• Friday, July 19, 2024
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BusinessDay

Five takeaways from Ecobank’s 2022 financials

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ECOBANK Transnational Incorporated (ETI) reported a 6.98 percent growth in profit after tax to N156.6 billion in 2022, the highest in five years on the back of a 14.4 percent increase in interest income, BusinessDay’s finding has shown.

The bank’s gross earnings grew 13 percent to N1.08 trillion in 2022, from N0.96billion in 2021, revenue also grew by 11 percent to N794.86 billion in 2022, while their n0n-interest revenue in 2022 recorded a 9 percent increase to N362.01 billion from N332.600 billion in 2021.

“Just 6.56 percent above our forecast (of NGN1.01trn), Ecobank posted gross earnings of N1.08trn in its 2022FY financial scorecard. This represents a growth of 12.93 percent year-on-year as revenue crossed the N1.00 trillion mark, enabled by an uplift in all revenue sources,” analysts at Meristem said in a note.

Profit after tax

ETI profit after tax rose to N156.551 billion at the end of the financial year of 2022 from N146.328 billion recorded in 2021.

Net Interest Income

ETI bank’s net interest income surged to N1 billion at the end of the 2022 financial year up by 7 percent from N0.94 billion in 2021.

Interest income climbed 14 percent to N690.5 billion at the end of the financial year, from N603.3 billion in 2021.

Meristem in the note noted that the increase in interest income was driven by higher interest on loans, a higher yield on investment securities and higher stock of risk assets.

Read also: Premium Pension Assets under management grows by 12% to N1trn

Other interest income stood at N 8.17 billion at the end of the financial period indicating a 151 percent increase from N 3.26 billion in 2021.

ETI’s interest expenses stood at N257.76 billion in 2022, 19 percent from N216.7 at the end of the 2021 financial year.

“Interest expense increased by 18.97 percent year on year, reflecting the role of higher deposits and interest rates,” Meristem said.

Operating Expenses

ETI’s operating expenses stood at N214.2 billion in 2022, 11 percent from N193 billion at the end of the financial period of 2021. Staff expenses stood at N191 billion, a 3 percent increase from N186 billion in the comparable period.

Depreciation and amortisation stood at N43.2 billion at the end of the year period, indicating a 3 percent dip from N44.4 billion at the end of the financial year in 2021.

However, Operating income stood at N794.9 billion indicating a 9 percent increase in 2022 from N719.3 billion in 2021.

Despite the inflationary pressure in the regions of presence, the group’s cost minimization efforts led to only a 5.85 percent year-on-year increase in operating cost, which also trails the performance of operating income (+10.50 percent),” Merristem said.

Cash and cash equivalents

ETI’s cash and cash equivalent at the end of the 2022 financial year, stood at N1.66 trillion, a 7.75 percent decline from N1.69 billion in 2021.

Cash and cash equivalents stood at N7.08 trillion in five years.Cash and cash equivalents recorded N1.5 trillion in 2020, N933.5 billion in 2019 and N780 billion in 2018.

Loan and advances to customers

ETI’s loans and advances to customers grew 25 percent year on year to N5.1 trillion in 2o22 from N4.06 trillion in 2021.

The banks’ loans and advances to customers hit N 22.42 trillion, indicating the highest in five years. ETI loans and advances to customers were at N3.7 trillion, N3.4 trillion and N3.4 trillion in 2020, 2019 and 2018 respectively.

Among the analysis of the loan and advances to customers, gross loans and advances grew by 22.5 percent to N5.3 trillion in 2022 from N 4.3 trillion recorded in 2021.

“ETI has indicated caution in loan book expansion as the group continues to limit its risk exposure. As such, gross loans advanced by 12.75 percent year-on-year while the cost of risk slowed to 0.09 percent from 1.69 percent in the 2021 financial year,”