SGBCI: Banking

The Company

Société Générale de Banques en Côte d’Ivoire (SGBCI), the largest bank in the West African Economic and Monetary Union, was created in 1962 from the local branches of France’s Société Générale with the participation of the government and several international financial partners.

The leading bank in the Ivorian banking sector with total assets of CFA1.138trn (€1.7bn), SGBCI has been listed on the stock exchange (formerly BVA) since April 1976.

At the end of 2015 SGBCI held 16% of market share in terms of customer loans and 15% in terms of customer deposits. More specifically, the bank performed well in 2015 in spite of a 2.52% decrease in net income. In fact, all the indicators were positive. Total interest income grew by 19.9% compared to 2014, driven by an improvement in interest income from corporate portfolio (+24.1%), individual portfolio (+13.8%) and loan granted to the state (+43.8%). Also, commission went up by 11.6%, and other banking income grew by 38%. Lastly, net banking income went up by 22% to stand at CFA84.1bn (€126.2m) compared to CFA68.94bn (€103.4m) in 2014. However, the net cost of risk, which deteriorated from CFA2.43bn (€3.7m) (net provision recovery) in 2014 to negative CFA4.41bn (€6.6m) in 2015 (net provision), has offset the strong operating performance.

More recently, in the first half of 2016 the bank achieved good performance both in commercial and financial terms. Net banking income increased by 15.5% to CFA46.79bn (€70.2m) due to the good performance in net interest income and net commissions. The net cost of risk improved by CFA3.45bn (€5.2m) to CFA1.35bn (€2m) in the first half of 2016 thanks to strong provision recoveries and good risk management. Consequently, net income grew by 51.7% to CFA18.43bn (€27.7m).


 Over the coming years, we expect customer deposits to grow thanks to the expansion of the bank’s branch network. Also, we forecast customer loans to increase, driven by economic growth in the country combined with the sector’s decreasing average lending rate. The bank should also remain extremely active in the agricultural sector, especially in coffee and cocoa segments.

Net banking income should grow owing to the expected growth in customer loans compounded by the improvement in commission income such as insurance products and money transfer activity. Lastly, following the net banking income trend, net income should see growth.

In term of valuation, the bank has a fair valuation with a price of CFA130,000 (€195), which represents price-to-book value of 3.46x, compared to 3.49x on the Bourse Régionale des Valeurs Mobilières.

Development Strategy

The strategy of SGBCI is to be more active in retail banking and consolidate its position in the corporate segment. To better face higher competition, the bank has decided to develop its commercial activity by hiring two new deputy managing directors to implement a new aggressive commercial policy. SGBCI also intended to open two new branches in 2016 and will open around two or three new branches per year in 2017 and 2018. In fact, with 67 branches in 2016, the bank shows strong willingness to cover the national territory. This will allow the bank to take advantage of proximity to its customers.

Moreover, SGBCI wants to develop cash management activities with the opening of a regional trading room based in Abidjan.

SGBCI decreased its dividend payout ratio from 85% to 67% in order to consolidate its equity and maintain its strong loan activities, which indicates a willingness to push the positive momentum started four years ago. In fact, since 2014 the payout ratio has been lowered by the company to 67%, while the ratio was at 85% between 2006 and 2014.