Ecobank Strengthens Risk Mgt to Reduce Impairment

Ecobank Transnational Incorporate (ETI) has strengthened its risk management architecture for better future performance, the Group Chief Executive Officer of ETI, Mr. Ade Ayeyemi has said.

After recording gross profit of N188 billion, it ended 2016 financial year with loss of N52 billion following provision of N221.7 billion for impairment charges on legacy loan portfolio for the financial year ended December 31, 2016.

Speaking to THISDAY on the strategies being put in place to avoid a repeat of such huge loss, Ayeyemi said the bank recognised that it could not go into the future with what got it into problem in the first instance.

“We have strengthened our risk management strategy. We have changed the processes and procedures, automate decision making to make sure that we give visibility to everybody. We have trained people who are in the forefront of the customer for early identification of the problem for early management of the account to make sure that they continue to perform and ultimately, we are to change some people. Where we identified it is a training issue, we can train, where it is a cultural issue, we coach people but where we identified there are individuals, we have changed people. All of that from the board of directors to management in various countries, we have done that. We will continue to do that,” he said.

The ETI boss disclosed that the group is in the market searching for experts, people that are very good in the risk management.

“Not just credit risk. We are in the market trying to make sure we improve our credit risk, improve our market risk and operational risk,” he stated.

ETI recorded a growth of 22.3 per cent in gross earnings to N665 billion in 2016, from N542.7 billion in 2015. Net interest income similarly rose by 25.3 per cent to N284 billion, from N226.6 billion in 2015. Profit before impairment charges stood at N188 billion, up from N146 billion.

However, the N221.7 billion impairment charges led to company to close the year with loss before tax of N33.7 billion compared with a profit before tax of N40.5 billion, while loss after tax stood at N52 billion, as against a profit after tax of N21.25 billion in 2015.

Ayeyemi had said Group revenues remained resilient despite a tough year of macro- economic headwinds including a weaker economic environment, particularly in Nigeria, and the strengthening of our reporting currency - the United States dollar – against all African currencies particularly the Nigerian Naira where 40 per cent of the group’s revenues have historically been generated.