Ecobank Transnational Incorporated’s (ETI) outlook has been upgraded from “negative” to “stable” by Moody’s Ratings.
This is in line with the rating agency’s affirmation of the group’s B3 long- and short-term issuer ratings, B3 senior unsecured debt rating, B2 notional Baseline Credit Assessment (BCA), and b1 Adjusted BCA.
The outlook arrives at a critical juncture for the group, particularly following the recent completion of its $250 million Additional Tier 1 capital raise.
Why the upgrade?
According to Moody’s, the revision reflects ETI’s resilient financial performance, improved liquidity profile, and progress toward recapitalising Ecobank Nigeria. Ecobank Nigeria currently accounts for about 11.7 percent of ETI’s total group assets.
The report stated, “Over the past year, ETI has demonstrated resilient financial performance, which supports our change in outlook to stable.”
It highlighted that the group’s profitability continued to improve through 2024 and Q1 2025, leading to a 22 percent rise in dividends received from its subsidiaries. It received dividends from 22 of its subsidiaries in 2024, up from 14 in 2021. These dividends have helped reduce ETI’s double leverage ratio to 168 percent in December 2024, from 173 percent the previous year.
The double leverage ratio is a key financial measure that evaluates how much of a holding company’s investment in subsidiaries is funded by debt instead of equity. In simple terms, it signals how much risk the parent is taking to fund its operations through borrowed money. Essentially, according to the report, ETI is now taking fewer risks in refinancing its subsidiaries.
Moody’s also pointed to a significant reduction in liquidity risks at the holding company level, following the successful refinancing of short-term obligations. ETI accessed capital markets in October 2024 and May 2025, raising $400 million and $125 million, respectively, through senior unsecured note issuances maturing in 2029.
The stable outlook further incorporates Moody’s expectation that Ecobank Nigeria’s capital adequacy issues, currently below the regulatory minimum of 10 percent, will be addressed through a series of capital-raising initiatives before the end of 2025. This includes the recently concluded $250 million Additional Tier 1 (AT1) capital raise, with part of the proceeds expected to be injected into Ecobank Nigeria in Q3 2025. Ecobank Nigeria is also pursuing a separate $200 million AT1 issuance.
Moody’s also acknowledged Ecobank Nigeria’s successful early repayment of $150 million for its February 2026 notes. The report also highlighted the removal of the capital adequacy covenant on the remaining bond terms. It was noted that the action significantly lowered the risk of a technical default in Nigeria that could have triggered a cross-default event for ETI.
The ratings agency also affirmed the group’s B2 baseline credit assessment. It was noted that the affirmation was supported by improving profitability, stronger capitalisation, and stabilising macroeconomic conditions across key markets.
According to Moody’s, ETI’s net income to tangible assets ratio rose to 1.7 percent in 2024, up from 1.2 percent in 2019, reflecting stronger earnings performance by its consolidated subsidiaries.
Asset quality is improving, but pressures still exist
It is noted that asset quality across the group has improved from pre-pandemic levels but remains under pressure. And this issue is particular to Ecobank Nigeria, where stage 3 loans make up about 9.6 percent of total lending as of March 2025.
Across the group, problem loans rose to 6.6 percent from 5.4 percent in 2023, driven mainly by delinquencies, especially in Anglophone West Africa, including Ghana. Nevertheless, the group’s overall loan loss reserve coverage stood at 89 percent in March 2025, helped by central provisioning at the holding company level.
Moody’s also noted a more supportive macroeconomic backdrop in several key markets. In Ghana and Nigeria, accounting for a combined 21% of group assets, economic pressures have started to ease. In Nigeria, Ecobank Nigeria is presently undergoing a ‘transformation’ as the bank has intensified its loan recovery efforts, especially considering improved macroeconomic conditions.
The bank has been able to reclassify about N170 billion of its stage 2 loans to stage 1 in 2025, reflecting consistent performance over the past 12 months. As part of its ‘asset quality war room’ efforts, it also highlighted a successful $6 million loan recovery from a long-standing delinquent obligor.
The asset quality war room set up by Ecobank Nigeria has also taken a different approach to impairment charges. In H1 2025, its gross impairment charges hit N32.8 billion, a more than 200 percent increase from the N10.7 billion provisioned in H1 2024. The ability to increase its impairment coverage was buoyed by rising earnings. Its H1 2025 gross earnings grew by 30 percent year-on-year to N113.7 billion, from N87.6 billion in H1 2024.
