As the 2019 full-year earnings reporting season entered the final week, directors of Ecobank Transnational Incorporated (Ecobank Group), on Monday presented its audited financials as of December 31, a summary of which was that net profit grew way faster (double-digit) than gross earnings (single-digit) for the period, even as that the percentage rise in interest expenses was faster than that of interest expenses
A review of the numbers showed that impairment losses on loans and advances dropped by 60% from N99.318bn in 2018 to N39.763bn; just as impairment charge on other financial assets inched slightly to N8.662bn from N7.434bn; just as impairment charges on financial assets fell by 55% to N48.316bn from N106.749bn.
Gross earnings climbed by 9.05% from N772.557bn in 2018 to N842.49bn, of which interest income contributed N510.813bn, up by 7.51% from N475.144bn in the previous year, of which it earned N263.334bn from customer loans and advances, down from N269.73bn in 2018. Interest expense jumped 28.74% from N186.105bn to N239.586bn, driven by the N127.241bn paid as interest on customer deposits, up from N115.715bn; while the most significant growth was observed in the N6.022bn interest the group paid on other borrowed funds, up from N9.79b; which left net interest income at N271.226bn, down from N289.039bn.
Fee and commission income stood at N166.364bn, as against the previous N157.748bn, mainly from the N71.81bn cash management and related fees, which was just the same as the N71.595bn of 2018; followed by the N48.646bn n credit-related fees and commission, a marginal rise from N42.308bn in the prior year, among others. Fee and commission expense at N19.582bn in 2018, rose from N14.597bn, represent a growth of 25%; lifted mainly by N14.069bn “other fees paid,” which dropped from N19.174bn. This resulted in a 16% net trading income growth from N118.718bn to N138.083bn. Other operating income improved by 20% from N21.476bn to N25.802bn in 2019, following which net interest revenue climbed 13% up from N276.361bn to N315.652bn; and operating income from N567.4bn to N586.879bn, a 3% rise.
Staff expenses rose 11% from N159.39bn to N171.378bn; depreciation and amortization increased by 30% from N30.292bn to N39.253bn; total operating expenses inched 8% up to N171.682bn from N159.436bn; resulting in operating expenses of N388.313bn from the year, up by 11% as against N349.04bn in 2018. The group’s operating profit before impairment losses and taxation for the group dropped by 9% from N218.36bn in the 2018 financial year, to N198.565bn. Operating profit after impairment losses soared by 35% from N111.61bn in 2018 to N150.249bn.
The group said it suffered N3.242bn net monetary loss arising from hyperinflationary economies in 2019, as against nil in the prior year, leaving a profit before tax of N146.544bn, which was 32 better than the N110.829bn reported in 2018 financial year-ended.
Tax expenses for the year also soared by 45% from N33.614bn to N48.789bn; bringing profit after tax from continuing operations to N99.461bn, 28% up from N77.463bn in 2018. The net profit represents Earnings Per Share of 3.75 kobo, up from 55 kobo.
Total assets grew by N428.504bn or 5.25% from N8.162tr in 2018 to N8.59tr; boosted by customer loans and advances, which grew from N3.31tr to N3.383tr; while total liabilities increased from N7.52tr to N7.894tr, the lion’s share of which was the customer deposits of N5.924tr, which improved from N5.803tr. Shareholders’ funds rose marginally from N530.786bn to N538.549bn.