Ecobank's value-creating subsidiaries rise to 25 as profitability improves across Africa

Finance

Thursday, 04 June 2026 14:23

Ecobank's value-creating subsidiaries rise to 25 as profitability improves across Africa

(Togo First) - Ecobank is proposing its first dividend in three years, a $40 million payout to its 640,000 shareholders, as a growing number of its African subsidiaries earn returns above their cost of equity.

The pan-African banking group announced on Wednesday that 25 of its 34 African subsidiaries now generate returns that exceed their cost of equity, up from about 15 three to four years ago, according to Chief Financial Officer Ayo Adepoju. The disclosure came in Lomé on the sidelines of the 38th annual general meeting of Ecobank Transnational Incorporated (ETI), the group's parent company, during a press conference held after shareholders approved statutory resolutions.

Responding to a question from Ecofin Agency on subsidiary profitability, Adepoju said that only around 15 countries had been generating returns above their cost of equity three to four years ago, compared with about 25 today. He added that the improvement in subsidiary returns benefits the bank by helping offset the impact of exchange-rate fluctuations.

The cost of equity represents the minimum return shareholders require in exchange for the risk associated with investing in a given country. A subsidiary that fails to earn its cost of equity may report an accounting profit while eroding economic value for the group.

According to Ecobank’s 2025 annual report, published on May 20, the threshold ranges from 16.47% to 30% depending on the market, reflecting country-specific risk premiums.

Uneven profitability across markets

Nine subsidiaries remain below the economic value creation threshold. The annual report does not identify them but cites the need to “re-energize Nigeria and subscale franchises.”

Ecobank Nigeria reported a pre-tax loss of $31 million in 2025 after the Central Bank of Nigeria (CBN) ended a regulatory forbearance arrangement covering certain loans in its oil and gas portfolio.

The group also sold its Mozambique subsidiary in 2025 to Malawian lender FDH Bank Plc, ending more than a decade of operations in the country. It has made sustainable profitability a core objective of its “Growth, Transformation and Returns” strategy.

Ecobank also announced a $40 million dividend for the 2025 financial year, its first since 2022. According to the annual report, the group is targeting a cost of risk of between 250 and 350 basis points in 2026, down from 500 basis points in 2025.

Shareholders also elected Cathia Lawson Hall, a Togolese-born investment banker and former head of African investment banking at Société Générale, to the board of directors.

Ecobank, whose parent company has been headquartered in Lomé since its founding on Oct. 3, 1985, with the backing of the Economic Community of West African States (ECOWAS), operates in 34 African countries and serves 30 million customers and more than 640,000 shareholders.

The group reported a 21% increase in pre-tax profit to $801 million in 2025.

Fiacre E. Kakpo

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