Recently, Ecobank Transnational Incorporated (ETI) released to the investing public its audited consolidated financial statements for the year ended December 31, 2020.
Ecobank’s 2020 scorecard shows it reported the least profit since after full year 2016 when it berthed with negative bottom-line figure, according to the Group’s five year financial summary at the Nigerian Exchange (NGX) Limited.
Ecobank Group gross earnings went down by 5percent to $2.20billion (N841.1 billion) from full year 2019 high of $2.328billion (N842.490billion). In naira terms, the group’s gross earnings decreased by 0.2percent.
The group revenue was also up by 4percent to $1.679billion (up 9percent to N641.8billion), from 2019 position low of $1.622billion (N586.879billion). Ecobank said its revenue benefited from an increase in net interest income partially offset by a decrease in non-interest revenues.
Net interest income (NII) increased by $157 million or 21 percent to $907 million, reflecting the benefit of deposit and funding mix. As a result, interest expense declined $179 million, partially offsetting a decrease of $22 million in interest income.
“The decrease in interest income was because of the net impact of lower interest rates. The net interest margin (NIM) improved to 5.5 per cent compared with 4.7 percent in 2019. The cost of funds of 2.3 percent improved from 3.4 percent in 2019”, Ecobank noted.
Ecobank recorded non-interest revenue decline by $100million or 11percent to $773million, primarily because consumer and business activities slowed down significantly due to the COVID-19 pandemic. As a result, net fees and commissions income fell by $31million to $389 million.
“The decrease was driven by cash management and related fees, which declined by $11million to $187million. Moreover, lockdowns led to decreased spending. As a result, card management fees fell by $15 million to $65 million. Also, credit-related fees and commissions, and portfolio and management fees, declined by $7 million and $10 million, respectively. Net trading income decreased by $35 million to $346 million, driven by lower fees on client driven foreign-exchange sales as trading activities slowed”, it stated.
Operating income before impairment losses was up 14percent to $625.7 million (up 20percent to N239.1 billion) as against a 2019 low of $548.878million (N198.565billion). Profit before tax (PBT) and goodwill impairment went down by 17percent to $337.9 million (down 12percent to N129.1 billion) as against 2019 high of $405.079million (N146.544billion).
Ecobank Group profit before tax (PBT) in full year 2020 was down by 57percent to $174.3 million (down 55percent to N66.6 billion), from 2019 high of $405.079million (N146.544billion).
Profit after tax was down by 68percent to $88.3 million (down 66percent to N33.7 billion) compared to 2019 high of $274.934million or N99.461billion.
The bank said notable items that negatively impacted profit before tax were the $164 million of goodwill charge ($159 million related to Oceanic Bank acquired in 2011 and $4 million related to Ecobank’s microfinance entity SOFIPE in Burkina Faso acquired in 2014), and a net monetary loss of $61 million due to hyperinflation in Zimbabwe and South Sudan.
Total assets went up by 10percent in 2020 to $25.9 billion (up 20percent to N10.384trillion), compared to total asset of $23.641billion in 2019 (N8.621trillion).
Loans and advances to customers decreased slight by 0.4percent in 2020 to $9.239 billion (up 9percent to N3.699trillion), compared to $9.276billion (N3.383trillion) reported in 2019. In full year 2020, deposits from customers went up by 13percent to $18.296 billion (up 24percent to N7.324trillion) compared to 2019 when it printed at $16.246billion (N5.924trillion).
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“Impairment losses on loans (net) for 2020 were $182 million, up $72 million from 2019. The higher impairments expense for 2020 reflected lower loan recoveries of $131 million in 2020 compared to $204 million in 2019. Gross provisions were down $2.1 million to $312 million, reflecting the reduction in non-performing loans. Extra management macro-overlays in reserves of $55 million were proactively taken as a buffer against what remains an uncertain economic outlook. Consequently, the cost-of-risk increased to 1.85 percent from 1.12 percent in 2019. Excluding the macro-overlay, the cost-of-risk was 1.29 percent”, the bank stated.
Incorporated in Lomé, Togo, Ecobank Transnational Incorporated (ETI) is the parent company of the leading independent pan-African banking Group, Ecobank, present in 35 African countries. The Ecobank Group is also represented in France through its subsidiary EBI SA in Paris.
ETI also has representative offices in Dubai, United Arab Emirates, London-UK, Beijing-China, Johannesburg-South Africa, and Addis Ababa-Ethiopia. ETI is listed on the stock exchanges in Lagos, Accra, and the West African Economic and Monetary Union (UEMOA) – the BRVM – in Abidjan.
On the Nigerian Bourse, ETI has 18,349,551,215 shares outstanding priced at N4.8per shares as at Monday March 22. ETI share price nears its 52-week low of N3.90 as against 52-week high of N7.30.
The Group is owned by more than 600,000 local and international institutional and individual shareholders. It employs 14,023 people in 39 different countries in 700 branches and offices. Ecobank is a full-service bank, providing wholesale, retail, investment and transaction banking services and products to governments, financial institutions, multinationals, international organisations, medium, small and micro businesses and individuals.
Ade Ayeyemi, Ecobank Group CEO, said: “2020 was a year which tested the resilience of the human spirit in rising to the many challenges as governments, businesses and households’ unrelentingly strove to keep citizens, clients and loved ones safe. I am proud of Ecobankers’ hard work and continued service to our customers and the support we provide to the communities we serve.”
He said, “Despite the pandemic’s challenges, revenues increased by 4percent to $1.7 billion. Pre-tax pre-provision profits rose 14percent to $626 million, reflecting the power of our Pan African diversified one-bank business model. Our tangible book value per share rose 16percent to $0.0547. Pre-tax profits were $174 million, down 57percent on last year, due to a $164 million goodwill charge, $61 million in net monetary losses, and legal and restructuring costs of $44 million.
“Corporate and Investment Banking was the primary growth driver, increasing PBT by 45percent, as it repositioned the Fixed Income Currencies and Commodities (FICC) business to offer innovative and structured products. Consumer Bank and Commercial Bank’s profits were down as the pandemic’s reverberations disproportionately affected households and small businesses, but they led the drive in the record growth of our customer deposits of $2billion to reach $18.3billion, thanks to the acceleration in digital channels usage,” Ayeyemi stated further.
According to him, “the regions’ results benefited from continued execution momentum. Nigeria improved Return on Equity (ROE) and strengthened liquidity and capital levels. UEMOA and AWA produced strong ROEs reflecting their leadership positions. Central, Eastern, and Southern African (CESA) hampered by Zimbabwe and South Sudan’s hyperinflation, delivered modest results. Group-wide we ended the year with a provisional Total Capital Adequacy Ratio of 12.3percent versus 11.6percent at the start. We improved our efficiency ratio by 342 basis points to 62.7percent as we continued resetting the firm’s cost base.
“With pre-tax, pre-provision profits up $77million, we added meaningfully to gross impairment reserves. We are turning the curve on asset quality. Non-performing loans reduced substantially, evidenced by our 7.6percent non-performing loan (NPL) ratio. We closed with a coverage ratio of 75percent, compared to 58percent in 2019, and are aiming for 100percent in the near term.
“We will continue to invest in our technology and payment business capabilities to ensure we deliver excellence in customer service. We remain optimistic about future growth and ability to create shareholder value by utilising our investments and achievements to grow revenues and generate long-term returns, despite the near-term challenges from COVID-19,” Ayeyemi noted.
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