Ecobank blames Nigeria’s recession, US dollar for loss

Ecobank Group CEO, Ade Ayeyemi Photo: Ecobank Twitter
Ecobank Group CEO, Ade Ayeyemi
Photo: Ecobank Twitter

Africa’s Ecobank, which operates in nearly 40 African countries, said on Tuesday a recession in Nigeria and a strong US currency had caused it to report a loss for 2016, sending its shares five percent lower.

Nigeria accounts for 40 per cent of Ecobank’s revenues and is in its second year of recession, brought on by lower oil prices which has caused chronic dollar shortages, frustrating businesses and households.

“Our group revenues remained resilient despite a tough year of macroeconomic headwinds including a weaker economic environment, particularly in Nigeria, and the strengthening of our reporting currency – the US dollar,” Ecobank said.

The Lagos-listed bank said its loss before tax narrowed to $131.3 million in 2016, from a loss of $205.2 million a year earlier. Its shares shed 5 percent, adding to a 20 per cent fall this year.

The stock fell 39 percent last year.

The bank also said it planned to raise $400 million via a convertible bond issue at 6.46 percent above Libor and had received interest from existing investors for $300 million.

In Nigeria, the bank began operations in 1986. It operates as a universal bank, providing wholesale, retail, corporate, investment and transaction banking services to its customers in the Nigerian market.

The bank divides its operations into three major divisions: (a) Retail Banking (b) Wholesale Banking and (c) Treasury & Financial Institutions.

The bank also offers capital markets and investment banking services.

During the fourth quarter of 2011, Ecobank Nigeria acquired 100% of the shareholding in Oceanic Bank, creating the expanded Ecobank Nigeria Plc.

As of December 2011, the expanded Ecobank Nigeria controlled total assets valued at approximately US$8.1 billion (NGN:1.32 trillion), making it one of the five largest banks in Nigeria at the time.

At that time the bank had 610 free-standing branches, making it the second-largest bank in the country by branch network.