Ecobank gets Sh46bn capital as focus put on loan recovery

Dar es Salaam. Ecobank Tanzania has changed its business strategy to recover from rising nonperforming loans (NPLs).

However, it assured the public that the change would not disrupt the bank’s operations.

The bank said it received $21 million (Sh46 billion) capital injection from shareholders as part of the strategies to sustain its business in Tanzania while taking other measures to recover the bad loans.

Ecobank is one of the commercial banks with the highest level of the NPLs ratios.

The bank’s ratio of NPLs to total gross loans reached 57 per cent at the end of the first quarter of 2017 compared with 38 per cent at the end of 2016 while the country’s market average is estimated at 10 per cent.

The bank’s NPLs reached Sh87.54 billion during the first quarter this year from Sh60.63 billion as of last December, according to the bank’s quarterly financial statement.

The bank said it will continue issuing loans to customers but the approach and strategy has changed to recover from the current situation. Ecobank acting managing director Raphael Benedict said yesterday that the bank was also talking to borrowers to see how it can help them repay the loans and may consider extending the repayment period.

“We have made significant progress in recovering the number of loans over the past three months and we believe the systems we have put in place will yield more positive results within the next few months.

However, that does not mean Ecobank may suspend operations. We are still committed to Tanzania and the capital injection means shareholders are still optimistic to business performance and committed to Tanzania.”

The decline in cargo at the Dar es Salaam Port has hurt transporters. Many of those who borrowed funds to increase their fleet are reported to be unable to repay bank loans as business has dwindled.

As a result, NPLs remained high.