Ecobank’s earnings surge despite continued headwinds
by BALA AUGIE
September 19, 2017 | 1:40 am| | | Start Conversation
EcoBank Transnational Inc’s second quarter profit has surged 21 percent despite continued macroeconomic headwinds, thanks to a reduction in costs and contribution from interest income.
The growth at the bottom line can be attributed to improved yield on loan book and high yield on money market instrument.
For the first six months through June 2017, EcoBank’s net income surged by 21 percent to N37.73 billion compared to N31.01 billion as at June 2016.
Operating incomes were up 34 percent to N278.48 billion in the period under review as against N208.48 billion as at June 2016.
Gross earnings spiked by 41 percent to N386.85 billion in June 2017 from N273.44 billion the previous year. Interest income was up 34 percent to N241.90 billion in June 2017 as against N180.05 billion the previous year.
Non Interest revenue surged by 54 percent in the period under review, driven by increased client-driven foreign exchange (FX) sales and trading income, following the further liberalization of the foreign exchange market.
The central bank has introduced the Investors’ and Exporters’ early in the year that ease the flow of dollars in country hard hit by a severe dollar shortage since oil price fell in mid 2014.
EcoBank has remained efficient amid a high inflationary environment and rising regulatory costs as cost to income ratio fell to 60.60 percent in June 2017 from 62.70 percent as June 2016.
A lower ratio means a lender is efficient in reducing costs while increasing profit.
“Our audited half year results demonstrated the benefits of our diversified business model. Despite a fragile macroeconomic backdrop in most of our markets, we still generated a 15.6% return on tangible equity and further improved our cost-toincome ratio to 60.6%, driven by our continued cost reduction initiatives across the network,” said Ade Ayeyemi, Group CEO of ECobank.
”We are also happy with the progress we are making on the digital front, particularly on our strategy to enable millions of unbanked Africans have access to financial solutions using our revolutionary Ecobank App and other digital channels,” said Ayeyemi.
Ecobank’s deposit from customers was up 3 percent to N4.23 trillion amid a tough and volatile macroeconomic environment.
Big Banks in Africa’s most populous nation and largest oil producer recorded slow growth in deposits as customers are liquidating deposits for Treasury Bills (T-bills).
The cumulative total deposits from customers of the 12 lenders that have released Half Year 2017 results increased by 1.0 percent to N16.53 trillion in June 2017.
This compares to the half year period to June 2016 when deposits from customers surged by 31.54 percent or N4 trillion to N16 trillion.
The relatively weak growth in deposit in the first half of the year can be attributed to two major factors, amongst others. First, most corporates continuously deployed otherwise Naira deposits into foreign currency purchase, taking advantage of the increased FCY liquidity in the system; thanks to the I&E window and increased supply from the CBN,” said Abiola Rasaq Head of Investor relations United Bank for Africa (UBA).
Ecobank’s shares have gained 73.15 percent since the start of the year while the lender has a market capitalization of N428.98 billion. Total shareholders fund stood at N502.59 billion while total assets was N6.45 trillion.
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