NONFON Mègnissou Amédée 1

Despite a difficult economic context, the Orabank Group experienced a 19% increase in its Net Banking Income and a 21% improvement in Gross Operating Income compared to the same period in 2021. Our additional contribution to financing the economies of our different areas of activity amounts to more than 335 billion FCFA for the year 2022, mainly supported by good growth in our deposits.

Chief Financial Officer

Key financial figures

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Net income, Group share

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 point of sales.

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 because 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, 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 marks 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.

Regarding 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. Strict cost control, rigorous risk management, financial innovation and the use of new digital technologies are enabling the Group to constantly open 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 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 fund-raising activity in 2022 was mainly driven by continued due diligence in the search for financing (AT1, subordinated debt, senior debt) on the market and with investors for Oragroup and its subsidiaries.

On the market financing front, Oragroup completed a private placement bond issue of FCFA 20 billion, 100% subscribed. Two fund-raising mandates for the issue of preferred shares were also entrusted respectively to Hudson & Cie for the regional market and to the merchant bank Galite Partner for the international market. Another mandate was given to Iroko Securities to raise additional equity financing (AT1). Discussions are also underway with Citibank to raise a Tier 2 by private placement on the international market.

Regarding the mobilization of senior debt, discussions have resulted in an agreement with the AATIF fund to grant Oragroup a 3-year EUR 25 million facility. Steps are underway to sign the agreement and disburse the facility in 2023.

As part of the search for subordinated debt for Oragroup and its subsidiaries, the OIKO fund has expressed an interest in granting financing of FCFA 6 billion to Orabank Côte d’Ivoire and FCFA 3 billion to Orabank Benin. Within the framework of the mandate entrusted to Blend, other discussions have been initiated and are continuing with investors such as Symbiotics, Blue Orchard, and Enabling Capital.

In addition, Afreximbank granted Orabank Côte d’Ivoire a EUR 80 million trade finance line as part of the AFTRAF program.

In addition, as part of the search for mechanisms to mitigate the consumption of equity capital by subsidiaries, DRIP has secured a USD 100 million portfolio guarantee from AGF.

The capital raisings currently underway will also help to restore the Group’s solvency ratios at consolidated level.

The pan-African banking group Oragroup’s results for the first half of 2022 confirm that it has achieved its targets, with a steady upward trend from one year to the next. Despite a difficult and uncertain economic and social context for all operators, Oragroup’s indicators are in the green across all its revenue lines, with NBI strengthening to FCFA 100.3 billion (+17%) and net income of FCFA

14.5 billion, up 51% on the same period last year.

In the first half of 2022, Oragroup’s balance sheet totaled FCFA 4,245 billion, up 5% compared with December 31, 2021, underpinned by a good performance in terms of customer funds collected (FCFA 2,765 billion), net customer loans (FCFA 2,076 billion), both up 7%, and steadily increasing support for the economies of the countries in which the Group operates (over FCFA 137 billion).

The Group’s cumulative profits over the last 5 years total 79.334 billion FCFA. These profits have been 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 Orabank Mauritania and Orabank 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.