Ecobank Transnational Inc., a lender with operations across much of sub-Saharan Africa has overcome the macroeconomic headwinds stifling the growth of lenders in Africa largest and oil producer Nigeria as first quarter profit rises 64 percent.
Profit was N24.48 billion in the first quarter of 2015, compared with N14.92 billion the previous year, the company said in an e-mailed statement on its website.
Ecobank is efficient, as cost to income (CIR) ratio reduced to 62.70 percent in 2015, as against 69.2 percent in 2014. The CIR measures the ability of a lender in managing costs while increasing profits.
Net margin another measure of profitability and efficiency jumped to 17.90 percent in 2015 as against 13.58 percent in 2014.
“Despite the headwinds, our diversified pan-African business model continued to serve as well, with encouraging underlying performance in our line of businesses and geographies,” said Albert Essien, Chief operating officer of the Togo based bank, in a statement released on its website.
“We maintained adequate levels of capital to support our business. Our total capital adequacy ratio was 19.4 percent for the quarter versus 16.1 percent in the prior year,” said Essien.
Nigeria lenders have been exposed to currency risk as the Central Bank of Nigeria (CBN) was forced to devalue the naira to shore off the effects of 40 percent decline in oil price on foreign reserves.
Inflation accelerated to 8.7 percent in April, close to the top of the bank’s 6 percent to 9 percent target.
The naira has lost more than 13 percent of its value against the dollar in the past six months, and was trading 0.5 percent stronger at 198.54 a dollar by 5:56 p.m. in Lagos.
Nigeria’s foreign-currency reserves stood at $29.8 billion on May 15, down 21 percent from a year ago.
The CBN also hike the interest by 100 basis point to 13 percent, while it also decided to set a unified cash reserve ratio — the amount of money that banks must set aside with the central bank — for public- and private-sector deposits at 31 percent. Previously, the rate was 20 percent for private-sector funds and 75 percent for public funds.
Ecobank’s interest income increased by 25 percent to N84.05 billion, while gross earnings moved by 64 percent as the lender continues to grow foreign exchange income and interest income on loans and advances.
The bank is aggressive about lending while pursing risk assets as loans to deposits ratio moved to 73.95 percent in 2015 from 70.11 percent in 2013.
Loans and advances to customer moved by 21 percent to N2.30 trillion in 2015, as against N1.90 trillion the previous year.
The loan growth means the lender is focusing on risk management via portfolio diversification.
Deposits to customers increased by 15 percent to N3.11 trillion in 2015 from N2.71 trillion the previous year.
Ecobank’s total assets spiked by 22 percent to N4.51 trillion in 2015, compared with N3.68 trillion in 2014.
The bank’s shares have risen 44.11 percent to close at N20.71 on the floor of the exchange while market capitalization was N489.62 billion.
“Overall, our results are reassuring in light of the challenging operating environment.
We are deeply proud of the competitive advantage our platform provides and the work our dedicated staff continue to do for all our stakeholders. ” said Essien.
BALA AUGIE
