REGIONAL PLAYER

Nigeria 2015 | FINANCE | INTERVIEW

TBY talks to Jibril Aku, Managing Director of Ecobank Nigeria, on joining the international loan market, making the most of a recognizable brand name, and promoting financial inclusion.

Jibril Aku
BIOGRAPHY
Jibril Aku studied Business Administration in Banking and Finance at the Ahmadu Bello University where he graduated with Honors in 1986. He has also received a Diploma in Insurance from the Institute of Administration, ABU Zaria and Masters of Business Administration, from the University of Benin. Aku is the Managing Director of Ecobank Nigeria, a position he has held since March 2010. Prior to his appointment as Managing Director in 2010, he was Executive Director of Treasury and Financial Institutions from 2006. Before joining Ecobank Nigeria, Aku served as Acting Treasurer of Citibank Tanzania, and as Country Treasurer of Citibank Nigeria, having started at United Bank for Africa. He has more than 35 years' banking experience.

Ecobank has secured a spot in UK Export Finance's project to finance a £3 billion Direct Lending Facility to UK Exporters. What is the significance of this achievement for Ecobank's activities?

Ecobank was appointed alongside 19 international banks as partner banks to UKEF, and is its sole local partner in Nigeria. The objective of the partnership is to help facilitate the direct facility, which UKEF recently established for the purpose of providing loan facilities to borrowers beyond the UK in order to finance payments due in respect of goods and services supplied by persons with business inside and outside the UK. The appointment of Ecobank as the sole Nigerian partner bank will, therefore, enable and facilitate trade between the UK and Nigeria through the UKEF in Nigeria. Earlier in 2014, we signed a $20 million line of credit for importers with the Brazilian Development Bank as a result of the significant interest of Brazilian companies in the construction and oil and gas industries in Nigeria. The line of credit will provide special funding needs to customers as well as prospective customers importing goods into Nigeria from Brazil. In addition, an Export Credit Agency financing facility that gives Ecobank Nigeria access to a line of credit of up to $200 million from various ECAs in Western Europe was also recently signed. Indeed trade facilitation between countries is really one of the core components of our activities with the objective of realizing our vision of contributing to the economic development of Africa.

You recently signed a $150-million term loan facility, marking Ecobank Nigeria's entry to the international loan market. What are your thoughts on this?

Demand is coming from local investors buying into the asset diversification of the government, particularly in the energy sector. Shell and Chevron have mostly been selling their onshore fields to local investors. The banks provided the debt portion of the funding, because the cash flows of these oil blocks have been proven. It is just a matter of how quickly they can raise production and they can average out the term of the loan. We see an average maturity of three to five years for the loan and the initial loan is seven years in duration. Those assets programs drove the liability strategy of going to the loans market and to the European market to get more stable funds.

Could you shed some light on how your asset base and earnings have increased in 2014?

The bank's total asset base has continued to grow steadily over the years following the successful merger with legacy Oceanic Bank in December 2011. Total assets pre-merger were at NGN443.9 billion ($2.9 billion) in 2010, and this has since grown to NGN1,325.3 billion ($8.4 billion) in 2012, NGN1,460.8 billion ($9.1 billion) by 2013, and stands at NGN1,555.6 billion ($9.6 billion) as of 3Q2014. This growth has been due to an increase in business across all segments. Leveraging our robust risk management framework, the bank has cautiously grown its risk asset portfolio by over 200%, from a pre-merger position in 2010 of NGN225.3 billion ($1.49 billion) to a year-end 2013 position of NGN625.9 billion ($3.9 billion). The bank's gross earnings have also improved significantly, growing by over 200% from NGN58.3 billion ($400 million) in 2010 to NGN 176.7 billion ($1.1 billion) at the end of 2013. Leveraging on its almost 500 retail outlets, the bank has continued to deliver value to over 7 million customers nationwide.

Could you tell us about the competitive advantage that Ecobank has over other banks operating in Nigeria?

We define our customers by two broad categories: a portfolio of regional customers, and a portfolio of domestic (local) customers. To our regional customers, we offer platforms that allow them to transact across the various geographies we are present in. We offer a good regional solution for all these problems, which is different from how we handle local customers. As a regional player in the African market, we hold the number one position. The regional market provides almost 20% of our revenue. To our domestic bank customers, the banking business is all about service. We have a good brand name and high level of integrity and we continue to improve on our technology platform to effectively compete domestically. We have one of the largest branch networks in Nigeria providing services to all segments of the domestic market. We are currently sixth in terms of total assets with the clear objective of being third in the shortest possible time.

A large share of the Nigerian population remains unbanked. How are you trying to promote financial inclusion?

Our acquisition of Oceanic Bank included their microfinance business of 1.1 million customers and $150 million of assets in deposits and just $12 million of loans. The microfinance business is geared toward financial inclusion. In line with the Central Bank of Nigeria's (CBN's) Financial Inclusion initiative, Ecobank has introduced a number of novel products aimed at providing Nigerians with direct access to basic financial services. Such initiatives include free access to the bank's mobile banking platform, and the setting up of mobile money agents to facilitate the transfer and receipt of money across the country, regardless of location. We are committed to being a strong player in ensuring the achievement of high levels of financial inclusion within Nigeria. We have set up over 1,500 ATMs, and over 13,000 POS at locations across Nigeria, with around 500 branches.

What is your growth strategy for the next five years?

We aspire to be one of the top three banks in terms of asset base, which will translate to one of the top in terms of profitability. With our growth rate we believe that this is achievable within the next five years. We have identified infrastructure development, agriculture, and oil and gas as the sectors that will open up as areas of strong growth. Given our pan-African role, we attract international companies investing in various areas of development coming into Nigeria as partners. Our continuous technological innovation enables us to compete and provide excellent banking services, which would endear more customers to the bank. We are well positioned to continue to attracting new international, as well as local, customers.