Page 17 - Ecobank Gambia Annual Report 2020

Financial Statements & Annual Report
Managing Director’s address
Dear Shareholders,
I would like to welcome you all to the 12th Annual General
Meeting of Ecobank Gambia Ltd. and to present to you the
financial results of the Bank for the year ended 31st December
2020.
Ecobank Gambia again posted a strong financial
performance for the period under review, as the bank
recorded year-on-year growth in both profits and balance
sheet. This is against the backdrop of zero economic
growth projected for The Gambia in 2020 by the IMF,
mainly attributed to the fall-out of the Covid-19 pandemic.
MACROECONOMIC OVERVIEW
The Gambian economy has been significantly affected
by the COVID-19 pandemic. Based on the International
Monetary Fund’s (IMF) Report (April, 2021), the growth of
the Gambian economy is estimated to have decelerated
from 6.1 percent in 2019 to zero percent in 2020, due
primarily to a sharp decline of the tourism sector. The full December 2020, 2.8 percent higher than the 2019 ratio
impact was partly reduced by good agricultural production
and strong private sector construction financed by large
inflows of remittances.
Inflation fell from 7.7 percent at end-2019 to 5.7 percent
at end-2020, partly reflecting weak domestic demand.
According to the IMF, the budget deficit was contained
at 2 percent of GDP despite the authorities’ swift and
effective responses to address the spread of the COVID-19
pandemic and support the population and the economy.
Liquidity expanded significantly, fueled by private
remittances, but credit to the private sector grew only
by 0.8 percent as banks adopted a prudent approach in
providing loans, given the highly uncertain economic
environment.
Going forward, some recovery of economic activity is
expected in 2021 according to the IMF. This is premised
on a continued good performance of private sector
construction and agriculture, the acceleration of projects
related to the Organization of Islamic Cooperation, as
well as a gradual resumption of other activities following
the COVID-19 vaccination campaign. In the medium term,
economic growth is expected to return to its long-run
average of about 6 percent as tourism returns to pre-
pandemic levels and the global economy recovers.
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BANKING INDUSTRY OVERVIEW
According to the Central Bank of the Gambia (MPC,
March,2021), The banking sector remains fundamentally
sound with high levels of capital and liquidity. On an
annualized basis, total assets of the banking industry rose
by 3.5 percent, to GMD58.8 billion in December 2020. The
risk weighted capital adequacy ratio was at 32.6 percent,
which is higher than the 2019 capital adequacy ratio
by 1.2 percentage points and well above the statutory
requirement of 10 percent.
All the banks in the industry are adequately capitalized
with liquidity ratio of the industry at 94.4 percent in
and well above the 30 percent statutory requirement.
However, the non-performing loans ratio increased to 6.8
percent in December 2020, from 4.6 percent a year ago.
FINANCIAL PERFORMANCE
The Bank operated under an extremely difficult operating
environment in 2020, this was characterized by a surge
in the number of infections and resulting deaths from
the Covid-19 pandemic. The government responded
by declaring a state of Public Health emergency and
enforcing lockdowns, restricting business activity and
movement of the general populace. These measures
were necessary to curb the spread of the virus, but at the
same time have had considerable impact on economic
activity upon which banks thrive.
Notwithstanding these challenges, Ecobank Gambia
Ltd. registered growth in all key financial indicators
and further strengthened its market leadership in the
industry. Profit before tax grew by 19% to GMD487.6
million (2020). Funded income grew by 24% to GMD449.3
million in 2020, mainly driven by increased investments
in government securities and Inter-affiliate placements.
Interest income from Loans & Advances also increased
during the year despite the decline registered on overall
outstanding balance as at year-end 2020. Non-funded
income, comprising commissions and fees as well as
Ecobank Gambia Annual Report 2020 15