Nedbank slashes value of Ecobank stake
Nedbank booked a $293 million write-down on the value of its stake in Ecobank and reported its slowest growth in annual profit since 2009.
Ecobank Transnational Inc’s operations in central and west Africa are exposed to some economies that have been pressured by the commodity price slide and unfavourable currency swings since Nedbank bought a 20 per cent stake for $500 million in 2014. The write-down reduces Ecobank’s value on Nedbank’s books to 4 billion rand ($308 million) from 7.8 billion rand, the South African lender said in a statement.
Nedbank said, however, that Ecobank remained vital to its expansion elsewhere on the African continent, where Ecobank has operations in nearly 40 countries outside its home market.
“It’s obvious that we would be disappointed with the performance of our Ecobank investment to date,” Nedbank Chief Executive Mike Brown told reporters.
“But we still, however, remain optimistic on the long-term growth prospects in the rest of Africa.”
Brown forecast another tough year for Ecobank, which makes the bulk of its earnings in Nigeria, before improving in 2018 and beyond. Nigeria, Africa’s biggest economy, has been hit by a currency crisis and its first recession in 25 years following the slide in oil prices since the middle of 2014.
