The UEMOA banking system, which has experienced accelerated development over the last five years with average annual growth of 13% of the total sector balance sheet, has remained globally stable and profitable. Nonetheless, there are still pockets of vulnerability. Indeed, some banks are still undercapitalised and several small banks still do not have the mandatory minimum share capital of CFA10bn (€15m) as at end-2017. In addition, activity in the UEMOA zone has been strongly impacted by monetary tightening and a fall of the reserve requirement ratio from 5% to 3%, somewhat allowing a quantitative easing.
Since 2016 the central bank had doubled the difference between its directory rate and the marginal facility rate (at 200 basis points). The bank has limited banks’ access to its credit facility, equal to twice their regulatory capital. Although these actions have increased the interbank market, they have only slightly reduced banks’ appetite for government securities. By mid-2018 banks were highly exposed to the top-five UEMOA borrowers, and unproductive debt represented 15% of total loans, of which two-third are provisioned.
BRVM
The banking sector of the Bourse Régionale des Valeurs Mobilières (BRVM) comprises 14 banks, namely BICICI, Société Générale de Banques en Côte d’Ivoire (SGBCI), the six affiliates of the Moroccan BMCE Bank of Africa (BOA) group (BOA Benin, BOA – Côte d’Ivoire [BOA-CI], BOA Mali, BOA Senegal, BOA Niger and BOA Burkina), Société Ivoirienne de Banque (SIB), a subsidiary of Moroccan banking group Attijarawafa, SAFCA, two bank holdings, Burkina Faso’s Coris Bank International (CBI) and Togo’s Ecobank and 2017 entrants: Ecobank CI and NSIA Banque.
Despite the economic disparities observed in the UEMOA, the banking sector has remained very efficient with the exception of four banks. These banks saw a decline in their profit margin in 2017, including the holding Ecobank (-211%), due to the economic recession in Nigeria, BOA Benin (-8.21%), BOA Mali (-19.96%) and BICICI (-22.91%). Nonetheless, the sector recorded appreciable earnings growth in the other 10 banks.
In 2017 the sector recorded a near stock variation balance, with a record performance by Ecobank CI (48.4%). Unsurprisingly, ETIT posted the worst performance (-32%) over the year given the decline in its strongly weighted activity in its Nigerian subsidiary.
The subsidiaries of BOA have all showed losses with BOA-CI losing 64.8% annually on the stock market although the rate of depreciation in the quality of its credit portfolio has been kept stable. It should be noted that BOA Niger and BOA Mali have the most attractive dividend yields with 7.63% and 7.15%, respectively. Overall, the finance sector index fell by 10.46% to 87.56 points between 2016 and 2017.
Due to strong sales, the value and volume of transactions in 2017 recorded significant gains compared to 2016, at 16.7% to more than 203m securities and 1% to CFA87.4bn (€131m), or nearly 38.2% of the amount traded on the market. Sector capitalisation stood at CFA2.5trn (€3.7bn) at end-2017, down 8.94% from 2016.
With the exception of SAFCA – which posted a deficit result at the end of FY 2017 – the other players in the sector, as a whole, distributed dividends for the year 2016: BICICI with a unit dividend, net of CFA277 (€0.42); BOA Benin (CFA447) [€0.67]; BOA Burkina Faso (CFA347) [€0.52]; BOA-CI (CFA274) [€0.41]; BOA Mali (CFA372) [€0.56]; BOA Niger (CFA378) [€0.57]; BOA Senegal (CFA50) [€0.08]; CBI (CFA224) [€0.34]; ETIT ($1); SGBCI (CFA584) [€0.88]; and SIB (CFA855) [€1.28].
Outlook
The UEMOA’s banking sector outlook remains favourable for the next five years despite pressures from the New Accounting Plan and implementation of Basel I and II. The complementary measures regarding capital and revision of debt maturity from six months to three months are likely to dilute results of some credit institutions because of higher provisions, reducing margin levels with the corollary the medium-term drop in profits of funds of the union’s banks.
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