Côte d’Ivoire’s strong economy gives confidence to its banks despite challenges that include the pandemic and tougher regulation. 


Côte d’Ivoire’s banks performed strongly throughout much of the 2010s on the back of a booming economy. And although the spread of coronavirus will impact performance in 2020, banks remain bullish about opportunities in the market beyond the short term.

The third largest economy in west Africa behind Nigeria and Ghana, Côte d’Ivoire recorded some of the world’s most impressive economic growth during the 2010s, thanks to far-reaching economic reforms by the government of president Alassane Ouattara.

Post-war boo

“Since the civil war ended in 2011, the Ivorian economy has been booming,” says Aymeric Villebrun, chief executive officer at Société Générale Côte d’Ivoire, the country’s biggest retail bank. “[The country] has been one of the strongest-performing franchises of Société Générale in the world.”

Côte d’Ivoire is one of eight francophone states in west Africa that form the West African Economic and Monetary Union (WAEMU), whose central bank is the Central Bank of West African States (BCEAO by its initials in French), headquartered in Senegal. WAEMU’s banking commission is headquartered in Abidjan, Côte d’Ivoire’s main financial centre. The bloc’s eight countries use a single currency, the CFA franc, which is pegged to the euro.

At the end of 2018, Côte d’Ivoire had 27 active banks and two financial institutions of a banking nature, according to the latest figures from the BCEAO; 13 were international and 14 sub-regional. The country also had 21 microfinance institutions at the same date.

The country’s total banking assets reached CFAFr12,760bn ($21.2bn) at the end of 2018, up 15% from a year before, according to the latest figures from Ivory Coast’s Professional Association of Banks and Financial Institutions (APBEF-CI by its initials in French). This followed an 11% jump in 2017. The country’s microfinance institutions asset base stood at CFAFr373bn at the end of 2018, according to BCEAO.

The banking system’s total deposits surpassed CFAFr8350bn at the end of 2018, up from CFAFr7480bn the previous year, according to APBEF-CI. Total bank credit amounted to CFAFr7060bn at the end of 2018, up from CFAFr6280bn in 2017.

Dominant group

Five lenders dominate Côte d’Ivoire’s financial sector, accounting for roughly 60% of the banking system’s assets, with foreign players dominating the landscape. Société Générale heads the pack, with a 19% share of the retail market. The sector’s other major players are the Côte d’Ivoire subsidiary of Togo-headquartered Ecobank, and Banque Atlantique and Société Ivoirienne de Banque (SIB), controlled by Moroccan lenders BCP and Attijariwafa, respectively. NSIA Banque is the only domestically owned top five bank.

“During the past few years, annual economic growth has been around 7% or higher,” says Société Générale’s local CEO, Aymeric Villebrunin. “Our bank’s performance has reflected the strong economic expansion. The bank’s net banking income surged by 13% in 2018 and by 17% in 2017. Our lending has been expanding at around 20% a year during the past three years.”

The bank’s Ivorian franchise – its second most important in the African region after Morocco – had a total net business income of €223m in 2019. Total risk-weighted assets stood at €2.62bn at the end of 2019, while its total credit portfolio amounted to €2.31bn and its total deposits added up to €2.51bn, with a loan-to-deposit ratio of 92%. In 2019, return on assets in the Ivorian market stood at 2.35%, with a 27.9% return on equity. 

The pandemic is likely to take the shine off this year’s numbers, however, says Mr Villebrunin. “Undoubtedly, Covid-19 will have a big impact on the Ivorian economy this year and on our bank’s performance in the country, although it is still too early to quantify the full effects. Our clients in the hospitality sector have been impacted significantly.”

Reinstating branches

Société Générale – which will celebrate 80 years in the Ivory Coast in 2021 – has a network of 75 branches nationwide and has opened three new branches since the start of 2020. It has around 350,000 clients in total. “Société Générale closed many of its branches in the countryside during the civil war period,” says Mr Villebrun. “However, we are now in the process of reopening some of them in rural areas, as we have been experiencing a lot of demand for banking services in those places.”

The bank’s expanding branch footprint has been complemented by its YUP mobile money product. The agent-based service first rolled out in Côte d’Ivoire and Senegal in 2017, before being launched across five other West African markets the following year.

YUP had more than 300,000 open wallets and 4500 agents across those countries by the end of 2018. The bank’s ambition is to open 1m wallets by the end of 2020 and have in place another 8000 agents by the end of the year.

“Africa is inventing the future of banking,” says Alexandre Maymat, Société Générale head of global transaction and payment services. “The YUP project’s key ambition is to be a part of this revolution by offering a simple transactional tool that’s accessible to all residents of the countries in which Société Générale does business, be they individuals or corporations, group customers, account holders with our competitors, or customers without bank accounts.”

New entrants

Côte d’Ivoire’s rapidly growing economy has seen six new banking institutions enter the Ivorian market between 2014 and 2018, including Senegal’s Banque Régionale de Marchés (BRM), Banque d’Abidjan (a joint venture between BDK Financial Group of Luxembourg and La Poste de Côte d’Ivoire) and Standard Bank subsidiary Stanbic Bank.

“Stanbic would like to become a major player in the west African market,” says Joël Touré, chief executive officer at Stanbic Bank in Côte d’Ivoire. “We are one of Africa’s leading financial institutions and it would be an incomplete story to say that you are a big pan-regional player until you have a presence in a significant country like Ivory Coast and the WAEMU region. We are exploring our expansion plans within the zone after Ivory Coast, and Senegal is one of the countries we are looking at establishing at the earliest occasion.

“Our strategy is to focus on the corporate and investment banking market at the moment. Abidjan provides a strategic location in west Africa and we want to become the bank of choice for multinationals that operate in the [WAEMU] region. We would also like to support the government’s strategic projects and also all the major players in the economy with their banking needs.”

Mansa Bank – which is owned by west African investors – is one of the latest entrants into the Ivorian market. It received its banking licence in February 2019 and became operational in February 2020, just before the Covid-19 crisis hit the country. 

“First and foremost, we want to be a corporate bank,” says El-Hassana Kaba, Mansa Bank founder and chief executive officer. “We would like to serve the biggest local companies and help to create ‘African champions’: firms that are highly successful across the west African region. This is our first step but in the future we would like to enter the Senegalese market, and eventually Ghana and Nigeria as well. We place a great deal of emphasis on innovation; we want to apply the latest technological solutions to digital banking, commodity financing and cash management, for example.”

Abidjan is emerging as one of west Africa’s main tech hubs and a large proportion of Mansa’s clients are in the fintech sector. Mobile banking is central to the bank’s strategy and it would like to have 3000 banking agents in place by the end of 2020 and 30,000 by the end of 2025.

Underbanked population

Despite the growth of the banking sector, financial inclusion remains a pressing concern within Côte d’Ivoire. The number of bank accounts in the country stood at just 3.91m at the end of 2018 according to BCEAO, out of a population of 25 million. Despite the growth in the sector since then, only 20% of the population had a bank account as of mid-2020, according to Société Générale.

The benefits of the country’s economic growth in the 2010s has yet to be shared by the population; the poverty rate stood at 46.3% in the government’s most recent Living Standards Monitoring Survey. Widespread poverty, low banking penetration and a lack of credit information has led lending activity to focus on a small number of large private conglomerates and state-owned enterprises.

The concentration ratio of loans to the top-five borrowers relative to capital was 99% at the end of 2017, according to the IMF (an improvement from 127% at the end of 2016 but still high). The inherent risk in maintaining such high ratios while lending to a smaller number of entities was exposed by the bankruptcy of SAF-Cacao, the country’s largest cocoa exporter, following a fall in prices in late 2017. The company was liquidated by a local court in July 2018, with outstanding debts of CFAFr150bn owed to some of the country’s largest banks.

Tightening requirements

WAEMU authorities began introducing tighter credit concentration limits in January 2018, with the gradual introduction of Basel II and Basel III standards, as agreed by the bloc in June 2016. From the beginning of 2018, banks were permitted to lend 65% of their capital to a single entity, down from 75% previously. This figure is set to be gradually lowered to 25% by 2022. NPL ratios have subsequently improved from 13% in 2013 to 9.3% in 2018, according to the IMF.

The main plank of the reform for the region’s lenders was the increase in the minimum capital requirement from 8% of total assets to 9% of risk-weighted assets, comprising of a minimum 6% Tier 1 capital. Since January 2018, all banks across the region must meet a minimum capital requirement of CFAFr10bn.

The Ivorian banking system’s liquid assets represented 46% of total deposits at the end of 2018 and the capital adequacy ratio increased to 9.6%, above the new Basel II/III regulatory norm of 8.625% for 2018 and 9.5% for 2019, according to the IMF. “While still strong, credit to the economy has moderated from 11.3% year-on-year at end-2018 to 7.4% in August 2019, reflecting banks’ adjustment to higher regulatory norms and the government’s heavier reliance on domestic bank financing compared to 2018,” it said in a November 2019 report.

The new capital requirements, coupled with greater restrictions on credit concentration, have put pressure on lenders outside the top five, with around one fifth of banks remaining relatively illiquid or undercapitalised as of late 2019, according to the IMF. “The persistence of a small and non-systemic minority of banks – including public banks – that do not comply with prudential ratios, introduces fragilities that can hamper the confidence in the overall banking sector,” it warned in late 2019. “This situation should be corrected quickly.”

Consolidation and privatisation

The impact of tightening prudential ratios on smaller banks raises the prospect of further consolidation, following a series of privatisation moves in the past five years that have greatly reduced the role of the state in the sector.

After selling a 51% stake in SIB to Morocco’s Attijariwafa in 2009, the government sold more shares in the lender via an initial public offering (IPO) in 2016, leaving it with a 5% stake. The following year saw the state sell its 10% stake in NSIA Banque via an IPO, and sell a 51% stake in Banque de l’Habitat de Côte d’Ivoire (BHCI) to Westbridge Mortgage Real Estate Investment Trust of Canada.

However in November 2019, local media reported that the government, with Westbridge’s agreement, would retake control of the bank, with a view to finding an alternative buyer for the lender. Westbridge was reported to be considering referring the matter to the World Bank’s International Center for Settlement of Investment Disputes. “The state has taken control and is working to resolve liquidity issues so that the bank can have enough resources to deal with its day-to-day operations,” said Moussa Sanogo, secretary of state to the prime minister in charge of the ministry of budget and state holdings.

In 2015, the government announced the privatisation of another state-owned lender, Versus Bank, which it had controlled since 2009, increasing its capital fourfold in June 2018. Yet the privatisation of the bank, owned by the government and the general state pension fund, has been bogged down by litigation between minority shareholders.

In October 2018, the Ivorian government signalled its plans to exit from two publicly owned banks, Caisse Nationale des Caisses d’Epargne (CNCE) – which changed its name to Banque Populaire de Côte d’Ivoire in November 2019 – and Banque Nationale d’Investissement (BNI), through the issuance of new shares that would also enable them meet capital requirements enforced by the Central Bank.

CNCE, which has struggled with losses for many years, was placed under administration by BCEAO in 2015. The Ivorian state injected CFAFr53bn into the bank – which is wholly owned by the state – in 2017 to improve its solvency. In December 2019, the state also increased the share capital of BNI by CFAFr4.8bn. The Ivorian state now holds 81% of the share capital while 19% is held by CNPS, the national pension fund. Like Versus, both CNCE and BNI had yet to attract a serious buyer at time of writing.


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