Ecobank Transnational Incorporated (ETI) presented its unaudited financials for the first quarter ended March 31, with sluggish gross earnings growth owing to a slight drop in interest income, rising interest expense and a flat net trading income. Help, however, came from its positive other operating income and non-interest revenue, as well as the robust recovery of the previously lost loan.
Profit before tax growth was strong across the group’s various regions, “except for Nigeria where performance was primarily affected by the suspension of accrual of interest income and FX translation impact,” the group noted.
Gross earnings stood at N199.448bn gross earnings, limping 0.42% from N198.615bn; with interest and similar income slipping by 7.81% from N126.585bn in the first quarter of 2018, to N116.696bn; at a time interest and similar expenses increased by 7.11% from N50.732bn to N54.336bn.
Net interest income dropped by 17.79% to N62.359bn from N75.853bn; fee and commission income notched 12.98% from N38.088bn in the corresponding period of 2018 to N43.032bn. Cash management and related fees contributed N19.43bn, slightly above the previous N18.082bn; followed by the N11.03bn credit-related fees and commissions, compared to N10.244bn; just as other fees climbed from N927.305m to N2.41bn; while portfolio and other management fees stood at N1.248bn from N602.917m. Fee and commission expenses declined to N5.598bn from N3.723bn in the prior Q1, representing 33.48%, mainly the N3.551bn ‘other fees paid,’ as against the previous N5.483bn.
Net trading income was flat at N34.745bn from N34.274bn, up by 1.37%, primarily the foreign exchange income of N28.741bn, down from N30.924bn; while trading income on securities soared from N3.35bn to N6.003bn. Other operating income grew by 975.83% to N4.032bn, compared to the N460.44m loss; following which non-interest revenue came to N78.086bn, after increasing by 17.77% from N66.304bn.
Operating income, however, fell from N142.157bn to N140.446bn; staff expenses increased to N42.374bn from N37.882bn, representing 11.86% increase; depreciation and amortization increased by 25.69% from N7.546bn to N9.484bn. Other operating expenses slipped marginally to N41.135bn from N41.999bn; even as operating expenses increased by 6.37% from N87.428bn to N92.994bn. Operating profit before impairment loss and taxation inched 13.3% up from N53.729bn to N47.451bn.
Impairment losses on loan and advances increased to N29.156bn from N26.19bn, representing 11.33%; the group recovered N24.727bn, up by 234.73%, up from N7.387bn. Impairment charge on other financial assets rose by 192.02% from N2.034bn to N5.94bn; impairment losses on financial assets fell by 50.23% to N10.37bn from N20.837bn.
Profit before tax climbed 9.39% up from N33.908bn in the 2018Q1, to N37.091bn; while tax expenses increased by 20.8% from N6.155bn to N7.435bn, following which Profit after tax climbed up 6.86% from N27.752bn to N29.655bn, representing Earnings Per Share of N1.67, up from N1.52.
Total assets rose by 14.67% from N6.837tr to N7.84tr, boosted by the N3.093tr customer loans and advances, which dropped from N3.339tr; and N1.05tr in cash and balances with central banks, a marginal drop from N1.018tr in the same period of 2018. Investment securities stood at N1.63tr, slightly lower than the N1.663tr, among others. Total liabilities fell from N6.28tr to N7.189tr, the lion’s share of which was the N5.475tr customer deposits, which dropped from N5.803tr, representing N327.593bn or 5.64%. Shareholders fund for the period, therefore, climbed by 16.8% to N651.089bn, up from N557.42bn.
Ade Ayeyemi, Group CEO expressed pleasure at the Q1 performance, especially amid the challenging macroeconomic environment, with its diversified business model continuing to be of immense benefit and allowing the group deliver the Ecobank brand promise to customers across the continent.
“Our objective to drive stable non-funded revenues gained momentum, with our non-interest revenues increasing by 25% on a constant currency basis, driven by cash management, trade finance, and digital product offerings. We maintained cost discipline across our businesses and drove efficiency in our processes.”
Ayeyemi acknowledged the recovery of huge impaired loans, employing effective non-performing loans recovery strategy, thereby significantly improving cost-of-risk, just as he expressed confidence “that Ecobank will deliver on its strategy, continue to serve our customers well, and generate attractive returns for our shareholders in the long-term.”