Africa winners:
As with other commodity exporting countries, Algeria has been hit hard by the global decline in oil prices. With hydrocarbon-dependent government revenues falling and public investments declining, there has been little opportunity for the country’s private sector to pick up the slack due to a stifling regulatory environment. As such, most of Algeria’s lenders are now suffering.
Yet, the winner of the country award this year, Citibank Algeria, is a resilient exception to this trend. Though net profits and total assets both fell in 2014, the bank has nevertheless pushed ahead with a number of innovative products and services for its corporate and investment banking clients.
“The regulatory and business environment have undergone significant change over the past 12 months in Algeria, in part because of lower oil prices, and adapting to these changes while maintaining customer focus and service quality has been our main challenge,” says Ramz Hamzaoui, chief executive of Citibank Algeria.
The introduction of an online trade services platform, allowing clients to electronically execute and follow up on trade transactions in real time, has been accompanied by the roll out of Citi FX Pulse, an online foreign exchange platform for deal automation. Meanwhile, mobile access for Citi Direct has gone live, meaning that the lender’s e-banking customers can access their accounts through mobile phones and tablets.
To assist its corporate clients, Citibank Algeria also holds tailored training sessions to cover the country’s challenging regulatory landscape and advise on best trade practices.
“In addition to remaining a reference bank for service with our corporate customers, Citi was the lead arranger for one of the largest local currency syndicated loans [$400m] for a leading mobile telecom operator. [The bank] also moved to brand new premises in the heart of Algiers’ emerging business district of Bab Ezzouar,” says Mr Hamzaoui.
Angola: Banco de Fomento Angola
Banco de Fomento was the standout winner in this year’s Bank of the Year award for Angola. With Tier 1 capital increasing 18% by the end of 2014, the lender has worked hard to strengthen its position in a challenging market environment. Moreover, net profits jumped by 33% reaching, Kw31.8bn ($322m), which was the highest in the bank’s history.
Meanwhile, total assets increased by 23.6% in a highly competitive Angolan banking sector. The strength of Banco de Fomento’s performance was underscored by its return on equity of 34.8%, its low cost-to-income ratio of 36.3% and a falling non-performing loan ratio of 3.3%.
Beyond the numbers, the bank has worked hard to develop its transfer and payment systems. In 2014 a number of new functions were introduced, including payroll file processing and a tax payment function via the bank’s website as well as its branches. Customers have also been offered a tool to allow the automatic conversion of Excel files into formats usable by the bank’s payments systems.
Banco de Fomento’s network of 186 branches across the country, including 16 corporate centres, nine investment centres and 161 retail branches, has been accompanied by an ambitious programme of direct customer visits. Not only has this programme helped the bank to strengthen its relationships with existing clients, it has also led to an increase in the cross-selling of products. Banco de Fomento attributes a 117,489 increase in customers of its business segments, in part, to this visitation programme.
Meanwhile, the bank has launched its first mobile banking app, the BFA App. On its first day of operation, the app registered a record 1000 downloads.
Despite Benin’s weakening economic position, Ecobank Benin was able to markedly improve its performance in 2014. In particular, the lender’s net profits surged by 25%, while total assets and Tier 1 capital grew by 22% and 7%, respectively. These achievements were compounded by the encouraging decline of Ecobank Benin’s cost-to-income ratio, which dropped to 54% in 2014, down from 61% in the previous year.
Meanwhile, over the past year the bank has realigned its strategy to focus on the value chain of local corporates. This followed the introduction of new regulations that have dented most lenders’ interest margins as well as commission-based income. Accordingly, total revenue has jumped from CFA Fr25bn ($40.9m) in 2012 to CFA Fr37bn in 2014.
To lower its cost-to-income ratio, Ecobank Benin has invested in its staff to decrease hiring costs. Measures taken include changing the status of temporary employees to permanent staff, while increasing their salaries and benefits to improve the working environment. In addition, by addressing services quality issues around loan processing, the bank was able to shorten the loan request period and enhance the efficiency of each application process for the bank as well as for retail and small and medium-sized enterprise customers.
The launch of OMNI, Ecobank Benin’s online portal, allows the bank’s corporate customers to make payments without having to visit a branch. In addition, retail customers have access to the proprietary Rapid Transfer service, which permits the transfer of funds using one of the bank’s 81 ATMs across the country. Customers can also use ATMs to top up credit on their phones, under an exclusive partnership agreement with mobile operator MTN.
Botswana: Barclays Bank of Botswana
Botswana’s challenging economic environment has forced many of its lenders to pursue innovative growth strategies in recent years. Barclays Bank of Botswana impressed the judges based on its contributions to digital banking, marking it out as the clear winner in this year’s country category. This commitment to product and service development went hand in hand with strong growth figures, as the bank recorded an increase to net profits of 15.81% in local currency terms in 2014. Meanwhile, total assets rose by 4.5% and Tier 1 capital grew by 12.1%. Encouragingly, this performance was matched by growth in the bank’s return on equity, which hit 23.2% in 2014, up from 19.5% in the previous year.
“Our successes were in the digital space where we launched a number of innovations for our retail and corporate customers to improve their banking experience and offer more convenience. In addition, we successfully facilitated complex deals for corporate clients who were expanding into other markets,” says Reinette van der Merwe, chief executive of Barclays Bank of Botswana.
To cater to the specific demands of the market, Barclays Bank of Botswana has launched a mobile app that allows customers to open bank accounts without having to visit a branch. Given that two out of three adults in the country do not have an account, this kind of development has positive implications for financial inclusion. Building on this development, the bank also rolled out paperless banking in 2014 to reduce turnaround times and improve the customer experience.
“We will continue to execute our strategy, which is underpinned by our strength as a fully local, fully regional and fully global bank. Innovation will continue to be our area of strategic emphasis as we continue to tap into the opportunities in public sector, mining, transport and communications, tourism and agriculture,” says Ms van der Merwe.
Burkina Faso: Ecobank Burkina Faso
Despite the challenges associated with protracted political instability, Ecobank Burkina Faso still managed to post a strong performance in 2014. Solid financials were backed by investments into the bank’s branch network, its point-of-sale devices and terminals and its mobile banking service. In local currency terms, the bank’s net profits increased by 9.6%, while total assets and Tier 1 capital grew by 14.8% and 20.5%, respectively. Encouragingly, non-performing loans remained steady at 3.8% while the lender’s cost-to-income ratio increased marginally to 54.3%, up from 54.2% the previous year.
In addition to this strong growth trajectory, the bank unveiled its first call centre in 2014 to better respond to customer complaints, questions and feedback. This was accompanied by the full renovation of seven branches at a total cost of $1.5m. Ecobank Burkina Faso also launched a dedicated diaspora programme to cater to nationals working overseas and in doing so tapped into sizeable amount of low-cost deposits.
In terms of electronic banking, the bank has partnered with the national utility provider on its BankCollect payment platform. As such, thousands of customers can now safely and effectively pay various utility bills from home.
Ecobank Burkina Faso is also playing a key role in supporting vital sectors of the economy. In particular, it leads a group of local lenders who finance the country’s main cotton ginning company. Independently, it provides the greatest financial backing for the cotton industry of any bank in the country. Moreover, Burkina Faso’s wider agricultural sector has been listed as a strategic driver of long-term growth and this outlook is shared at the group level, where Ecobank has played a sizeable role in supporting the continent’s agricultural potential.
As Burundi’s political and economic challenges have mounted this year, the country’s banks look set to weather a sustained period of volatility. While growth opportunities may be limited, the winner of this year’s Bank of the Year country award, Ecobank Burundi, is in a good position to weather the storm. In local currency terms, Tier 1 capital grew by 18% in 2014 while total assets increased by 13%. Net profits maintained their upward rebound, surging by 87% following a 169% increase in 2013. Yet, these gains emerged in the aftermath of a disappointing year in 2012 when net profits decreased by -172%.
“Despite a difficult environment, Ecobank Burundi recorded strong growth in profitability as well as in our contribution to the economy and society of Burundi. The bank positioned itself as a major player in the sector by developing trade business activity through a targeted strategy towards small and medium-enterprises and regional corporates, a successful syndication of big-ticket deals and we improved our distribution capabilities and multi-delivery channels,” says Alhassane Sissoko, managing director of Ecobank Burundi.
In 2014, Ecobank Burundi launched a dedicated online retail banking platform for its customers, in tandem with the launch of e-banking and SMS alerts. Moreover, the launch of a regional credit card that allows customers to withdraw cash from any Ecobank ATM on the continent has provided the lender with a unique competitive advantage.
“Business opportunities for next year will mainly depend on the evolution of the political crisis in Burundi. Our strategy will focus on consolidating our gains. It will… strengthen our regional trade [business], finalise the implementation of our new operating model and increase our market share in the remittances space to diversify income sources,” says Mr Sissoko.
Ecobank Cameroon’s commitment to product innovation and alternative distribution channels over the past 18 months clinched it this year’s country award. This success has come as the Cameroon banking sector as a whole faces a challenging liquidity environment, more stringent capital rules and a fall in oil prices, which has had an impact upon the trade volumes and revenues of most lenders. Nevertheless, the bank has managed to establish a strong and diversified growth model setting it apart from the competition.
Net profit growth was the standout feature of the bank’s performance in 2014, with a gain of 51%. This mirrors the two previous years, where Ecobank Cameroon saw net profits surge by 143% in 2013 and 103% in 2012. Meanwhile, total assets increased by 14% while Tier 1 capital grew 7%. In a sign of the bank’s success at increasing shareholder value, its cost-to-income ratio continued to fall in 2014, reaching 61.2%, compared with 69.3% in 2012.
Meanwhile, two new branches were opened in 2014, including the first standalone premier banking branch in Cameroon. These additions brought Ecobank Cameroon’s total branch network to 35. In addition, 12 new-generation ATMs were deployed around the country bringing the bank’s total to 71.
These developments have gone hand in hand with a range of new products. In 2014, the bank launched its Cash Express card, which functions as a pre-paid card. The Orange Money mobile money scheme, which emerged through a partnership between Ecobank Cameroon and Orange Cameroon, allows customers to make purchases using their mobile phones. Finally, the roll out of the instant card service permits customers to receive new cards instantly in their local branch.
Though UBA Chad is one of the youngest lenders in the country, it also happens to be one of the most innovative. These innovations, particularly in the sphere of e-banking, are helping to position the bank as a leader in terms of its commitment to financial inclusion. Backed by strong financial results for 2014, these factors assured UBA Chad the country award this year.
“The operating environment was challenging, given the insurgency along the borders of Chad, Nigeria and Cameroon. This insurgency and counter military actions reduced cross-border trade and investment flows, which are a good part of our fee-based business. The protracted weakness in crude oil price also impacted fiscal revenue of the Chadian government, and thus overall economic activity in the country,” says Salami Aliyu, country chief executive of UBA Chad.
The bank has about 31,000 customers served by six branches across the country. By year-end 2015, the bank hopes to obtain an additional 25,000 customers by taking advantage of the country’s 3G mobile phone network as well as focusing on smaller towns and rural areas. This ambition goes hand in hand with the bank’s goal of developing its U-Direct and U-Mobile product suites for internet and mobile banking respectively.
“We will consolidate on our strength and success, as we leverage low-cost, high-impact channels to expand our reach in the country. As we deepen our penetration of the Chadian economy to achieve our desired scale and share of the market, we will further extract synergy opportunities across our group’s network. We will leverage technology and our dedicated people to become the ‘go-to’ bank in Chad,” says Mr Aliyu.
Democratic Republic of Congo: Trust Merchant Bank
This is the fourth year in a row that Trust Merchant Bank (TMB) has scooped the country award for the Democratic Republic of the Congo. With its impressive results backed by investments in its mobile banking services, the bank once again emerged as the standout winner. In 2014, net profits surged by 53% while total assets and Tier 1 capital both grew by 19%. Meanwhile, TMB’s return on equity continued on its positive trajectory reaching 18% in 2014, up from 14% in the previous year and 3% in 2012.
“The main challenges faced by the bank continue to be those related to the business environment in the Democratic Republic of Congo. Noteworthy is the immense infrastructural deficit, in particular in the areas of electricity, telecoms and transportation, which acts as a significant impediment to growth and innovation within the domestic economy,” says Oliver Meisenberg, chief executive of TMB.
The launch of Pepele Mobile, TMB’s innovative mobile banking product, in 2015 following a trial in the previous year has been a great success. Employing Near Sound Data Transfer security and validation technology, Pepele Mobile is available on all five phone networks active in the Democratic Republic of Congo. The product has been so successful that just three months after its launch, in May 2015, it had more clients than all but five of the country’s 18 banks.
“The successful launch of Pepele Mobile was our most significant achievement in the past year. The launch ensured that TMB was the first, and is today the only, bank providing a mobile banking service in the Democratic Republic of Congo. Pepele Mobile is a key part of our strategy to confront financial exclusion in the Democratic Republic of Congo,” says Mr Meisenberg.
Djibouti: International Commercial Bank
In many ways, Djibouti’s banking sector is one of the most competitive in Africa. A population of 800,000 – with a low ratio of bankable citizens – is catered to by 10 lenders. Meanwhile, the largest lenders benefit from government contracts and the cheap funds that are linked to them. As such, this year’s country winner, International Commercial Bank (ICB), has demonstrated both innovation and resilience to enjoy a strong year in 2014.
“Stiff competition from Islamic banks and… long-established lenders was very successfully met. This necessitated maintaining a very high quality of customer services and also very close contact with valuable customers to check customer poaching very effectively. In addition, being able to control bad debts was another area of success that helped maintain profitability,” says Ravinder Singh Parhar, ICB’s chief executive.
Notably, ICB introduced mortgage financing to its product range in 2014. This move positions it as one of only a handful of lenders in the country with a mortgage lending capability. Beyond this development, ICB has differentiated itself from its competitors through its successful money transfer services. Through various promotions, the bank incentivised customers to promote inflows in order to boost foreign exchange availability and subsequently its trading income.
“In the coming year, [an increase in] modern channels for customer service, including ATMs, internet banking and mobile banking, will form our core strategy to acquire new customers and retain the existing ones. There are huge opportunities in infrastructure and related funding, including transit and shipping companies. The housing sector will also be a significant source of growth,” says Mr Parhar.
Egypt: Commercial International Bank
In many ways, Egypt represents the Middle East and north Africa region’s most promising banking market. With a population of about 90 million and banking sector penetration of just 10%, the potential for growth is huge. This year’s winner, Commercial International Bank (CIB), the country’s largest private sector lender, not only enjoyed stellar results in 2014 but is at the forefront of efforts to tap into this potential by enhancing financial inclusion and formalising much of the grey economy.
As part of this effort, the bank is pushing hard to increase the use of cards in Egypt. In collaboration with Egypt Air, the bank successfully launched the first airline co-branded credit card in three different editions; platinum, titanium and standard. Meanwhile, the launch of its ‘Plus’ consumer banking segment in June 2014 is designed to cater to medium-net-worth individuals in the country.
CIB has also invested heavily in various alternative distribution channels. Overhauls to its online banking service and phone banking service, to improve the interface and customer engagement mechanisms, have gone hand in hand with upgrades to the bank’s ATM services to include remittance transactions and increases to the withdrawal limit.
The bank’s small and medium-sized enterprise offering provides dedicated relationship managers, as well as tailor-made packages and products designed to address the needs of these entities which constitute the majority of the country’s business community.
In local currency terms, the bank enjoyed net profit growth of 24% in 2014, accompanied by asset growth of 26.4% and gains in Tier 1 capital of 23.1%. Meanwhile, return on equity hit 31.3% while the bank’s cost-to-income ratio continued to fall, reaching 22.6%.
Equatorial Guinea: Ecobank Equatorial Guinea
Like other hydrocarbon-dependent economies around the Gulf of Guinea, Equatorial Guinea has been hit hard by the fall in oil prices. With gross domestic product growth in the first half of 2015 in freefall, contracting by -8.7%, optimism in the country has evaporated as government revenues fall and public infrastructure spending declines.
In order to shore up its fiscal position, the authorities are now facing painful liquidity challenges while a presidential decree has abolished the generous system of tax exemptions granted to companies during the good times. Meanwhile, the minimum rate of flat tax has been increased from 1% to 3%. This has come as new regulations for the banking sector impose more conservative provisioning levels around non-performing loans.
Moreover, banks in the country will now be required to pay company tax, value added tax and customs duties. This environment has left most lenders with limited growth opportunities and a bleak outlook for the coming years. Nevertheless, this year’s country award winner, Ecobank Equatorial Guinea, is in a good position to weather this coming storm. The year 2014 in particular was a strong one for the bank, as it posted a 56% increase in assets and a 22% increase in Tier 1 capital. The bank’s return on equity by year-end 2014 was 31% while its cost-to-income ratio was 54%.
“One of our main successes was to present good financial performance growth while creating premium value for all stakeholders. This was achieved by the entire team’s commitment to be the leading service provider in Equatorial Guinea and by leveraging the strong Ecobank brand and its reputation,” says Alfred Kasongo, managing director of Ecobank Equatorial Guinea.
Ethiopia’s Dashen Bank is on the rise. In 2014, the lender’s net profits, in local currency terms, increased by 17.4%, while assets and Tier 1 capital were up by 11.2% and 33.6%, respectively. During the 2014/15 financial year, the lender opened an additional 23 branches, bringing its total up to 156. Meanwhile, its total number of ATMs and point-of-sale terminals hit 220 and 873, respectively.
This physical expansion has been accompanied by developments in mobile and internet banking, including the roll out of an SMS alert messaging service for the bank’s customers. Meanwhile, Dashen Bank is currently upgrading its core banking system to improve the quality of its service provision.
“[In 2014] we introduced internet, mobile and agent banking services and pushed forward our growth agenda while achieving a higher bottom line compared with the previous year. Furthermore, to support our pioneering role in the card payment services, we have started acquiring the American Express card and are the only bank in the Ethiopian market to have this capacity,” says Asfaw Alemu, president and chief executive of Dashen Bank.
In order to strengthen its small and medium-sized enterprise offering, the bank has signed partnership agreements with USAID and the French Development Agency to initiate a credit guarantee scheme. The development of tailored products and services for these businesses has also helped Dashen Bank to better serve this segment.
“In the coming year, we will aggressively expand our market outreach through the expansion of branches, self-serving alternate channels and agent banking. Furthermore, we intend to introduce premium customer service lounges for corporate businesses and high net-worth individuals at metropolitan areas,” says Mr Alemu.
Low tourist numbers and a drop off in agricultural output contributed to a cooling of the Gambia economy in 2014, with gross domestic product growth reaching just 1.4%. These challenges were accompanied by reductions in external donor support, leading to the dalasi’s depreciation against most of the major international currencies. The government’s regulatory response – with respect to the exchange rate regime and the supply of local liquidity – has hit the performance of most lenders. Nevertheless, under these circumstances Ecobank Gambia has performed admirably with both asset and net profit increasing in 2014.
“Our biggest challenges related to declining business volumes with respect to our corporate banking business, as well as issues around foreign exchange. We also had challenges with a very slight deterioration in our loan book largely due to the difficult macroeconomic environment that we operated in. Our non-performing loan ratio increased from 1% to 2.3%. This performance is well within the industry average of 11%,” says Josephine Ankomah, managing director of Ecobank Gambia.
Ecobank Gambia grew its total revenue by 42% year on year in 2014. To achieve this, the bank grew its non-interest income, consolidating relationships with key business segments including the public sector, telecommunications, oil and gas and construction. The lender also provided guarantees for a project valued at Ä52m for the construction of the Trans-Gambia bridge, funded by the African Development Bank.
In terms of its support for small and medium-sized enterprises (SMEs), Ecobank Gambia has managed to grow its exposure to this segment by about $1m. In total, SMEs contribute about 10% to the bank’s total revenue, up from 4% in 2013.
In a highly competitive country category, Zenith Bank emerged as this year’s winner for Ghana. Demonstrating a consistently strong multi-year performance, the lender impressed the judges based on its huge increase in net profits for 2014, 85.8%, as well as total assets and Tier 1 capital, which grew by 60% and 58.5%, respectively. Growth in 2014 was underpinned by a cost-to-income ratio of 41% and a return on equity of 57%.
“The bank grew significantly in profitability and size, culminating in Zenith becoming the fifth largest bank in terms of total assets in Ghana as of December 31, 2014. Our performance is a direct reflection of the continuous hard work and dedication of our employees. Our customers continue to demonstrate their trust in the Zenith brand,” says Daniel Asiedu, managing director and chief executive of Zenith Bank Ghana.
Zenith Bank was responsible for a number of innovations in the market in 2014. It enhanced its card product range through the launch of Kudi Card, which is a customised pre-paid Visa card. As such, workers who typically receive their income in cash can load their salaries onto the card, offering them both convenience and security. Notably, the Kudi Card also advances the government’s ‘cash-lite’ agenda. The cards can be used both locally and internationally.
“We will continue to invest in systems and structures to enable our customers to access products and services on the go, thereby creating an unrivalled customer experience in line with the bank’s vision, which is to be the reference point in the provision of prompt, flawless and innovative banking products and services in the Ghanaian banking industry,” says Mr Asiedu.
Despite a fall in net profits, Ecobank Guinea was the standout winner in this year’s country award. Total assets increased by 11.38% in 2014, while Tier 1 capital posted marginal growth of 0.49%. Strong efforts were also made to develop alternative distribution channels and to encourage a nascent syndicated loan market in the country. These improvements came despite a particularly challenging operating environment as a result of the recent Ebola outbreak.
“During the past year, Ecobank Guinea faced three main challenges. First was the Ebola epidemic and negative impact it had on the economy. Travel restrictions and declining investor interest resulted in lower foreign inflows and overall lower gross domestic product growth. Second, banking regulation tightened, which saw an increase in reserve requirements. A final challenge was the competitive deposit market, pushing funding costs higher,” says Moukaramou Chanou, managing director of Ecobank Guinea.
Financing much-needed infrastructure developments in Guinea, including major transportation and power generation facilities, requires syndicated lending. Here, Ecobank Guinea has led the way among the country’s lenders to secure market-changing co-operation between the largest banks and the government.
In its personal banking segment, Ecobank Guinea offers customers instant card production for all current accounts, while the recent addition of an account-based money transfer system in partnership with Western Union offers customers the chance to transfer funds through its internet banking system.
“Against a difficult banking environment, we plan to be niche in our customer focus. We will focus on small and medium-sized enterprises and personal banking, with a focus on ‘premier’ and ‘advantage’ customer segments. The key sectors in which we expect to see opportunities are construction, agrobusiness and telecommunications,” says Mr Chanou.
Strong growth, positive developments in terms of financial inclusion and a commitment to technological innovation all ensured that Equity Bank was this year’s winner of the Kenya country award. In terms of its key numbers, the bank registered net profit growth of 33% in 2014, while total assets increased by 16%. Notably, Tier 1 capital grew by 14% over the same period, building on a highly successful 2013 when it rose by 17.7%. This growth story was underpinned by strong fundamentals, including a cost-to-income ratio of 48% and a return on equity of 37.2%.
In order to diversify its sources of income, Equity Bank is focusing on its agency banking business, whereby partnerships with private businesses help the lender to reach out to underbanked populations in the country. This model helps Equity Bank to overcome challenges associated with distance and geographical isolation, in turn promoting financial inclusion and increasing the deposit base of the bank on a variable cost basis.
Equity Bank also launched its Equitel mobile banking service, becoming the first mobile virtual network operator in Kenya. This has delivered new banking services into the hands of the customer as Equitel simcards are linked directly to customer accounts, a first on the continent. To date, Equitel has about 1 million users, or about 3% of Kenya’s mobile market, in less than a year of operating.
Equity Bank also has the largest share of entrepreneurs and micro clients in the Kenyan market. Of the 900,000 micro clients it has served over the past 15 years, the bank estimates that 450,000 of them are ready to graduate to small and medium-sized enterprise status.
Lesotho: Standard Lesotho Bank
Through a commitment to strategic cost management, automation and enhancing the customer experience, Standard Lesotho Bank has presided over a strong growth trajectory in recent years. Net profits for 2014 were up 9% in local currency terms, building on the 38% increase posted in 2013 and 11% in 2012. Tier 1 capital increased by 26% in 2014, while asset growth was slower at 1% for the year.
Though non-performing loans have increased in recent years, up to 3.4% in 2014 from their 2% level in 2012, the bank’s cost-to-income ratio has fallen by about 6% over the same period, reaching 41% in 2014. Meanwhile, return on equity was 45.1%.
“We remained focused on delivering on our strategic pillars and continued to shift frontiers in the financial services sector. We also improved our service offering to our customers in a somewhat turbulent business environment. The bank continued to grow its business and broadened the distribution network and service offering to align to our vision of becoming the leading financial services provider in Lesotho,” says Mpho Leslie Vumbukani, managing director of Standard Lesotho Bank.
The bank expanded its distribution network by commissioning new ATMs in Mapholaneng, Mount Moorosi, Semonkong and Masianokeng, bringing its total tally to 82 by December 2014. In addition, it increased its point-of-sale terminals from 235 in 2013 to 409 in 2014.
“Consumer power and choice, which is driven by technology, is taking shape in Lesotho, and the transformation to electronic channels will certainly shape the way we will be doing business going forward. At Standard Lesotho Bank, this is also where we are heading, especially in the personal banking market,” says Mr Vumbukani.
Liberia and many of its fellow west African states have endured a torrid 2014 and 2015 thanks to the deadly attentions of the Ebola virus. The disease has killed more than 11,000 people across multiple countries, incapacitated many more and caused huge economic disruption.
Liberia was among the worst hit countries, though it was happily declared Ebola-free in May this year. Ecobank Liberia, a subsidiary of pan-African lender Ecobank Transnational, has diverted much of its energies to combating the disease in the past 18 months.
As public and private institutions closed their doors as the plague intensified, the bank put its business continuity plan into action. This included education for all staff on how to prevent infection, and medical supplies handed out to employees and their families. Staff who were able to remain at work throughout the crisis were paid special incentives. As a result of this quick action, the bank did not lose any of its staff to the virus.
Despite the economic problems caused by Ebola, Ecobank has performed well in Liberia. The lender recorded a return on equity of 11% in 2014, and a net profit of 10%, although the latter figure was a significant reduction from the 130% net profit recorded in 2014. Although Ebola posed challenges, it also presented opportunities. The bank was able to make healthy returns on the cash management fees brought by the handling of donor money flowing into the country to fight the disease.
Given the small size of many African economies, actions by individual banks can often have a significant impact on a country’s growth. Such is the case in Malawi, where the local subsidiary of pan-African lender Ecobank Transnational structured a $60m fuel financing facility during a tricky period for fuel importation into the country in 2014. The transaction is the largest to come out of the local banking sector.
The bank was also the largest participant in a $22m structuring of letters of credit facilities for the government’s fertiliser subsidy programme. This programme helps improve productivity in Malawi’s agricultural sector, which still dominates the wider economy.
“Growth opportunities abound in commodities financing in Malawi,” says Charles Asiedu, managing director of Ecobank Malawi. “We will tap into the group’s platform to provide more trade finance to the export sector. We will continue to be the leading fuel and fertiliser financier in Malawi.”
Helped along by these large transactions, Ecobank had a very strong year in Malawi. Return on equity hit 34%, an improvement of eight percentage points on the year before. Tier 1 capital increased by 49% and net profits grew by 152%. The bank’s asset book doubled from K3.9m ($6.81m) to K5.8m.
The bank put heavy focus on improving its customer service standards. A customer relationship management system, the first of its kind in Malawi’s banking sector, was launched, allowing customer complaints to be properly processed and dealt with. Several technological improvements were also made – cash machines run by the lender were upgraded to become compatible with MasterCard and the bank partnered with Airtel Money to improve bank account access via mobile phones.
In a continent where mobile phone penetration is incredibly high, and bank account penetration incredibly low, it is no surprise that enterprising lenders have sought to expand their coverage among ordinary people by teaming up with telecoms companies.
The Malian subsidiary of Ecobank Transnational has done just this with the launch of Ecobank Mobile Banking in February 2015, which received authorisation from the Bank of West African States. The service offers a range of bank account services, allowing customers to make deposits, transfer funds or receive funds from any location, in conjunction with Orange Mobile. It is hoped that the scheme will increase the number of ordinary Malians who have a bank account, thus improving financial inclusion, a key goal of governments across Africa.
Like other Ecobank subsidiaries across Africa, Ecobank in Mali has established a customer relations management platform that will allow the lender to better absorb and respond to customer complaints, on both the retail and corporate side of the business. It will also improve the management of customer data.
The long-term nature of Ecobank’s presence in Mali was underscored by the opening of a new, eight-story headquarters for the bank in the country’s capital Bamako. Ecobank has matched this vision with strong returns in the country. Net profits grew by 29% in 2014, building on the 29% improvement the year before. Tier 1 capital has been increased by 4%, and return on equity was a creditable 33%.
Mauritius: Mauritius Commercial Bank
The Mauritian banking system is something of an odd man out when set alongside its African peers. As an island, the country has avoided much of the economic and political problems that have beset its regional peers over the past several decades. Its banking industry has developed as a sophisticated haven for financial activity from around the globe.
Consequently, many of the challenges that faced the Mauritius Commercial Bank this year came from abroad. In particular, the lender had to deal with unusually high impairment charges on loans offered to Indian corporates. The bank ringfenced these exposures and took steps to improve its risk management functions to avoid a recurrence of the problem. It has also set up a specific vehicle to recover amounts due to the bank.
In spite of these issues, the bank improved its financial position over the year. As of March 2015, its Tier 1 capital base stood at 11.4%, compared with 9.9% in June 2014. Return on equity grew from 14.2% to 20.3% in this time. Its cost-to-income ratio fell from 46% to 41.4% and its net profits grew by 42.8%.
“The excellent results of an above 30% rise in after-tax profit represents the major success,” says Anthony Withers, chief executive of Mauritius Commercial Bank. “Alongside enhanced asset quality and efficiency gains, this growth in profit reflects the execution of our diversification strategy with foreign-sourced income now accounting for more than 50% of results. Operationally, the bank made headway in enriching its customer relationships and bolstering its internal capabilities linked to risk management.”
Of all the infrastructure challenges currently facing African countries, energy generation is perhaps the most pressing. With populations growing quickly and modernisation on the march in many economies, meeting rising power demands is of huge importance.
Given the limited size of its domestic banking markets, Africa has often struggled to generate the financing for power projects. Not so in Morocco, where Attijariwafa Bank notched up a number of major deals. It acted as co-arranger and facility agent for the $400m financing behind the 300-megawatt Tarfaya wind farm, the largest in Africa. It also acted as co-arranger and security agent for the $260m financing of three private wind farms, totalling 350 megawatts of electricity generation.
Outside the green energy sector, Attijariwafa Bank was part of a consortium of banks, and national and international financial institutions, that supported the $1.8bn financing of the Safi project, a cutting-edge coal-fired power station.
The success of its domestic and pan-African operations has produced a strong year for Attijariwafa Bank. Tier 1 capital increased by 2.9% and assets by 4.2%. Though net profits grew by a relatively meagre 1.5%, this compares favourably with the 4.6% fall in net profits experienced in the previous year. Return on equity was a respectable 14.6%, slightly less than the 15.4% seen a year earlier.
“Our bank is pursuing its development through early entry in nascent segments and careful but proactive investment in technology. In the past year, among other things, we innovated in the field of very small enterprise financing by developing a robust in-house scoring system and we migrated our branch IT system to a modern architecture that allows the acceleration of our digital transformation,” says Mohamed El Kettani, chief executive of Attijariwafa Bank.
Mozambique’s banking sector has grown at an impressive rate since its 15-year civil war ended in the early 1990s. Financial inclusion is still low, even by African standards, but all of the country’s major commercial banks see improvement in this area as a high priority. With the recent discovery of large natural gas reserves off Mozambique’s coast, there is also the chance for the sector to help finance a major area of growth in the national economy.
In a country with a lot of territory and a relatively modest population size, maintaining a presence in all areas can be tough, especially in the case of Mozambique, where transport infrastructure is often inadequate. Millennium bim has 166 branches, 30% of the country’s total, and also offers an internet and mobile banking service. It has a physical presence in all of Mozambique’s provinces and 41% of its districts. It also runs 25% of the bank branches present in Mozambique’s large rural hinterland and 40% of all ATMs.
One of the bank’s biggest projects is IZI, a mobile banking service that can be used even on the basic handsets owned by most of Mozambique’s citizens. In the past year, the bank has enhanced the convenience of the system by introducing greater functionality – different menu languages, early settlement of credit card balances and a term deposit with a minimum of just one metical, aimed at encouraging micro savings. IZI has led to a 60% increase in monthly transactions by the bank’s customers, reaching close to 5 million monthly transactions.
Millennium bim recorded a net profit of 7.6% in 2014, trimmed its cost-to-income ratio from 43.6% in 2013 to 42.9% in 2014 and posted a return on equity of 22.3%.
Namibia: First National Bank of Namibia
Namibia, with its commodity-reliant economy, has been buffeted by the volatile nature of global demand for raw materials in the past year. However, it has maintained an economic growth rate of about 4%, making life a little easier for its domestic banking sector, which is undergoing a period of change as new entrants challenge existing market participants.
First National Bank of Namibia aims to edge ahead of its rivals with the establishment of RMB Namibia, a wholly owned subsidiary that offers corporate and investment banking services. The new division launched in June 2014 and has since participated in many significant transactions with the country’s largest corporates and state-owned enterprises, such as Air Namibia. The division also acted as a key advisor and earned capital-raising mandates for the government, and major Namibian telecoms firms in both local and South African markets.
The bank launched an overhaul of back-office functions, aimed at improving efficiency and incorporating new regulatory requirements. Manual processes were replaced with electronic systems, with the end goal of moving to a completely digital environment for most functions. The bank’s mobile banking app is the only one offered by a domestic lender in the country and the bank also offers other e-services such as prepayment of electricity bills and cardless withdrawals at ATMs.
The bank’s return on equity rose to 28.8% in 2014 from 25.4% in 2013, and its net profit increased by 31%. “The challenge was to improve on the excellent growth performance of the previous five years, notwithstanding the internal change process and the increasing competition from new entrants into the market,” says Sarel van Zyl, First National Bank of Namibia’s chief executive.
Ecobank Niger, a subsidiary of pan-African lender Ecobank Transnational, has achieved strong asset growth over the past two years, growing its balance sheet in 2014 by 16% to CFA francs 245bn ($408m) in the last year alone. Revenues were up 14%, and its return on equity stayed consistent at 35%. Meanwhile, Ecobank Niger reduced its cost-to-income ratio, a major challenge for many African banks, from 52% to 47% between 2012 and 2014.
In a continent where participation in the financial sector from ordinary members of the public is often very low, Ecobank Niger has made efforts to expand its coverage. According to its figures, customer loans have risen by 6%, and customer deposits have grown by 24%, representing a market share of 21% and making the lender a market leader in terms of total deposited assets. It has also strengthened its position with corporates in the mining, oil and public sectors.
The bank has built a new headquarters that it hopes will entrench its position in the country and improve customer service. It has an agreement with the Niger government to funnel financing into social housing, and is working in a joint venture with the Caisse Regionale de Refinancement Hypothecaire, a local mortgage agency, to finance mortgages for salaried employees in Niger.
On a smaller scale, it has opened four new branches in the country, and now has 41 ATMs, 34% of the total to be found in Niger.
Africa’s largest economy has endured an exceptionally challenging 18 months. Growth in Nigeria, so heavily dependent on cash inflows from oil exports, has been badly hampered by the drop in the price of the commodity. Government finances have been badly disrupted, and several emergency budgets have been required to patch up the difference between revenue and spending. Nigeria remains a tough place to do business, although the new president Muhammadu Buhari has pledged to improve the security situation and crack down on corruption.
Guaranty Trust Bank has performed well in this tough environment. According to its internal figures, net profit hit 10% for 2014, an improvement on the 3% recorded in 2013. Its balance sheet has grown by 12% and it has also increased its Tier 1 capital by 12%. Non-performing loans have decreased from 3.58% to 3.15% and return on equity is at 27.93%
A key focus for the bank over the past year has been retail and small and medium-sized enterprise (SME) customers. Eight new SME teams have been created to serve the needs of this class of clients, and the bank has created an e-commerce platform to allow SMEs to create online stores through which to advertise and sell their goods.
“We started life as a wholesale bank, very high-end, and that’s what we were known for, but more recently we have gone heavily into the retail space,” says Segun Agbaje, chief executive of Guaranty Trust Bank. “Our retail strategy is to serve the full value chain of our customers using cost-effective delivery channels. We have a very robust mobile banking app and we are making very good strides on our money transfer system.”
Republic of Congo: Ecobank Congo Brazzaville
Ecobank Congo Brazzaville’s strong performance in 2014 coupled with its commitment to innovation and physical expansion ensured that it clinched this year’s country award. Despite net profits falling by 31% in 2014, the lender registered strong asset growth of 36% while Tier 1 capital increased by 14%. Meanwhile, non-performing loans (NPLs) remained steady at 2% and the bank’s cost-to-income ratio was 51%, the same figure as 2013 but an encouraging reduction from the 64% posted in 2012.
In order to improve long-term profitability, Ecobank Congo Brazzaville is pursuing a multi-pronged strategy to lower costs, increase innovation and grow its network. Measures include a target NPL ratio of 1% to minimise the need for excessive provisions, increasing its network of ATMs in major urban centres and improving its human resources policy to better develop and retain key talent.
The bank has increased its network of ATMs from 14 in 2012 to 30 by May 2015. Consequently, the number of transactions on ATMs has increased from 152,439 in 2012 to 300,653 in 2014. This was reflected in the total volumes of withdrawals, which jumped from $31,196 in 2012 to $71,383 in 2014.
Meanwhile, the bank is pushing hard to develop its small and medium-sized enterprise (SME) offering. Ecobank Congo Brazzaville adopts a holistic approach to supporting its SME clients, including funding support for assets, inventory and employees. Encouragingly, the banking sector has received governmental support, including the creation of a guarantee fund to cover the risk for banks, which will go some way to supporting these SME engagement efforts. Over time, these programmes and others will go some way to addressing issues of financial inclusion and economic development in the country.
As African banking markets become more interconnected, many local lenders are facing threats from rivals that operate across the continent. These pan-African banks can often bring in a wider set of skills, experiences and more financial muscle, so resisting their challenge is no mean feat.
The Bank of Kigali has managed to do this over the past year, maintaining its position as the market leader in Rwanda. As of December 31, 2014, the lender’s market share of total assets was 33.7%. It also has 30.2% of total loans and advances, and 30.9% of deposits.
The bank has performed strongly in both the retail and corporate sectors. Balances and deposits from retail customers reached RwFr7.4bn ($9.9m) for 2014, up by 7.6% year on year, while that for corporate clients reached RwFr185.9bn, up 13.4% year on year.
Bank of Kigali has also recently partnered with African telecommunications firm MTN to provide any customers who are also subscribers to MTN Mobile Money with the means to move money to and from that service and their bank accounts. The bank hopes that this will increase their customer base as ordinary citizens become more enamoured with the possibilities of a well-connected and open banking service.
In terms of results, Bank of Kigali has had a strong year in 2014. Tier 1 capital increased by 30.1%, and assets grew by 14.3%. Net profits, meanwhile, were up by 23.5%, with a return on equity of 22.9%.
Unlike many of its African neighbours, Senegal is not blessed with natural resources. It has little in the way of mineral wealth, no oil or coal or natural gas, and as such has to rely on other sectors to produce growth.
The Senegalese economy is dominated by agriculture, but it does have other strings to its bow. It has one of the most sophisticated tourism industries on the continent. Its port, in the capital city Dakar, is one of the busiest in West Africa, and it has a vibrant banking and business community.
The Senegalese gross domestic product grew by 4.5% in 2014, the highest rate it has reached since 2008, but one that still lags behind many other sub-Saharan economies. The World Bank expects growth to pick up speed in 2015, though the long-term regional fall-out from the Ebola crisis may produce a dampening effect.
It is in this environment that UBA Senegal emerges as the winner of this year’s country award. Its financial results were solid for 2014. Tier 1 capital increased by 23%, and though total assets fell by 21%, net profits were up by 9.7% and return on equity grew from 42% in 2013 to 43%.
Faced with the challenge of spreading its coverage across a country with a fairly poor infrastructure network, UBA Senegal has turned to agency banking as a way to solve this problem. It has partnered with several state and privately owned entities to extend its banking services across a wide area. It has also signed a mandate with Joni Joni, a money transfer operator, to offer 50,000 prepaid debit cards to customers across the country, and performed a similar feat with employees at a government agency, allowing it to offer 10,000 pre-paid cards to government workers on low salaries.
As with Mauritius, Seychelles offers different challenges and opportunities for its banks than most countries in continental Africa. Its tropical waters and sandy beaches offer a paradise for tourists, and the islands are home to many offshore companies from Africa and beyond.
Much of the country’s banking sector is aimed at affluent customers. Barclays Bank has a dedicated ‘Premier’ service for high-end clients. The service’s minimum deposit criteria ensures that the bank can attract a significant and reliable deposit base, and an expansion of the service is planned. Two new outlets will soon be launched in affluent areas of the capital, Victoria. Client accounts are equipped with fraud detection systems and text message alerts.
The stability of its funding sources allows Barclays to extend a significant level of financing and loans to its customers. It is the only bank on the islands that offers a 25-year mortgage, coupled with the lowest 12 months fixed rate of 4.99%.
In 2014, the bank reorganised its commercial business, setting up a dedicated corporate and investment banking team to support large local corporates, global corporates and public sector bodies. A business banking team was established to provide coverage to smaller domestic clients, and clients can use the bank’s iPortal to access services such as Barx, its global foreign exchange trading platform.
In terms of physical presence on the islands, Barclays leads the field with seven branches and 16 ATMs. It was the first to launch 24-hour internet banking for both commercial and consumer clients, closely followed by the launch of an internet banking app. Its results for 2014 were also positive, with a 22% return on equity and an 8% increase in assets.
Sierra Leone: Ecobank Sierra Leone
For the past 18 months, Sierra Leone has been consumed by the Ebola crisis. Just as it did in Liberia, the outbreak killed thousands of people, debilitated many more, shuttered businesses and paralysed the national economy. Sierra Leone was not declared ‘Ebola-free’ until November 7, 2015, long after many other neighbouring countries, and just under 4000 of the virus’s 11,000 victims came from within its borders.
Ecobank Sierra Leone, a subsidiary of pan-African lender Ecobank Transnational, has ridden the crisis well, increasing its return on equity from 17% in 2013 to 18% in 2014. Net profits increased by 24%, while total assets and Tier 1 capital rose by 33% and 24%, respectively.
To reduce exposure to a highly volatile internal market, Ecobank boosted its holding of Sierra Leonean treasury bills, which offer a steady return despite lower central bank interest rates. It also successfully targeted high-net-worth individuals and large companies in order to widen its deposit base. It continued to offer loans and overdraft services to its customers as before, but tied them to collateral to protect the bank in the event of defaults.
To improve financial inclusion, Ecobank continues to spread its coverage across the country and set up ATMs in every new branch. The bank has also expanded its mobile banking platform, particularly to allow customers to pay utility bills as well as the usual sending and receipt of money transfers. Ecobank’s point-of-sale system has been boosted, and customers can use their visa or pan-African cards to pay for products and services all over the country.
Home to some of the largest banks in Africa, South Africa dominates financial markets on the continent, with many of its well-capitalised lenders operating on a cross-border basis. But though they may have a broader outlook than many of their African peers, they face significant challenges in their home market.
Growth in South Africa has been anaemic in the past few years, and the value of the rand has been volatile, pushed up and down by poor domestic news and macroeconomic changes among emerging market countries. There have also been regulatory hurdles to clear – South Africa is a signatory to the Basel III process, meaning that its banks must grapple with new measures such as the liquidity coverage ratio (LCR), which are designed chiefly for banking markets in the US and Europe.
Nedbank spent the past year or so doing precisely this, implementing the LCR fully before the 2017 deadline. In 2014 it increased Tier 1 capital by 2.8% percentage points, building the total capital ratio to 12.5% of risk-weighted assets. Its balance sheet grew by 8%, and its net profits by 14%. Return on equity was 17.2%.
“The banking environment continues to be challenging as banks grapple with unprecedented volumes of regulatory change, low economic growth and increasing competition from non-traditional players. Banks in Africa operate under additional pressure as many emerging markets have been impacted by lower oil and commodity prices and exchange rate volatility,” says Mike Brown, Nedbank’s chief executive.
The bank has also tilted its strategic portfolio away from home and personal loans in its domestic market toward more profitable activities such as transaction banking, transactional deposits and business in the rest of Africa.
Though governance across Africa is improving, many banks still have to operate in volatile political environments. Sudan has endured its fair share of upheaval in recent times, but the Omdurman National Bank produced a strong set of results for 2014, increasing its stability and growing its earnings. Tier 1 capital rose by 3%, while its balance sheet expanded by 19.4%. Net profits jumped by an impressive 39.9%, and return on equity was 17.8%.
“In the past few years the bank succeeded in overcoming a number of challenges, the most important of which was the negative economic results from the separation of South Sudan and consequent reduction of national oil resources, as well as the bad effects of the economic embargo imposed on Sudan,” says Nagmedin Mohamed Agab Mohamed Nour, chief executive of Omdurman National Bank.
A major internal focus for the bank is the installation of new software that will reduce the time taken by customers to obtain financing, allow them to offer feedback on various bank procedures, and enable the bank to react more nimbly to customer demands. It will also let customers manage their accounts and get transaction statements through mobile phone systems.
The bank has also expanded the microfinance it extends to small and medium-sized enterprises (SMEs), and offers business training courses to entrepreneurs. “We strive to continue to improve the quality of banking services. The bank is working to maintain its pioneering position in our sector and benefit from the improvement in the political and economic environment as well as the expansion in the development projects,” says Mr Nour.
Swaziland: First National Bank of Swaziland
The cross-border impacts of financial regulation are a familiar concern for top-tier banks in developed markets, but they also pose challenges for their peers in emerging economies. The introduction of the US Foreign Account Tax Compliance Act, which ensures tax compliance from US citizens abroad, has placed new burdens on banks in Africa, and it is something that First National Bank of Swaziland has devoted much time to.
The lender has implemented upgrades to its reporting and monitoring systems to automatically detect US citizens if they open an account, all in order to avoid sanctions that would be levelled against the bank in the event of non-compliance. It also enhanced procedures used to combat money laundering.
Elsewhere, the bank had to fend off competition from rival lenders who had not been so conservative in the expansion of their loan portfolios, and were now stealing a march on new customers. To counter this, the bank increased its personal loan limit from Ä20,000 to Ä150,000 and made it easier for customers to open an account. It also introduced smaller, easier to maintain ATMs to ease customer access to cash.
“Competition within the sector in Swaziland is becoming sophisticated. Micro lenders are issuing more products competing directly with banks, but under softer regulations. The regulatory environment has also been getting tougher for banks, increasing the cost and complexity of doing business. The industry could benefit from revised regulations that match the level of product and technology sophistication being introduced by the financial services sector. Slow growth in the economy has narrowed our own growth prospects and increased impairment risks,” says the bank.
Tanzania: Standard Chartered Bank Tanzania
With more than 50 lenders operating within its borders, Tanzania has a healthy, and competitive, banking sector. Standard Chartered’s local subsidiary has tried to stay ahead of the game by maximising its digital services to make banking a less time-consuming activity for ordinary Tanzanians.
It has constructed the Straight2Bank online service, a fully integrated banking platform that offers a full range of transactional services to its customers. Standard Chartered’s mobile banking platform is also market leading. To keep the personal relationship side of the business in good shape, the bank has also invested in a strenuous programme of staff training.
The bank also made strides in corporate banking, continuing to offer hedging transactions across foreign exchange, fixed income and commodities for local and international clients, despite rising volatility and the high cost of derivatives market participation in Africa. The bank also made it easier for corporate clients to make bulk payments from their own accounts into beneficiaries’ mobile wallets, offered by several telecoms companies. This significantly reduces the time taken to transfer funds and simplifies the payments process.
Though Tier 1 capital and assets stayed fairly flat in 2014, net profits at Standard Chartered Bank Tanzania grew by 12% and return on equity increased to 23%, reflecting a commitment by the bank to shareholder returns.
“Tanzania is a highly competitive market in banking and mobile financial services. With a reputation for high-quality service, innovation and connecting Tanzania to neighbours and the world, we have a special offer to clients,” says Liz Lloyd, chief executive officer at Standard Chartered Bank Tanzania.
Given its strong performance all over sub-Saharan Africa, it is no surprise that Ecobank leads the pack in its home market of Togo. The country plays host to the pan-African lender’s headquarters, and has experienced a significant change in its banking market over the past year, with aggressive competition now the norm.
Ecobank has had to be nimble to stay ahead. It has strengthened its customer management service, creating a more personalised, tailored approach. It has a personal banking service, dedicated to individual customers, to reinforce this relationship. It has also established a small and medium-sized enterprise (SME) club, which identifies promising SMEs within Togo and offers them financing based on their specific needs.
Ecobank operates the largest ATM network in Togo, with 60 machines at the last count. It has also pioneered instant credit card production, freeing up time at local branches for better customer care. Revenues from electronic payments increased by 22% compared with 2013.
The firm currently has 24 branches in Togo, and has upgraded its technology platform to allow customers to make and receive payments, for corporates to make electronic revenue collections, and to give clients access to account statements and text message alerts. This has eased the pressure on customers to physically travel to branches to make certain transactions.
There has also been an effort to attract customers of informal trade into the banking system by reducing tariffs and transactions. The bank also finances the informal economy indirectly through microfinance ventures.
Although overall profits were down by 37.9% in 2014, return on equity increased to 24.6%. Tier 1 capital rose by 6.5% and total assets expanded by 8.6%.
Tunisia: Attijari Bank Tunisia
Attijari Bank Tunisia has set itself the goal of being Tunisia’s best managed and most profitable private bank by 2018. To achieve this, the bank has adopted a global strategy that focuses on growth in its core activities – retail and corporate banking – and takes an opportunist approach to investment banking activities. The bank’s high-quality loan book will expand, with special emphasis on mortgages, and a sustained effort will be made to expand the banking network while focusing on key customer segments such as affluent individuals and small-scale entrepreneurs. The bank is also targeting Tunisians living abroad, aiming to be a regional leader in ‘immigrant banking’.
Tunisia’s recovery path from the overthrow of its autocratic regime during the Arab Spring has been a winding one, and economic growth has been patchy, but its banking sector is lively and competitive.
Net profits at Attijari Bank dropped by 10.6% in 2014, though return on equity came in at 22.1%. Tier 1 capital increased by 5.4%, and the bank’s balance sheet grew by 7.1%.
“[The past year] has been a challenging one for Attijari Bank. The bank has had to cope with a local economic environment that had a negative impact on all sectors and markets,” says Hicham Seffa, the general manager at Attijari Bank. “Regarding next year’s plan and opportunities, we believe that the Tunisian economic recovery needs driving forces and companies could lead this process. Attijari Bank is working, especially from next year, to become the market leader in this field by proposing the most attractive added value offer to companies.”
In just 20 years, Crane Bank has grown from nothing to a 45-branch Ugandan bank, with a strong retail and commercial lending service. It operates more than 100 ATMs, and owns a subsidiary bank in neighbouring Rwanda.
“Crane Bank was built on a vision to provide personalised banking services throughout Uganda. Since its inception, Crane Bank has been known for driving innovation and setting the standards within the industry. It was the first bank, in 1996, to open on Saturdays and increase opening hours,” says the bank.
Crane has spread itself across every region of Uganda, and has powered its growth strategy with a focus on technology, both in terms of customer service and as a strategic tool for gathering data on business operations. It has upgraded its internal software systems to improve customer interaction, and has enhanced its risk management practices to be compliant with the standards laid down in Basel II.
Elsewhere, it has promoted financial inclusion, a major issue in underbanked Africa. Only 30% of Uganda’s 37 million population have a bank account. “Crane Bank has developed an entry-level product to banking, known as Crane Access. This is a simple account with minimum requirements and no charges, designed to promote a banking and saving culture,” says the bank.
To promote the product further, Crane has partnered with the Rabo Bank Foundation, the UK’s Department for International Development and other international institutions. It has also partnered with Ugandan schools and universities to promote the importance of saving. In 2014, it increased net profits by 7.21% with a 16.04% return on equity.
Barclays’ Zambian subsidiary has played its part in a number of large deals in the past 18 months. In August 2015, it acted as lead arranger and bookrunner for the $828m financing of the Maamba Colleries thermal power plant project. The project involves the refurbishment of an existing coal mine and the construction of a 300-megawatt coal-fired power plant that will provide about 17% of Zambia’s installed electricity generation capacity, which will alleviate its power shortage problems.
In the agriculture sector, this year the bank also acted as joint-lead arranger and bookrunner for a $120m, five-year syndicated loan facility for Zambia Sugar, the largest sugar producer in Zambia and one of the largest in Africa.
Alongside sugar, Zambia depends a great deal on the export of hard commodities, and volatile markets this year have produced problems. “Zambia is one of largest copper producers in the world and therefore the country faced significant economic slowdown with lower commodity prices negatively impacting the economy,” says Saviour Chibiya, managing director at Barclays Bank Zambia. “In addition, an increase in competition due to new entrants in the banking industry and new regulatory policies have also necessitated changes and adjustments, and we thank our customers for their unwavering support.”
Despite these economic problems, the results for Barclays in Zambia have been good. In 2014, net profits increased by 54% on 2013, with a return on equity at 18.3%. Tier 1 capital also rose by 9%, and the bank’s overall balance sheet expanded by 13%.
On a smaller scale, it has launched an upgrade to its ATM machines that allows them to receive deposits, and has offered Zambia’s first local currency credit card.
Zimbabwe: Stanbic Bank Zimbabwe
Though Zimbabwe has recovered from its hyperinflation horrors of the late 2000s, the past few years have still been challenging for its economy. Weak growth has affected business conditions and the banking industry, an impact that Stanbic Bank Zimbabwe readily acknowledges.
“The slowdown in economic growth that prevailed in 2013 persisted into 2014, and was characterised by tight liquidity, weakening commodity prices, decline in aggregate demand, company closures and job losses. These factors led to an increase in default risk in the banking industry in Zimbabwe, compounded by declining transaction volumes and the growing cost of doing business as the economy continued to deteriorate,” says Solomon Nyanhongo, the chief financial officer at Stanbic Bank Zimbabwe.
Non-performing loans in the Zimbabwean banking industry peaked at 20% in September 2014, and closed the year at 16%. As a contrast, Stanbic’s average for 2014 was just 6%, one percentage point higher than the year before. Its other financial results were solid, too. Net profit was 13% higher than the year before, while return on equity was 27%. The bank raised Tier 1 capital by 26%, and expanded its balance sheet by 18%. The lender attributes this showing to robust credit risk management procedures, and says it has continued to offer high-quality financing to local and international corporates throughout this difficult period.
The bank also focused on expanding its reach as other, rival banks retracted theirs. In March 2015, it opened a new branch in the resort town of Hwange, where previously it had only offered its services through an ATM.
Stanbic also continued to provide financing to the agricultural sector, even as the economic squeeze affected the viability of many farming operations. Loans worth $40m were disbursed, some 16% of the bank’s overall lending portfolio.
