Overall, the Orabank Group has been relatively resilient, as shown by our financial results, and deposits have grown at a relatively normal pace. This year, even more this year than the others, we are experiencing a relative decline in our cost of resources, which is favorable in terms of a mixed deposit strategy. Commercially, the Orabank Group had a good year, but we still need to make progress in managing the cost of risk and also certain operational risks.
Group Treasurer, Group Chief Commercial & Marketing Officer
Key financial figures
Millions CFA francs | 31.12.2022 | 31.12.2021 | |
|---|---|---|---|
Interest expense | 235,346 | 198,661 | |
Interest expense | -113,431 | -95,865 | |
Commission income | 108,005 | 91,874 | |
Commissions (expenses) | -11,449 | -11,419 | |
Income from variable-income securities | 116 | 138 | |
Net gains or losses on disposal of financial assets measured at amortized cost | 0 | -86 | |
Income from other activities | 4,115 | 4,285 | |
Expenses from other activities | -270 | -274 | |
Net banking income | 222,431 | 187,315 | |
Personnel expenses | -61,318 | -52,394 | |
Amortization of intangible assets and property, plant and equipment | -15,450 | -13,321 | |
Other general operating expenses | -60,945 | -51,910 | |
Gross operating income | 84,718 | 69,691 | |
Cost of risk | -59,790 | -42,560 | |
Operating income | 24,928 | 27,138 | |
Net gains or losses on other assets | 505 | 7 | |
Profit before tax | 25,433 | 27,138 | |
Income tax | -6,234 | -7,340 | |
Net income | 19,199 | 19,798 | |
Non-controlling interests | 10,450 | 9,034 | |
Net income, Group share | 8,749 | 10,764 |
Oragroup held its ordinary general meeting on May 31, 2023 in Lomé, to approve the company’s financial statements for the year ended December 31, 2022, published in accordance with the international IFRS standard.
The year 2022 ended with a balance sheet size of over FCFA 4,732 billion (+17%) compared with December 31, 2021, and underpinned by the good performance in terms of customer resource gathering, with over FCFA 593 billion in additional deposits collected, an increase of 23%.
In addition, our incremental support for the economies of our host countries is estimated at over FCFA 335 billion. At December 31, 2022, we had 2,510 employees (+11%) and a distribution network of 165 branches and 11 sales outlets.
Net banking income rose by 18.7%, thanks to good performance across all revenue lines. The cost/income ratio improved from 62.8% in FY 2021 to 61.9% in FY 2022, despite a 17.1% rise in overheads. PBIT has also improved in 2022, confirming the Group’s sound operational management.
The net cost of risk remained 40.5% higher than in the 2021 financial year. This level of net cost of risk is partly explained by the effects of the health crisis, the operational risks that impacted entities in Côte d’Ivoire and Senegal, and the revision of assumptions for calculating expected losses as required by IFRS9. Collection performance was up 3.2%. The various actions taken to improve portfolio quality and collection will continue, and should enable collection performance to improve over the coming months.
An analysis of net income by subsidiary shows that net income rose by 58% in Gabon, 9% in Guinea, and 9% in Côte d’Ivoire and its branches. Subsidiaries in Benin and Togo underperformed, with declines of 50% and 16% respectively. Subsidiaries in Chad and Mauritania closed with losses. At the Holding level, net income came to FCFA 820 million, down 19% on 2021 as a result of higher financial expenses.
Deposit mobilization remains a priority for the Orabank Group, with particular emphasis on low-interest resources. The year 2022 was the best ever, with a record mobilization of over 593 billion in deposits collected, up 23% compared with December 2021, despite declines in the entities of Mali, Mauritania and Guinea Bissau. The objective of passing the 3,000 billion mark in customer deposits by December 31, 2022 was achieved in 2022, with FCFA 3,177 billion in deposits and an average cost of funds below 3%.
Net loans to customers rose by 17.3% compared with December 2021, with almost 336 billion in new direct loans to the economy for all our countries of presence, and 177 billion for financing our own countries.
The Group strengthened the Chad subsidiary’s equity capital by 10 billion, in line with the plan, and invested 1 billion in Oragroup Securities in the first half of 2022. The second part of the 20 bn private placement bond issue was completed in March 2022. In February 2022, the BMB hive-off vehicle finalized a €50 million capital raising for the acquisition of non-recoverable receivables from the Togo subsidiary, enabling this major Group subsidiary to comply with all prudential ratios.
With regard to cash management, the specialized CARTHAGO cash management software acquired in 2021 is being deployed in all Group subsidiaries.
Finally, in terms of Corporate Social Responsibility (CSR), in support of the United Nations’ Sustainable Development Goals, the Group has joined the PRB (Principles of Responsible Banking), the United Nations’ first global partnership with the world’s financial community dedicated to understanding, integrating and advancing the sustainable finance agenda.
Our teams are continuing their efforts to achieve results in line with our strategic objectives, which aim for continuous improvement in shareholder value. With this in mind, strict cost control, rigorous risk management, financial innovation and the use of new digital technologies are enabling the Group to constantly open up new growth prospects.
The objective of a cost/income ratio below 60% by 2022 has not been achieved. However, the search for efficiency remains a priority in order to achieve this objective by 2023.
The net cost of risk does not appear to be on a downward trend, and this is likely to continue in 2023, given the difficult economic environment in which some of our customers operate. We will continue to focus on portfolio quality, in particular recovery, improved portfolio monitoring, and optimization of weighted net assets to minimize capital requirements.
No significant events have occurred since the balance sheet date.
The constitution and optimal allocation of the equity capital required to support the growth and profitability of the Group’s activities remains a priority. The Group therefore plans to strengthen its capital base by issuing subordinated debt for the holding company and its subsidiaries, and by reinforcing its core capital.
The cash situation remains tight at two subsidiaries.
Despite the downgrading of the Group’s financial rating by one of the rating agencies (Fitch), the fund-raising operations currently being finalized will enable us to pursue the development of our activities.
Oragroup’s fundraising activity in 2022 was mainly punctuated by the pursuit of due diligence in the search for financing (AT1, subordinated debt, senior debt) on the market and with investors for Oragroup and its subsidiaries.
In terms of financing on the market, Oragroup successfully completed a bond issue by private placement of 20 billion FCFA, subscribed at 100%. Two fundraising mandates for the issue of preferred shares were also entrusted respectively to Hudson & Cie on the regional market and to the business bank Galite Partner for the international market. Another mandate was given to Iroko Securities for the mobilization of additional equity financing (AT1). In addition, discussions are also continuing with Citibank for the mobilization of a Tier 2 by private placement on the international market.
With regard to the mobilization of senior debt, the discussions resulted in an agreement from the AATIF fund to grant Oragroup a facility of EUR 25 million over 3 years. The steps are underway for the signing of the agreement and the disbursement of the facility during the year 2023.
As part of the search for subordinated debt for Oragroup and the subsidiaries, the OIKO fund has expressed its interest in granting financing of 6 billion FCFA to Orabank Côte d’Ivoire and 3 billion FCFA to Orabank Benin. As part of the mandate entrusted to Blend, other exchanges have been initiated and are continuing with investors such as Symbiotics, Blue Orchard and Enabling Capital.
In addition, a Trade Finance line in the amount of EUR 80 million was granted to Orabank Côte d’Ivoire by Afreximbank under the AFTRAF program.
In addition, as part of the search for mechanisms to mitigate the consumption of equity by the subsidiaries, the DRIP mobilized a portfolio guarantee of USD 100 million from AGF.
The ongoing capital raisings will also restore the Group’s solvency ratios at the consolidated level.
The results for the first half of 2022 of the pan-African banking group Oragroup confirm the achievement of the objectives set, in a steady upward trend from one year to the next. Despite a difficult and uncertain economic and social context for all operators, Oragroup is showing green indicators on all of its revenue lines, with a NBI which has increased to 100.3 billion FCFA (+ 17%) and a result net of 14.5 billion FCFA, up 51% compared to the same period last year.
The first half of 2022 ended with a balance sheet size of 4,245 billion FCFA, up 5% compared to December 31, 2021, supported by the good performance in terms of collection of customer resources at 2,765 billion FCFA, net loans to customers at 2,076 billion FCFA, both up 7% and constantly increasing support for the economies of the countries where the group is present at more than 137 billion FCFA.
In order to ensure its financial solidity, Oragroup continues to strengthen its long-term resources and its equity through fundraising operations and has already finalized this year, a bond issue by private placement of 20 billion FCFA, strengthened capital of Orabank Chad for 10 billion FCFA and 1 billion FCFA for Oragroup Securities, the SGI of the group whose approval was obtained in August 2022 and for which the effective start of activities is expected at the beginning of next year.
The total cumulative profits of the group over the last 5 years amount to 79.334 billion FCFA. These profits were primarily reinvested within the group to finance its strong growth.
Orabank Group cash flow
Our teams are continuing their efforts to achieve results in line with our strategic objectives, which aim for continuous improvement in shareholder value, with strict cost control, rigorous risk management and a healthy dose of agility to seize the new opportunities offered by the various changes. We continue to mobilize all our employees around these objectives, while saluting their creativity, sense of ethics, commitment to serving our customers and resilience during this very special period.
Through our strategic plan 2021-2025, our organization is committed to accompanying the people of Africa towards a return to growth.
Ferdinand NGON KEMOUM
Director and CEO, Oragroup
Highlights of 2022
The Group has made progress in many areas, but remains penalized by the situation of certain subsidiaries such as Mauritania and Chad. The fact that the change of majority shareholder has not yet been finalized creates a particular context. Nonetheless, the Group is committed to a proactive strategic plan designed to support business growth in our most profitable subsidiaries, and to rigorously and firmly implement turnaround plans for subsidiaries in difficulty.