Its assets now stand at DF2.5bn ($14.3m) while its Tier 1 capital amounts to DF398m.
ICB’s success was fuelled by an aggressive credit expansion policy in a market starved of loans and financing. The bank boosted its loan book through financing infrastructure development such as telecommunications and electricity generation, as well as television and radio and housing. ICB offered low lending rates, which stimulated the wider banking industry as a whole. As a result, by the end of 2007 the average loan deposit ratio of other banks in Djibouti had soared to 39%.
ICB also focused on developing its inward and outward remittance programme by offering competitive foreign exchange rates. By doing this it built up a strong flow of non-interest income.
ICB has made a strong start to banking life in Djibouti, and in its own words has created “an overall feel-good factor about the banking scenario that was missing hitherto”.
“ICB had a clear vision to take massive competitors head on, concentrating on the creation of bulk corporate loan assets albeit with thin margins,” says ICB chief executive Gorijelli Shivananda. “The strategy paid off with the net interest income registering DF56.6m while commission and fees improved to DF25.3m, resulting in cash accruals of DF10.4m.”
The biggest challenge for ICB going into 2009 will be to keep its non-performing loan ratio down. At present it stands at 1%, but with such an aggressive credit strategy it is inevitable that that figure will grow if the bank does not take stringent risk management measures.
