Ecobank Transnational’s profit after tax plunges by 66%

Ecobank Transnational Incorporated posted a huge dip in net profit for 2020 as a result of impairment losses, according to its audited financial statements for the year.

The bank’s profit after tax declined by 66% to GHC 494.3 million as of December 21, 2020, compared to the same period the previous year.

Investors would therefore not be smiling as their dividends plummet.

Earnings per share from continuing operations were slashed to 0.055 pesewas from the previous year’s 4.060 pesewas.

Similarly, earnings per share from discontinued operations generated 0.041pesewas from the 0.054pesewas in 2019.

Ecobank has seen a downward trend in revenue for the last four years, but saw a reversal in 2020.

The company’s gross earnings increased by 1% to GHC 12.3 billion just as revenue went up by 11% to GHC9.4 billion.

Operating profit before impairment losses shot up by 22% to GHC3.5 billion as well as total assets which witnessed a 14% rise to GHC 148.7 billion.

However, there was a decline in profit before tax and goodwill impairment by 11% to GHC 1,891.0 million.

Likewise, profit before tax also reduced by 54% to GHC 975.6 million.

Under the period under review, the bank increased its credit to clients as victims of the COVID-19 impact counted their losses.

Loans and advances to customers were increased by 3% to GHC 53.0 billion.

Customers held a lot of cash in savings with deposits rising by 17% to GHC 104.9 billion.

The bank’s total equity is up by 11% to GHC 11.6 billion.

Bank’s CEO expresses optimism

Ecobank Group CEO, Ade Ayeyemi, attributed the rise in revenue to corporate and investment banking which pushed their profit before tax by 45%.

He said consumer banking and commercial bank 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 $2bn to reach $18.3bn, thanks to the acceleration in digital channels usage”.

He pointed out that the Total Capital Adequacy Ratio has improved to 12.3%.

He indicated that the bank has improved its efficiency ratio by 342 basis points to 62.7% as they continue resetting the firm’s cost base.

“With pre-tax, pre-provision profits went up to $77m, as we added meaningfully to gross impairment reserves. We are turning the curve on asset quality. Non-performing loans reduced substantially, evidenced by our 7.6% NPL ratio. We closed with a coverage ratio of 75%, compared to 58% in 2019, and are aiming for 100% 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.

Ecobank Transnational Incorporated (ETI)

Ecobank Transnational Inc. (ETI), is a pan-African banking conglomerate, with banking operations in 36 African countries.

It is the leading independent regional banking group in West Africa and Central Africa, serving wholesale and retail customers.

It also maintains subsidiaries in Eastern and Southern Africa.

ETI has representative offices in Ghana, Angola, China, Dubai, France, South Africa, and the United Kingdom.




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