(Ecofin Agency) - Société Ivoirienne de Banque (SIB) has reported strong financial results for 2023, but also disclosed a significant allocation of $3.25 million (CFA2 billion) to cover unspecified "operational risks."

This precautionary measure raised the bank's risk-related expenses to an unprecedented CFA8 billion. The exact nature of these risks was not detailed, leaving room for speculation that they could range from simple procedural errors to more systemic operational failures. In discussing the period’s performance, the bank pointed to challenges posed by a "difficult economic environment," though details were not provided.

Despite these challenges, SIB, which is 75% owned by Moroccan group Attijariwafa Bank and listed on the Abidjan-based Regional Securities Exchange (BRVM), has continued its aggressive approach in the credit market, albeit with increased prudence. The bank's financial operations grew, with customer loans increasing by over 8% to CFA1,442.7 billion. For 2023, the bank's total lending represented 104% of its resources, a slight reduction from 107.3% in 2022.

The bank's working capital needs, which measure the timing gap between cash inflows and outflows, improved significantly, decreasing to CFA60.7 billion from nearly CFA100 billion in 2022. This indicates enhanced capability to cover its financial obligations, with equity reaching CFA164 billion by the end of December 2023.

Nevertheless, SIB faces ongoing challenges. It must balance robust credit growth and revenue generation with short-term liabilities, such as addressing a nearly 464% surge in interbank debt repayment obligations. The bank might also need to boost its capital to CFA20 billion to comply with new regulations set by the Central Bank of West African States (BCEAO) while maintaining its substantial dividend policy, which has seen only a slight reduction in 2023.

On a performance level, the bank's strategic focus on financing the economy of Côte d'Ivoire has paid off, with a 14% increase in net banking income to nearly CFA96 billion. This rise was primarily fueled by a 12% increase in market activities and a significant 23.5% increase in commission revenues.

Additionally, the bank's efforts to optimize costs in 2023 were successful, leading to a 261 basis point reduction in the cost-to-income ratio to 43.1%, despite an 8% rise in general expenses. Coupled with revenue growth, this approach to cost management resulted in a 20% increase in gross operating income, reaching nearly CFA57 billion. Despite the challenging environment, the bank managed to post a 9% increase in net profit, totaling CFA43.5 billion. Investors are expected to pay close attention to the upcoming presentation of results, particularly for insights that go beyond the basic figures.