Ecobank Transnational Inc., Africa’s most geographically diverse lender, could reward shareholders this year as the lender started the year with a double-digit growth in earnings while curtailing costs.
Investors use the first quarter results of companies to gauge future performances as they expect a return on their investments.
At its 30th Annual General Meeting (AGM) held in Pan Africa Conference Centre in Lome Togo, Ecobank said that it was unable to pay dividend for 2017 financial year despite rebounding to a profit position because there was the need to create buffers and maintain a solid profit position.
For first three months through March 2017, Ecobank’s net income spiked by 49.14 percent to N27.86 billion as against N18.68 billion the previous year.
A reduction in impairment losses on financial assets and increased noninterest income helped propel the lender to growth amid a volatile and unpredictable environment.
Gross earnings were up 11.34 percent to N198.61 billion in the period under review, thanks to contributions from interest on loans and advances.
Interest income and similar charges were up 9.58 percent to N126.58 billion in March 2017 from N115.58 billion the previous year.
The growth in interest income was driven largely by a 12.90 percent increase in noninterest revenue to N66.30 billion in the period under review.
The Lome, Togolese lender’s decision to curtail costs by reducing number of branches in Nigeria to 405 from 479 as it seeks to reach more customers through digital platforms has yielded fruit as cost to income improved.
Staff expenses were down 2.47 percent to N37.88 billion in the period under review from N38.87 billion as at March 2018.
Operating expenses were up 9.80 percent to N42 billion as at March 2018, lower the 13.34 percent March inflation figure.
“Overall, our results show the progress that we have made in the last two years in strengthening the firm’s foundations as part of our ‘roadmap to leadership’ and digitisation strategies – particularly around operating efficiency, credit risk management, and digitisation to reduce our cost-to-serve and advance our vision to bring affordable and convenient financial services solutions to the many unbanked Africans,” said Ade Ayeyemi, Group CEO of Ecobank in a note to client.
“We have now reached a turning point in our five-year strategy. In the next few years, we will build on this momentum with one major goal – relentless execution,” said Ayeyemi.
Ecobank’s deposits from customers increased by 13.76 percent to N4.71 billion in March 2018, from N4.14 billion as of March 2018.
Total assets were up by 9.10 percent to N6.83 trillion in the period under review from N6.26 trillion as at March 2018.
“We can serve the number of people, while improving fundamentals will boost economic activities and ease credit risk. We expect credit quality metrics to remain elevated in some countries, notably Nigeria and Ghana. To address these issues, Ecobank has appointed a highly experienced chief risk officer to ensure that the bank establishes and maintains robust risk management framework,” said Ayeyemi, during the lender’s Annual General Meeting.
BALA AUGIE
