The Pan-African banking group Ecobank Transnational Incorporated (ETI) may pay its shareholders dividends for FY2021. The bank’s Board proposed last February 28 that $40 million be paid. Although the amount will not offset five years without dividend, it is sufficient to ensure solid growth for Ecobank shares.

$40 million in dividends means $0.16 per share, which is CFA90, N66.6, or 1.08 Ghana Cedi. For Nigerian and Ghanaian investors, this represents 5.5 times and 8.3 times, respectively, the most recent value of the Ecobank shares they hold. For those on the Abidjan Regional Securities Exchange (BRVM), it is 4.5 times the value of Ecobank shares at the close of trading yesterday February 28. This is in addition to the cumulative gain of 49.5% (at the end of February 2022) for WAEMU investors who hold ETI shares since early 2021.

As a reminder, Ecobank only distributed dividends twice over the past 9 years, and the last time was in 2016. This situation, which affected all investors and mainly small ones, led to the reduction of the bank's market value by half. ETI Board's proposal may seem modest, given the bank’s audited 2021 financial net income of $396 million, or its cash position, which, although declining, still reached $3.1 billion at the end of last year. But when the proposed dividend is compared with the overall accounting result, which takes into account (potential) foreign exchange losses of $294 million, its net accounting result is only $55 million. The proposed dividend, therefore, represents 72% of the profit that Ecobank is certain to have secured.

In a recent interview with Agence Ecofin, Ayo Adepoju, the group's financial director, explained the reasons for this long period without dividends. "We first wanted to repair the foundations of our group, which from a strategic point of view took us between 2016 and 2018. Secondly, we were faced with new regulations in terms of capital, with a transition from Basel 2 to Basel 3. So we had to conserve our resources to adapt to the regulator's requirements," he said, stressing that “there was also the covid-19 pandemic. It seemed normal for many companies around the world to be conservative in terms of shareholder returns. So, we may not have distributed dividends, but the company is much stronger than in 2016."

On the Nigerian Stock Exchange, the Ecobank stock increased by 5.8% yesterday. On the BRVM, it is up 11.1% since the beginning of 2022, after having improved by 38.4% throughout 2021. However, we should expect a new bull run, driven by short-term investors looking for quick margins.