On the Abidjan square, the banks have safe with the equivalent of $ 18 billion in the form of deposits. Moroccan banks have taken precedence over French ones. Indeed, the three financial institutions of the kingdom (Attijariwafa bank, BCP and Bank Of Africa) account for 26% of the market share against 22% for the two French brands, Societe Generale and BNP Paribas.
Behind this Franco-Moroccan duel, comes the constellation of 10 sub-Saharan regional banks with 32% of the aggregate market share. The so-called Ivorian banks, namely BNI and NSIA, jointly and severally hold 15% of the market share. The question is how the banking system contributes to the economy. First of all, it should be noted that while banks demand high transparency from their customers requesting credit, they are reluctant to show a white paw. Only nine of them are listed on the Abidjan Regional Stock Exchange (BRVM), which expresses a certain reluctance to ensure transparency and deprives households and economic actors of the opportunity to grow their savings.

Structural excess liquidity

Is the lack of interest in the stock market explained by the fact that credit institutions have other, more competitive sources of financing? The place of Abidjan presents in any case a structural overliquidity since the credits are financed at 70% by deposits, in particular savings. Hence the war on pricing that is taking place there at the moment and which participates in the overconcentration of risks on a few players, always the same, assailed by bank offers and outbidding. The systemic risk is immense.

It should also be noted that 30% of banks' balance sheets sleep in securities for prudential reasons (Basel 2 and Basel 3). In fact, Ivorian banks are not motivated to borrow since they mainly finance short-cycle assets whose maturities are aligned with outstanding liabilities such as deposits and also the possibilities offered by the window of the Central Bank of West African States (BCEAO). Loans to SMEs, which are riskier by definition, do not always evolve as expected for various reasons, sometimes linked to smEs themselves but also and above all to a rigid approach to credit risk. In this context, the lack of enthusiasm generated by the SME refinancing window opened in the context of Covid is illustrative of the strategic choice of asset allocation of Ivorian banks based on figures at the end of June 2020.

Postponement again

In the 2019 financial year, there was a negative carry-over of CFAF 35 billion, which is a small cluster bomb calling for losses to be expurgated and the level of equity to be adjusted accordingly. Part of the reason for this black hole would come from the Basel rules where the focus was more on reserves than on carrying it over again. Beyond the regulatory provisions, major incidents have also affected the facades of banks. Thus, the bankruptcy of Saf Cacao, now resurrected in new colors, forced the banks to provision. In addition, despite the efforts of the WAEMU central regulator, the Banque de l'habitat de Côte d'Ivoire (BHCI), the Banque Nationale d'Investissement (BNI), Versus Bank, Cofipa and Afriland First Bank Côte d'Ivoire are still fragile.

Recall that Basel II and III set the level of equity in a bank's liabilities at 12%. On the Abidjan market, with 47 billion in subordinated debt and 10% if we weigh the entire balance sheet (against a capitalization of 15% in Microfinance), we can say that the balance sheet structures are more or less correct. Especially since the sector offers an ROE of 21%, against an average of 15% in Europe and, above all, more than twice the return of the equity market. The transformation of deposits into credit is 78% against more than 100% in South Africa, and 100% for microfinance. The portfolio represents 57% of the assets while in Microfinance 80% of the assets are loans. Many depositors are from the WAEMU/ECOWAS zone and many hold government securities and bonds, some identified as originating in the EURO zone.