No Dividend For ETI Shareholders, Despite 223% Net Profit Growth

Ecobank Transnational Incorporated (ETI), on Wednesday reported a return to profitability at the end of the financial year ended December 31, 2017, despite keeping a tight lid on loan growth, even as customer deposits closed the year 13% better.
Gross earnings for the period climbed 15% up from N665.001bn in 2016 to N763.633bn, just as it improved from a loss to profit before and after tax for the period, with the directors not proposing a dividend for approval by shareholders when the annual general meeting holds on April 24, 2018, in Lome, Togo.
Nonetheless, Ade Ayeyemi, ETI’s group chief executive and Greg Davis, its group chief financial officer, linked the return to profit to the successful implementation of a five-year ‘Roadmap to Leadership’ and digitisation strategy now in its second year.
The strategy, they explained, has seen the group make real strides in fixing the foundations on which the group’s businesses can grow.
“Among other things, we have reorganised our businesses, overhauled our risk management, improved our controls and systems, adopted technology to drive efficiency, and we are addressing capital allocation,” the statement added, expressing appreciation of the group’s customers who expressed “showed their confidence in the firm’s value proposition.
“Also, our actions to improve the firm’s efficiency were productive as will be our progressive moves to right-size and simplify our businesses, which have been designed to allow us to serve our customers better and create more sustainable value generation. We have reduced our efficiency ratio to 61.8% which evidences the effectiveness of these actions and we will continue to drive this ratio down.”
Interest income rose 12% from N429.324bn to N480.94bn; interest expense increased by 25% to N181.617bn from N145.363bn, resulting in net interest income of N299.322bn, as against N283.961bn in the preceding year.
Fee and commission income improved 15% to N143.799bn, from N283.961bn; while expense was up by 67% to N21.175bn from N13.471bn; net trading income jumped to N127.323bn from N103.569bn, representing a 23% growth; following which net losses from investment securities amount to N1.531bn from a N6.77bn gain. Other operating income stood at N261.517bn, 18% up from N222.205bn; resulting in operating income of N560.84bn from N506.16bn.
Staff expenses rose 15% to N157.74bn from N137.319bn; depreciation and amortization rose 15% also from N25.458bn to N29.346bn; other operating expense increased slightly from N154.743bn to N159.471bn; just as operating expenses stood at N346.559bn from N317.52bn; resulting in operating profit before impairment of N214.281bn from N188.645bn.
Impairment losses on loans and advances was constrained at N99.919bn, down from prior year’s N197.683bn; while loss on other financial assets creeped to N25.973bn from N24.017bn. This brought total impairment losses on financial assets dropped 43% from N221.7bn to N125.893bn; resulting in operating profit after impairment losses of N88.388bn, up by 367% from the loss of N33.056bn.
Profit before tax stood at N88.309bn, a 362% improvement over the prior year’s N33.707bn loss; even as tax expense rose to N69.761bn from N51.909bn; resulting in 233% improvement in net profit from a loss of N52.6bn to N69.992bn profit, representing Earnings Per Share of N2.22, as against the previous N2.59 loss.
Exchange difference on translation of foreign operations rose to N30.985bn gain or 119% from a loss of N160.349bn; just as total comprehensive profit for the year jumped to N112.988bn from the N222.475bn loss, representing a 151% improvement during the period.
Total assets for the period stood at N6.864tr, 10% better than the N6.255tr of prior year; loans and advances to customer was flat at N2.863tr, compared to N2.824tr. Total liabilities climbed to N6.199tr from N5.717trillion, helped by customer deposits, which improved by 13% from N4.116tr, to N4.652tr; loans loss provision increased to N16.049bn, up from N8.778bn, representing an 83% rise; following which shareholders’ funds climbed 24% to N664.657bn from N538.043bn.