Loan Recoveries Lift Ecobank Group Half-Year Profit To N59.5bn

Ecobank Transnational Incorporated presented its unaudited results for the half-year ended June 30, 2019, to the Nigerian Stock Exchange (NSE) Friday morning reporting that gross earnings for the period grew by a marginal 5%, which was outpaced by the 25% rise in profit for the period, while increased tax expense lifted net profit up by 15%.
A major highlight of the financials was the N37.602bn loan loss recovery within the period which was 166% better than the prior half-year, the impact of which was blighted by the increase in impairment charge on other financial assets
Gross earnings for the period stood at N406.201bn, up from N384.588bn; buoyed by interest income of N246.568bn, which was 2% up from N242.214bn, out of which interest on customer loans and advances stood at N136.815bn, a drop from N145.814bn in 2018; just as income from investment in securities fetched N66.158bn from N52.714bn; followed by the N33.918bn from treasury bills and other eligible bills up from N34.912bn.
Interest expense jumped 21% to N115.568bn from N95.645bn, boosted by the N65.829bn paid on customer deposits, as against N58.007bn; and the N33.551bn on other borrowed funds, which rose from N20.478bn; while deposits from banks amounted to N15.947bn as against N14.327bn. This resulted in net interest income of N130.885bn, 11% down from the previous N146.569bn.
Fee and commission income notched 10% to N85.154bn from N77.246bn, driven by cash management and related fees at N36.344bn, which rose slightly from N35.854bn; credit-related fees and commissions, N25.008bn from N20.65bn; and N14.232bn in card management fees, up from N13.629bn. Fee and commission expense fell from N10.131bn to N8.214bn, representing 19% drop, with other fees paid amounting to N7.927bn, after declining from N9.941bn.
At N64.177bn, net trading income rose 9% from N58.866bn; just as other operating income improved by 34% to N8.102bn from N6.061bn, boosted by foreign exchange trading income of N53.569bn, as against N51.227bn in the preceding half-year; while trading income on securities increased to N10.607bn from N7.639bn.
Non-interest revenue for the period notched 13% to N149.22bn, compared with N132.643bn in 2018; even as operating income climbed to N280.105bn, from N278.612bn. Staff expenses increased by 16% from N75.685bn to N87.895bn; depreciation and amortization dropped slightly from N81.52bn to N78.828bn; resulting in operating expenses of N185.995bn, up from N172.425bn; following which operating profit before impairment loss increased by 13% from N106.187bn to N347.166bn.
Impairment losses on loans and advances dropped to N49.67bn from N52.236bn; even as the group recovered a total of N37bn, 166% improvement over the N14.155bn of the 2018 half-year. Impairment charge on other financial assets however jumped by 184% from N3.045bn in the first half of 2018 to N8.644bn; resulting in impairment losses on financial assets of N20.678bn 50% down from N41.126bn.
Operating profit after impairment losses before tax stood at N73.431bn, 13% up from N65.06bn.
Profit before tax climbed 13% from N65.099bn to N73.433bn just as net profit stood at N59.491bn from N51.552bn, which translated to earnings per share of 176 kobo, up from 167 kobo, after-tax expense rose to N15.139bn from N13.706bn.
On the balance sheet, total assets dropped to N8.086tr from N8.223tr, with customer loans and advances slipping by 6% from N3.339tr in the corresponding period of last year to N3.15tr; followed by investment securities worth N1.697tr from N1.663tr; among others. Total liabilities declined from N7.52tr to N7.396tr; with customer deposits rising marginally from N5.803tr to N5.823tr. Shareholders’ funds, therefore, dropped slightly from N660.073bn to N651.316bn.