Ecobank’s lot to improve as gamble pays off

By Jackson Okoth

Despite being slowed down by bad loans inherited after buying mortgage lender East African Building Society (EABS), Ecobank Kenya remains unrelentless in its plan to outdo the competition in the booming banking business.

"The bank’s performance has been less than impressive in the past. This is because of acquisition related costs and legacy issues, including making huge provisions for bad loans," Tony Okpanachi, Ecobank Kenya’s chief executive officer, told the Standard yesterday.

After receiving approval from Central Bank of Kenya two years ago, Ecobank Transnational Incorporated (ETI) acquired 75 per cent of EABS Bank, and renamed it Ecobank Kenya.

Expanded network

During this period, the bank recruited and trained staff, expanded its branch network, set up its IT and banking platforms, and cleaned up its loan book.

"Although all these issues have slowed down our debut, we will begin to see a significant performance and profitability of the bank this year," said Okpanachi.

The recovery of a large portion of its non-performing loans is still ongoing, although a slow moving court process has frustrated this process.

With a network of 17 branches, Ecobank Kenya intends to increase its network to 24 branches by close of the year.

The bank is also targeting the small and medium sized enterprises (SMEs), even as competition in the retail segment heats up. It hopes to compete with Fina, Co-operative, KCB and Equity banks, dominant players in the retail segment.

"We have realised there is a shortage of long-term funds, and we intend to partner with development banks to provide these facilities," said Okpanachi.

Ecobank is among banks expected to benefit from agency banking to increase their footprints.

third party agents

At the end of January, the Finance Act 2009 became operational, allowing third party agents to operate as banks

"The brick and mortar branches cost money. We are already taking to agents to increase our presence in the rural areas," said Okpanachi.

Its parent, ETI, pumped an estimated Sh1.140 billion ($15 million) in the Kenyan business last year and is expected to increase this investment.