(Ecofin Agency) - Société Générale's subsidiary in Côte d'Ivoire announced it is getting ready to increase its capital by CFA4.45 billion (around $7.3 million). This financial strategy, which avoids the issuance of new shares or direct appeals to existing shareholders, will be a key topic at an extraordinary general meeting on April 23, the company said.

Rather than enlarging its share base, the bank intends to boost the nominal value of its shares through the strategic use of its accrued profit reserves. By the end of 2023, Société Générale de Banques Côte d'Ivoire (SGB CI) had recorded profit reserves of CFA210.9 billion, maintaining a robust financial position even after a record CFA53.4 billion dividend payout. Although they had fallen by CFA140.2 billion by December 2023, available funds, including cash and deposits with the Central Bank, remained substantial at CFA315.7 billion, sufficient to finance the capital increase.

Though SGB CI has not elaborated on the specific motivations behind the capital increase, the move is clearly in response to the BCEAO's updated capital requirements. As the year 2023 concluded, SGB CI's share capital was recorded at CFA15.56 billion, falling short of the new benchmark.

This capital increase is anticipated not to directly impact shareholder stakes but could set higher expectations for the bank's financial performance. SGB CI, having elevated its equity to CFA404 billion and reaching an unprecedented profitability rate of 24.07% in 2023, is expected to continue its upward trajectory.

The year 2023 was notably successful for SGB CI, with net profits approaching CFA100 billion, a 30% increase from the previous year. Moreover, the rising cocoa prices on the global market signal a positive outlook for Côte d'Ivoire's economy, the leading exporter of the commodity. Analysts predict a steady demand for cocoa, with possible slight price adjustments in the near term, which is likely to enhance national revenues, lower risk costs, and strengthen investor confidence.