Ecobank Transnational Incorporated (ETI) has announced a profit before tax of $352 million for the nine months of this year, on net revenue of $1.3 billion. 

It attributed the profit to higher revenue and lower expenses combined to create positive operating leverage and an improvement in the cost-of-risk or credit quality.

Net revenue, operating income was $1.265 billion, increasing by $52 million, or 4%. Revenue benefited from increases in net interest income and non-interest revenue, both increasing by $26 million from the prior year, with solid revenue growth in Commercial and Consumer Banking.

The pan-African bank said cost-to-income ratio of 58.3% has been on a downward trajectory on a quarterly basis, benefiting tremendously from its strategy, sustained cost discipline and revenue growth.

Customer deposits also increased $1.5 billion or 9% year-on-year to $18.9 billion driven by deepening client relationships, partnerships, and increasing consumption of our digital platforms.

The Non Performing Loans ratio reduced further to 6.9% from 7.6% in the 4^th quarter of 2020 and 9.9% in third quarter of 2020.

Ade Ayeyemi, Ecobank Group CEO, said: "We reported strong results, reflecting the continued diligence of Ecobankers in putting our customers first and ensuring that we meet their respective needs. For the nine months period up to September 2021, we earned $352 million in pre-tax profit, a 41% increase compared to the prior year and revenues of $1.3 billion, a 4% growth. Hence return on tangible equity increased to 17.9%, and we grew the per-share value of our shareholders' equity by 11% to 5.52 US dollar cents.”

"These results also demonstrate the hard work invested in driving efficiency in all our businesses in line with our deliberate focus on driving down our cost-to-serve, sustain improvement in the quality of our credit portfolio, and strengthen liquidity and capital buffers. As a result, our cost-to-income ratio has been declining consistently quarter on quarter, currently 58.3%,” he explained.

“In addition, the stock of NPLs as a percentage of loans outstanding is now at 6.9%, compared to 9.9% a year ago. At the same time, we are proactively building loan reserves, currently at 91.2% of nonperforming loans, close to our near-term target of 100%. We have boosted the firm's liquidity profile, thanks to growing customer deposits fueled by an acceleration in digital channel adoption, partnerships with Fintechs, Telcos, and businesses in the Payments Ecosystem," Mr. Ayeyemi added.

Regional performance

Francophone West Africa (UEMOA)

UEMOA posted a profit before tax of $143 million, an increase of $34 million, or 31%, or a rise of $26 million, or 22%, on a constant currency basis.

Annualised Return on Equity (ROE) for the period was 21.9%. Net revenue of $409 million increased $40 million, or 11%, and on a constant currency basis, increased by $15 million, or 4%, driven by net interest income.

Net interest income increased $30 million, or 13%, to $255 million, significantly driven by a decrease in interest expense.

Net impairment charges on loans were $41 million compared with $39 million in the prior year. The current period’s impairment charges the bank said reflected higher provisions on higher nonperforming loans.

Nigeria

Nigeria reported a profit before tax of $18 million, a decrease of $19 million, or 51%, or 49%, in constant currency, primarily due to revenue headwinds and lower recoveries compared to prior period. Annualised ROE was 2.9%. Net revenue was $156 million, decreasing by $47 million, or 23%, or in constant currency, by 18%, with growth in noninterest revenues offset by a decrease in net interest income.

Net interest income decreased $68 million, or 53%, to $60 million, driven by lower interest-earning assets and the net impact of higher interest rates. Additionally, Nigeria’s interest income continues to be adversely affected by persistent discretionary cash reserve requirements, which continue to impact liquidity and profitability.

Net impairment charges were $8 million compared to $1 million in the prior year, primarily due to significantly lower loan recoveries in the current period compared to the prior year.

Anglophone West Africa (AWA)

AWA recorded a profit before tax of $184 million, up $35 million, or 24%, or 27%, in constant currency. Annualised ROE was 27.1%. Net revenue of $384 million increased $21 million, or 6%, and on a constant currency basis by 8%, predominantly driven by net interest income.

Net interest income increased $28 million, or 12%, to $262 million, driven by higher interest earning assets balances and the net impact of higher yields.

There was net impairment charges on loans of $29 million compared with $43 million in the prior-year period. The lower impairment charge in the current period, Ecobaak Group, said reflected a decrease in non-performing loans, an increase in loan recoveries and an improvement in the credit risk portfolio.