Ecobank Group Nets N102.168bn Profit, Up 46%, As Impairment Losses Down 34.83%
Despite a flat growth in gross earnings and 80.65% rise in tax for the period, the board of Ecobank Transnational Incorporated, on Thursday presented its audited financials for the year ended December 31, 2018, with profit after tax soaring by 46.22%.
Besides improved management of the Pan-African group, there was also the 34.83% drop in impairment losses on loans and advances and other financial assets from N125.893bn in 2017, to N82.044bn.
According to the result, gross earnings stood at N773.144bn from N763.633bn; out of which interest income stayed flat from N480.94bn to N475.144bn, mainly the N269.73bn income from customer loans and advances, a drop from N308.411bn; followed by the N74.588bn earnings from treasury bills, a rise from N64.676bn. Interest expenses increased by a marginal 2.47% from N181. 617bn, to N186.105bn, the lion’s share of which was the N115.715bn paid to customers, up from N100.564bn.
This left net interest income at N289.039bn, down 3.44% from N299.322bn, with its Nigerian subsidiary contributing N258.816bn, which less than the N282.895bn from the group’s UEMOA (Francophone West Africa) region; followed by the N241.823bn and N207.281bn by its Anglophone West African segment (outside of Nigeria) and CESA (Central, Eastern and Southern Africa) regions respectively.
Fee and commission income climbed 9.7% up from N143.799bn to N157.748bn; boosted by N71.595bn cash management related fees, up from N62.368bn and N42.308bn credit related fees and commissions, a slight drop from N43.419bn in 2017. Credit related xpense was down 7.52% to N19.582bn from N21.175bn, as ‘other fees paid’ of N19.174bn, down from N20.772bn.
Net trading income slipped by 6.76% from N127.323bn to N118.718bn, being forex income of N105.934bn, a slight drop from N110.295bn in 2017, as trading income on securities fell from N17.028bn to N12.784bn. Other operating income leaped 85.62% up from N11.57bn in 2017, to N21.476bn, accruing principally from the group “other” income of N19.554bn from N9.313bn.
Non-interest revenue stood at N278.361bn from N261.517bn, representing a 6.44% rise; operating income could only inch 1.17% to N567.4bn from N560.84bn. Operating expenses stood at N349.04bn from N346.559bn, the biggest sub-head being the N159.309bn staff expenses, which rose marginally from N157.74bn in 2017; and the N159.438bn other operating expenses, which stood flat, when compared to N159.471bn recorded in 2017.
Impairment losses on loans and advances and other financial assets dropped to N82.044bn from N125.893bn, with impairment losses on loans and advances at N74.61bn, down from N99.919bn; and impairment on other financial assets falling from N25.973bn in 2017 to N7.434bn. This resulted in operating profit after impairment losses of N136.315bn, as against N88.388bn reported in 2017.
Profit before tax soared by 53.48% to N135.534bn from N88.309bn; the group paid N33.614bn in taxes, rising from N18.607bn; following which profit after tax came to N101.919bn, translating to Earnings Per Share of N5.57; compared to N69.701bn, or N3.81 in 2017.
Profit before tax soared by 53.48% to N135.534bn from N88.309bn; the group paid N33.614bn in taxes, rising from N18.607bn; following which profit after tax came to N101.919bn, translating to Earnings Per Share of N5.57; compared to N69.701bn, or N3.81 in 2017.
The group however displays the biggest balance sheet yet, with total assets of N8.223tr, up 19.81% from N6.864tr in 2017, of which customer loans and advances amounted to N3.339tr, up 17% from N2.863tr in 2017.
Total liabilities amounted to N7.563tr, compared to the previous N6.199tr, representing 22.01% rise, with customer deposits of N5.803tr, as aginat the N4.652tr or 25%. Shareholders fund dropped slightly to N660.073bn from N664.657bn.
Commenting, Ecobank Group Chief Executive, Ade Ayeyemi, described the 2018 financial performance as “remarkable in many ways and reflected the meaningful and significant progress that we have made against the priorities that we set in our ‘Roadmap to Leadership’ strategy.
“We delivered a 51% growth in profit before tax to $436 million and generated a return on tangible equity of 21%. Our cost-of-risk of 2.4% was an improvement on 2017 and demonstrated the progress that we have made addressing credit quality issues and enhancing internal control processes.
He noted the continued investment “in the technology platforms to accelerate our shift from ‘physical’ to ‘digital’ and we are supporting our customers with transactions across Africa.”
He expressed excitement “about the prospects for the firm and for Africa. Yes, risks remain, and economic cycles come and go, but we will remain steadfast in serving our customers well. I am proud of the work that Ecobankers have done in the last three years to stabilise the firm and position it for long-term success. I am very grateful to them,” Ayeyemi added.
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