Posted on Tuesday, 12 August 2014 14:41

Banking: A cautious year leaves an Ivorian bank struggling

By Baudelaire Mieu in Abidjan

SGBCI plans to ramp up its development programme to recover lost ground in 2014. Photo©Nabil ZorkotSGBCI, Côte d'Ivoire's largest bank has attributed its fall in revenue to prudence over sub-prime loans, but it must square up to the advancing competition.

On 21 May, the lobby at the headquarters of Société Générale de Banques en Côte d'Ivoire (SGBCI) was transformed into an entertainment arena to celebrate the 150th anniversary of its French parent company, Société Générale.

The festivities were somewhat dulled, however, by SGBCI's decline in net income in 2013. Alexandre Maymat, head of the Africa/ Asia/Mediterranean Basin & Overseas region, had arrived from Paris to give a boost to morale.

The annual general meeting held five days later approved the balance sheet for the previous year. SGBCI, Côte d'Ivoire's largest bank (with 40% of the country's civil servants on its books), saw revenue plummet by 44% in 2013, to stand at 13bn CFA francs ($27m).

Around the same time, Banque Internationale pour le Commerce et l'Industrie de la Côte d'Ivoire (BICICI), the subsidiary of another French group, BNP Paribas, saw its net profits skyrocket by 77% to 9bn CFA francs.

Blip on the bourse

The drop in SGBCI's net profits even sent a wave of panic through the Bourse Régionale des Valeurs Mobilières (BRVM) in Abidjan, causing share prices to fall between the end of May and early June. However, the market quickly recovered, with shares reaching 73,000 CFA francs on 18 June.

"This loss is not of major concern to us, considering the stable growth in net banking income from 59.9bn to 60.7bn CFA francs between 2012 and 2013," said a source close to the bank's management.

Total assets have also progressed – from a little over 8% to 865.4bn CFA francs in 2013. "The decline in earnings is a result of the prudent approach we adopted to fully fund potential risks identified by the banking commission," said an internal source.

After an audit in the second half of 2013, the West African Economic and Monetary Union regulator advised the bank to cover its operational risks, relating in particular to potentially unproductive business loans.

SGBCI has therefore made provision for 11.4bn CFA francs in the books of the Banque Centrale des Etats de l'Afrique de l'Ouest, compared to only 18m CFA francs in 2012.

Even if SGBCI attributes the decline in profits to operational risks, it has lost ground to competitors such as Ecobank. In personal and commerical loans, which SGBCI had dominated up to that point, it was overtaken last year by the local subsidiary of the pan-African group. Ecobank granted loans worth 436bn CFA francs, almost 10bn more than SGBCI.

SGBCI also suffered some social upheavals in the second half of 2013, which disrupted its operations. Hubert de Saint-Jean, who was appointed to head the bank in September, had to put in place a new management team to help it regain momentum.

He recruited two deputy general managers: Harold Coffi, formerly of BIAO Côte d'Ivoire, and Bassirou Diagne, of Société Générale de Banques au Sénégal.

To appease employees, management approved some salary increases, bringing the bank's operating ratio to 61% against 54% previously (the average for the sector is around 70%).

Branch roll-out

Caught up in conflict resolution and management restructuring, the group's development programme in Côte d'Ivoire stalled. In 2013, only 3.7bn CFA francs of the 7.6bn budgeted were allocated to it.

The bank has said that the opening of new branches will resume, taking the number from the current 67 to 80 by the end of 2015, and that business and personal loans will recommence.

The bank is putting together a 75bn CFA franc loan for the Société Ivoirien de Raffinage to enable the state-owned company to secure its supply of crude oil. But in a market as competitive as Côte d'Ivoire these good intentions are not necessarily a guarantee for success.

And Ecobank and BNP Paribas, as well as Bank of Africa, Banque Atlantique and Attijariwafa Bank, are among the challengers who don't intend to lag behind. ●


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