Ecobank reports full-year loss on soaring loan impairment charges
The group declared an after-tax loss of N52.6 billion.
Ecobank Transnational Incorporated, a leading Pan-African banking group, has reported a full-year loss in 2016, owing to a sharp increase in loan loss provisions arising from the weak economic environment across the continent. The group said after-tax loss stood at N52.6 billion as against a profit after tax of N21.25 billion in 2015.
Notwithstanding the loss, ETI said gross earnings rose 23 per cent to N665 billion compared with N542.71 billion in the previous year. The revenue growth was driven by significant increases in interest and non-interest income.
ETI’s revenue and profit underperformed analysts’ estimates, according to CardinalStone Partners, a Lagos-based investment advisory firm.
“Our Group revenues remained resilient despite a tough year of macroeconomic headwinds, including a weaker economic environment, particularly in Nigeria, and the strengthening of our reporting currency – the US dollar – against all African currencies particularly the Nigerian Naira where 40 percent of the Group’s revenues have historically been generated,” said Ade Adeyemi, ETI’s CEO.
“Separately, our end of year bottom line performance has been impacted by our voluntary adoption of a full impairment charge regarding our legacy loan portfolio, for which a resolution vehicle was set up, the first private sector funded resolution vehicle of its kind in Nigeria, with the sole objective of ring-fencing the legacy loans from Nigeria’s core bank,” the ETI CEO added.
ETI said total assets rose 33 per cent to N6.26 trillion compared with N4.69 trillion in 2015 due mainly to the impact of the devaluation of the naira on the foreign-currency borrowing. Loan loss provisions rose 110.7 per cent to N221.7 billion compared with N105.2 billion in the previous year.
“We maintain our cautious stance on lending in this challenging period, but will continue to implement a number of exciting new customer initiatives such as our Pan-African banking app and leveraging our blue-chip partnerships to benefit our customers across 40 countries,” Adeyemi said. “The Francophone West Africa and Anglophone West Africa regions continue to perform positively generating over 40 percent of the Group’s revenues at a return on equity above 24 percent and 32 percent respectively.”
ETI said basic loss per share from continuing operations stood at N2.59 per share compared with a per share earnings of 56 kobo per share in 2015. The banking group did not declare a dividend for the 2016 financial year.
“I remain confident in the result of the cost efforts and in our ability to deliver a leading service for our customers, which will be reflected in improved key performance indicators in 2017 and beyond. Ecobank’s twin goals are generating sustainable returns above the cost of equity whilst maintaining the highest international standards and we treat both goals equally. Reputations are hard won and easily lost and we will never compromise that,” Adeyemi said.
ETI’s stock fell 5 per cent to N7.79 per share as of 11.52am at the Lagos bourse on Wednesday.
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