Ecobank 9-months profit dip by most in 9 years

Ecobank Transnational Incorporated (ETI), a panAfrican banking conglomerate has posted its lowest profit in 9 years as the company made a huge loss on its investment in securities.

Ecobank’s profit after tax (PAT) plunged to N10.3 billion within the first 9 months of 2020, an 87 percent drop from N78.8 billion in the same period last year.

Other operating income also fell 87 percent to N1.98 billion from N15.2 billion dragged by the loss on investment securities.

The company made a loss of N1.31 billion on investment securities in the nine months period compared to a profit of N4.02 billion recorded in the same period last year.

Similarly, profit before tax (PBT) declined to N34.49 billion between January till September 2020, a 68 percent decrease from N109.48 billion in the same period of 2019.

In the three months period ( June- September), the company also recorded a loss of N38.3 billion, some 301 percent decline from a profit of N19.1 billion recorded in the same period last year.

Despite the low yield environment, the company grew its interest income 7 percent to N372.4 billion in the nine months period from N372.4 billion in the same period last year.

Gross earnings rose to N613.1 billion in 2020, less than 1 percent increase from N610.8 billion in 2019 on a 9- month basis with revenue seeing a mere 9 percent hike to N461.2 billion from N422.6 billion within the same period. A closer look at the financials revealed that impairment losses on loans and advances dropped to N66.89 billion within the first 9 months of 2020, a 12 percent dip from N76.2 billion in the same period of 2019.

Meanwhile, the bank’s 9-month recoveries plunged by 39.7 percent to N27.6 billion in 2020 from N45.79 billion in 2019, further dimming the profit outlook.

Also, operating expenses increased to N292.38 billion in 2020, a 4 percent rise from N280.5 billion in 2019 on a 9-month basis. Similar patterns were seen for other operating expenses.

Interest expense dipped by 19.6 percent to N142.34 billion up from N177.05 billion in 2019 whereas interest income rose by barely 7 percent to N397.37 billion from N372.49 billion.

This made net interest income hike to N255.03 billion between January to September 2020, a 30 percent rise from N195.45 billion in the same period of 2019.

The bank’s Fees and commission income dipped 7 percent to 115 billion compared to N123.8 billion in the first 9 months of last year.

Fees and commission expense also declined 10 percent to N8.8 billion as against N9.8 billion in 9M’19.

Net trading income stood at N97.9 billion, same as recorded last year.

Depreciation and amortisation grew 5 percent to N29.4 billion from N28 billion in the nine months period of 2019.

The bank’s staff expense grew by 1 percent to N128.9 billion from N129.7 billion last year

Earnings per share fell 122 percent to N50.1 per share in the first nine months of the year from N224.3 per share last year.

In the third months period, although Ecobank made a loss, the company recorded an 11 percent increase in interest income to N139.5 billion from N125.9 billion in Q3’ 19. Interest expense dipped 25 percent to N45.7 billion in Q3’ 20 compared to N61.3 billion in the third quarter of 2019.

Impairment of financial asset also jumped 176 percent to N2.8 billion from N7.7 billion recorded in Q3’19.

Earnings per share rose to N186 per share in Q3’20 from N50.8 per share in the third quarter of 2019.