Market, Regulatory Realities Stop 2023 Dividend Payment –Ecobank
Ecobank Transnational Incorporation (ETI) Plc has revealed that the group did not declare or pay dividend in 2023 as a result of regulatory, market realities.
The group distributed dividends totalling US$68 million to shareholders for 2021 and 2022 but will not be paying a dividend in 2023. The Pan African lender said its decision is also a strategic move aimed at ensuring the long-term stability and resilience.
Ecobank said central banks require the group to maintain minimum regulatory capital and additional capital buffers in the year. The tight regulation demand that lender have enough capital to grow and protect depositors.
Ecobank explained that some central banks where the group have presence halted banks’ dividend payouts or requested additional capital levels.
“We must exercise extreme caution to ensure the safety and soundness of Ecobank and comply with regulatory directives”, the group said in a statement shared with MarketForces Africa.
According to the statement, Ecobank said Ghana government domestic debt exchange resulted in substantial loss for the group in 2022, and this extended to 2023. The group said there was no dividend payments from Ghana since 2022.
The group said it stepped down dividend payment to boost net revenue, up by an average of 1% over the past eight years. Ecobank said it’s committed to accelerate this growth going forward.
However, the Pan African lender said its growth target requires additional capital to help achieve outcomes and generate returns above the cost of capital.
It also hinges 2023 dividend holiday to effort to maintain prudent dividend distribution and reinforce capital position to be in a stronger situation for the coming years.
In the financial year 2023, the group profit before tax increased by 8% in 2023 or 34% when adjusted for foreign currency translation effects to $581 million
Pan African lender said this is the largest ever achieved by the Group. It explained that the growth primarily due to a surge in the group revenue, outpacing expense growth, which resulted in positive operating leverage.
Details from audited report showed that the group pre-tax operating profit reached $951 million in 2023, representing a 17% increase from 2022.
In the period, its cost-to-income ratio improved significantly – from 56.4% in 2022 to 53.9% in 2023 despite tight macroeconomic conditions in its key markets.
In a successive manner, Ecobank Group brought down its cost to income ratio which peaked at 66.2% in 2019. The Pan African lender attributed the feat to cost discipline, which has been pivotal to increasing profits.
In 2023, Ecobank earnings was impacted by lower loan recoveries, non-recurrence of the $40 million non-conversion premium associated with the repayment of the $400 million convertible debt in 2022.
Its pretax profit was also hit by $26 million of net modification losses related to Ghana’s Domestic Debt Exchange Programme in addition to $40 million in net monetary losses primarily due to hyperinflation in Zimbabwe FSDH Merchant Bank Plans Rights Issue with Shareholders- Bukola Smith, MD
