The chairman of Ecobank Transnational Incorporated (ETI), Emmanuel Ikazoboh, has addressed the issues that forced the lender not to pay dividends to its shareholders, despite posting an impressive financial result for the year ended 2018.
Factors that denied shareholders dividends: In his speech to some shareholders, Ikazoboh, said Ecobank was compelled not to embark on the payments because of impending regulatory capital requirements and the need to build the holding company’s liquidity buffers.
Ikazoboh made the disclosure while presenting the bank’s 2018 financial report in Lome, Togo, where Ecobank held its 31st annual general meeting (AGM). He emphasised the board made the decision not to pay dividends in the interest of the company.
He promised that Ecobank will be back to paying dividends once the bank has a strong balance sheet and solid capital base.
“We assure you that while this was a hard decision, it was taken in the best interest of the company. We want to make sure we attend to the capital needs of all our subsidiaries before can start paying dividends.” Ikazoboh said.
Ecobank look to consolidate 2018 financial year: Stakeholders of ETI, the parent company of Ecobank subsidiaries, have been assured of continuous growth in the finances of the African lender.
Ikazoboh promised stakeholders that the banks will consolidate on their achievement between 2017 and 2018 financial year, which recorded significant growth.
ETI had posted a loss in 2016 but bounced back into profit in 2017, while the bank consolidated on the performance after recording N101.9 billion in 2018 from N69.7 billion in 2017; amounting to a 46 percent increase year on year.
How Ecobank maintained positive result: According to Ikazoboh, the discipline in cost management, commitment to risk management and the ongoing clean-up of the bank’s credit portfolio were factors that aided the result.
While revealing the efficiency or cost-to-income ratio has steadily improved to 61.5 per cent in 2018 despite tepid revenue growth, Ikazoboh said subsidiaries are meeting their capital commitments as well.
“Our capital levels remain adequate. The Group’s Base II/III Capital Adequacy Ratio of 13.6 per cent is above the regulatory limit and each of our subsidiaries is meeting its capital commitments as well.
However, your board believes that in the near-term, to meet our planned growth initiatives, and to ensure that we win in key countries such as Nigeria and Kenya, we will need to boost capital levels through a combination of fresh equity injections and the reinvestments of profits.”