(Ecofin Agency) - With a generous distribution policy and consistently positive profitability, SGCI maintains its leadership position in Côte d'Ivoire. However, the rise in risk costs, margin pressure, and increased competition are setting a new pace for its growth.

Société Générale Côte d'Ivoire (SGCI) reported a record net profit of CFA101.2 billion (about $159 million) in 2024. The bank has reinforced its policy of rewarding shareholders, distributing over 57% of its profits. While the dividend per share rose by 8.4% to CFA1,863, the bank’s net banking income showed slower growth, and profitability is being challenged by a more competitive market. Here’s a breakdown of the numbers and trends shaping the future of SGCI, the Ivorian branch of the French banking group.

Rising Dividends to Attract Investors

SGCI has increased its payout ratio by 2.25 percentage points, positioning itself as one of the most generous banks in the region. Over the past five years, its dividend has surged 4.5 times, from CFA368.3 in 2020 to CFA1,863 in 2024—far outpacing the net profit growth of 108% over the same period. This signals strong returns for shareholders, especially as SGCI’s market capitalization on the regional stock exchange (BRVM) now exceeds CFA690 billion. With one of the highest dividend yields on the BRVM, the bank strengthens its reputation as a safe haven for investors seeking returns.

This strategy is well thought out. In a time when investors closely monitor the profitability of financial institutions, SGCI is focusing on boosting its market attractiveness. Its earnings per share (EPS) continued to rise, reaching CFA3,254 in 2024, a 4.1% increase from the previous year. For comparison, it was CFA2,167 in 2021 and CFA3,125 in 2023.

Growth Slows After Years of Rapid Expansion

While SGCI’s 2024 results remain positive, growth has slowed after three particularly strong years. The bank’s net banking income (NBI), which measures its revenue, grew by just 3.9% to CFA263.2 billion. This performance lags behind the average annual growth rate of 12.2% from 2020 to 2023. Notably, NBI jumped 17.8% in 2023 and 13.7% in 2022.

This slowdown in revenue growth can be attributed to several factors. The net interest margin, the key component of NBI, rose by 12%, though it faced pressure due to a volatile interest rate environment and intense competition in the credit market. Additionally, net commission income, which represented 34.8% of NBI in 2023, fell by 8% year-on-year.

Looking ahead, SGCI hopes to grow its commission income in 2025 by leveraging rare market expertise and the advantages of being part of the Société Générale group, particularly in areas like structured finance, trading, and trade finance.

SGCI also significantly increased its investments in bonds and other fixed-income securities in 2024. The portfolio grew by CFA10.3 billion in 2023 to CFA64.5 billion in 2024, marking a sixfold increase in just one year.

Meanwhile, operating profit grew by 10.7% to CFA163.5 billion, helped by tight control over operating costs. General expenses, which had been steadily rising in previous years, decreased by 5.6% to CFA99.7 billion. This led to an improvement in the efficiency ratio, from 41.7% in 2023 to 37.9% in 2024. These productivity gains are a result of continuous process optimization and a faster rollout of digital banking services. SGCI remains the market leader in Côte d'Ivoire with 20% of the market share in loans and 16% in deposits.

Rising Risk Costs Reflecting Worsening Credit Quality

One of SGCI’s major challenges is the deterioration of its loan portfolio. In 2024, the cost of risk jumped by 31% to CFA36.2 billion, following a 47.9% increase in 2023. This trend is driven by a rise in non-performing loans (NPLs), which climbed from 6.8% to 7.5% over the past year.

This situation has a dual impact on the bank’s results. First, the increase in provisions reduces net profitability, forcing the bank to dedicate a larger share of its earnings to covering risks. Second, the lower NPL coverage ratio, which fell from 95% in 2023 to 84% in 2024, shows that SGCI is now provisioning less for bad debts relative to their total amount, a strategy that could prove risky if economic conditions worsen. Despite projected Ivorian GDP growth of 6.5% in 2024, liquidity tensions and inflationary pressures have weighed on the solvency of both businesses and households.

Liquidity Pressure and Slowing Deposit Growth

Another trend to watch is the slowdown in deposit growth. In 2024, customer deposits rose by just 1.2% to CFA2,747.5 billion, compared to +8.2% in 2023 and +6.7% in 2022.

To offset this slower deposit growth, SGCI turned to more interbank financing, increasing its interbank liabilities by 55.7% to CFA262.5 billion. While this adjustment ensures short-term liquidity, it raises the cost of refinancing, especially as overall access costs to the interbank market reached 6-7% last year, according to BCEAO data. Meanwhile, at the central bank’s weekly window, short-term borrowing costs were around 5.5%.

On the other hand, the bank’s loan portfolio continued to grow, increasing by 3.3% to CFA2,474.6 billion. As a result, the Loan-to-Deposit Ratio (LDR) reached 90%, up from 88.2% in 2023, indicating that the bank is lending more despite a less liquid market.

Intensifying Competition

The Ivorian banking market is becoming highly competitive, with regional and pan-African banks challenging the local subsidiaries of major French groups. Banks like Coris Bank International, NSIA Banque, Ecobank, SIB, and BOA Côte d'Ivoire are gaining market share, particularly in the SME and retail segments. These banks continue to expand by offering aggressive loan rates and digital solutions tailored to the increasingly demanding customer base.

At the same time, fintech companies like Djamo, Julaya, and Wave are capturing a growing share of payments and mobile savings. This shift challenges the traditional banking model, pushing SGCI to accelerate its digitalization and innovate to retain its customer base.

Fintech and mobile payment operators are continuing to expand, eating into segments once dominated by traditional banks, especially in payments and microcredit.