(Ecofin Agency) - The banking group seems to be playing safe despite a positive net result and banking income up 3% and 6% respectively. The prudential stance may be due to its significantly lower cash position and unrealized losses. 

At its annual general meeting, Ecobank Transnational Incorporated suggested the distribution of a $0.11 per share dividend for the 2022 fiscal year. The proposed dividend is down by 31.25% from the $0.16 per share it distributed for the 2021 fiscal year. 

Yet, in 2022, several of the banking group’s indicators improved, including its net banking income, which rose by 6% to $1.8 billion. Reported net financial income, although impacted by 43% additional tax charges, was up 3% to $366.7 billion.

The banking group provided no comment on what could explain the lower dividend. However, an analysis of certain indicators could provide some hints. The first hypothesis is the cash position, which was down by $227.888.7 million in 2021 (despite the group spending twice as much to acquire public securities).

Also, the group declared an increase in unrealized losses, which could affect the net result if they were to be realized. On the one hand, foreign currency exchange difference caused unrealized losses of $386.1 million on all its operations. At the same time, the aggregate value of certain debt instruments in which the group has invested declined by $112.5 million.

Taking these and other additional items into account, the group-wide consolidated net book result shows a loss of $61.2 million, compared to a consolidated book profit of $91.3 million in 2021. This is not that surprising. Indeed, the group operates in environments where currencies have come under severe pressure in 2022, notably in Nigeria and Ghana, but also in some East African countries.

The reaction of small institutional and individual investors remains to be seen. On the WAEMU stock exchange BRVM, the group’s stock has made almost zero gain since January 2023 due to a 5% decline in March 2023, which erased the 5.3% gain recorded last January.