Ecobank Nets N75.51bn Q3 Profit, On Ops Income Rise, Loan Loss Decline
Ecobank Group, operating as Ecobank Transnational Incorporated Plc (ETI), on Wednesday presented its unaudited financials for the nine-month ended September 30, 2018, to the Nigerian Stock Exchange (NSE), fueling hope for increased payout at year-end, if the current performance trajectory is maintained in the remaining few months of 2018.
Highlights of the results showed that although gross earnings for the period could only snail by 1.45% upward, there a robust 163.79% rise in other operating income and marginal growth in fee and commission income, even as trading income slipped 15.9% lower. These were however amidst the tight hold on interest, other operating expenses, as well as loan and advances, resulting in 30.74% increase in profit for the period from continuing operations.
Gross earnings for the period stood at N572.657bn from N564.461bn; with interest income representing N354.081bn, as against N353.386bn; while interest expenses inched 1.3% up from N137.074bn to N138.862bn, resulting in net interest income of N215.218bn, down from N216.311bn in the corresponding period of 2017.
Fee and commission income rose to N115.657bn, from N103.29n, helped by cash management and related fees at N52.687bn, as against N43.028bn in the prior Q3; even as credit related fees and commissions fell to N32.913bn from N32.938bn; among others.
Fee and commission expense rose 8.7% up to N14.862bn compared to N13.672bn in 2017, arising mainly from “other fees paid” of N14.58bn, compared to N13.375bn; net trading income fell to N85.029bn, representing 15.9% decline from the previous N101.106bn, after foreign exchange income dropped from N91.72bn to N74.342bn; while trading income on securities rose marginally from N9.386bn to N10.687bn.
Other operating income soared to N17.616bn, as against the previous N6.678bn, principally from the N16.33bn gains less losses from investment securities, a significant rise from the previous N5.552bn; just as non-interest revenue rose marginally also from N197.403bn to N203.44bn.
Operating income stood at N418.659bn, with the group’s Nigerian operations accounting for N111.547bn, or 26.64%; from N413.714bn, with Nigeria contributing N136.286bn or 32.94%; staff expenses slowed down to N114.415bn from N116.298bn; while depreciation and amortization rose to N22.798bn from N21.48bn. Other operating expenses rose to N118.759bn from N117.295bn; even as operating expenses stayed flat at N255.973bn, as against N255.073bn; resulting in operating profit before impairment losses and taxation of N162.686bn, from N158.6; even as operating expenses stayed flat at N255.973bn, as against N255.073bn; resulting in operating profit before impairment losses and taxation of N162.686bn, from N158.64bn.
Impairment losses arising from loans and advances for the period dropped 14.32% from N72.368bn to N62.003bn; while that on other financial assets slumped 73.83% from N16.932bn to N4.431bn. Impairment losses on financial assets also reduced 25.61% from N89.3bn to N66.434bn; leaving operating profit after impairment losses at N96.251bn, 38.81% from N69.34bn.
Profit before tax rose 38.78% from N69.407bn in 2017, to N96.321bn, out which Nigeria pooled N26.586bn, or 27.6%; behind the N33.022bn, or 34.28%; and N31.457bn, or 32.65% by Anglophone West Africa (AWA) and Francophone West Africa (UEMOA) countries respectively. Meanwhile, a 78.62% increase in income tax expense from N11.648bn in the previous nine months, to N20.806bn, left profit after tax at N75.514bn, up from N57.759bn. This translated to Earnings Per Share of N4.12, 30.74% better than N3.15 each in 2017.
On the balance sheet, total assets increased to N6.7tr, as against the previous N6.408tr; with customer loans and advances dropping to N2.647tr, as against the N2.83tr reported in prior third quarter.
Total liabilities N6.081tr, up deom N6.199tr, out of which customer deposits climbed 10% up from N4.319tr in 2017 to N4.754tr; resulting in shareholders’ funds of N619.642bn, down slightly from N621.953bn
Reacting to the result, Ade Ayeyemi, ETI’s Group Chief Executive Officer expressed delight that the board’s initiatives in phase-one of a “five-year strategic plan are starting to show results in our financial and business performance. The risk profile of our credit portfolio is improving; we are increasingly becoming leaner and more cost efficient; and thanks to our digitisation strategy, broadening our products and services to include the unbanked. Thus, we are seeing encouraging growth in trade loans, remittances, cards and e-banking, and foreign exchange and fixed income sales in some of our regions.
“Loan growth, however, has been tepid, despite the fact that we are seeing strong deposit generation in all of our businesses and regions, largely because we are seeing limited credit opportunities that meet our risk appetite.
“That said, we remain excited about the prospects for our diversified pan-African banking business model and in our operating regions. Economic activity is forecast to grow in Africa and we believe the firm is rightly placed to benefit from this growth. At the same time we are also keenly planning for any contingencies that will arise from any one of the global geo-political uncertainties.”
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