Ecobank Transnational Nets N30.49bn, As Loan Loss Charge Up By 48%

Ecobank Transnational Incorporated presented its audited financials for the first quarter ended March 31, 2021, which showed a major improvement over that of last year’s first quarter, helped by growth in interest, as well as fee and commission incomes, just as profit before and after-tax rose at a faster pace than gross earnings for the period. A further look at the numbers showed that the Ecobank Group could have reported a significantly better bottom-line, but for the 48% increase in impairment charges on financial assets to N22.799bn, from previous year’s equally high N15.454bn, which calls for a significant tightening of its risk management framework to effectively plug leakages.

Gross earnings for the period rose 10% up from N194.86bn to N214.282bn; boosted by the 12% growth in interest income from N124.452bn to N139.109bn, driven by interest on customer loans and advances at N71.76bn, as against the previous N70.533bn, followed by income from investment in securities, which jumped from N28.496bn to N42.205bn. Interest expense dropped to N43.782bn, from N47.85bn, the bulk of which was the N13.679bn paid on customer deposits, a drop from N27.582bn; resulting in net interest income of N95.347bn, an increase of 24% over the N78.601bn reported in the corresponding period of last year.

Fee and commission income was up by 19% to N45.62bn, from N38.484bn, lifted by cash management and related fees of N20.086bn, from N16.211bn, and credit related fees and commission, which grew marginally from N12.294bn to N12.626bn. Fee and commission expense jumped 80% up from N2.977bn in 2020 to N5.346bn, being mainly ‘other fees paid’; while net trading income dropped from N29.361bn to N25.801bn.

Other operating income during the period under review rose 45% from N2.977bn to N3.213bn, helped by the N3.036bn ‘other income,’ which rose from N2.093bn; resulting in non-interest revenue of N69.288bn, a slight improvement on the previous N67.077bn.

Operating income stood at N164.636bn, compared to the previous first quarter’s N143.306bn; depreciation and amortization increased from N8.544bn to N10.517bn; other operating expenses stood at flat at N43.701bn, marginally higher than the N43.032bn reported in 2020Q1.

Operating expenses for the period was up marginally from N94.884bn to N97.626bn; resulting in operating profit before impairment charges and taxation of N67.009bn, 37% up from N48.795bn of last year.

A breakdown of the loan impairments showed that charges on loans and advances climbed up from N21.196bn to N26.737bn, which was made better by the N7.553bn recoveries, a drop from N8.327bn in the previous Q1; just as impairment charge on other financial assets increased from N2.585bn to N3.614bn. Operating profit after impairment charges for the period, therefore, improved by 33% from N39.341bn to N33.21bn.

The group also reported a net monetary loss arising from hyperinflationary economies of N3.875bn, compared to just N285.781m in the previous Q1; following which profit before tax stood at N40.342bn from N33.026bn.

A tax expense of N10.379bn, as against N8.713bn in 2020, left net profit at N30.493bn, up from N24.694bn, translating to Earnings Per Share of 1.164 kobo, up from 0.839 kobo.

Total assets for the period recorded a flat growth from N10.384tr to N10.433tr, of which customer loans and advances stood at N3.644tr, a decline from N3.699tr; while total liabilities improved marginally also from N9.502tr to N9.563tr, with customer deposts accounting for N7.378tr, as against the previous N7.324tr.

A statement by the group described the performance as “remarkable… in all the key financial indices,” quotingt Ade Ayeyemi, its chief executive as saying the group is focusing on achieving execution momentum in our payment business.

While noting the increased adoption of its products and services, he said the group’s Non-Performing Loans ratio is low, “exceeding the expectations of our customers to truly be the pan-African Bank that Africa trusts”. 

These, together with all our investments and achievements to date, he expects, “will enable us collectively grow revenues and generate a long-term return of capital to our shareholders, despite the near- term challenges from COVID-19.”

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