ETI Works Its Come Back, Gross Earnings Rises 5.36%


Sunday, September 22, 2019 / 12.00PM / Proshare Research / Header Image Credit:

After a few years of trouble (still smoldering) with its Nigerian subsidiary (Ecobank Nigeria), ETI  is slowly edging out of the woods, albeit still fragile. The banking groups H1 2019 performance was a statement of intent. ETI  gross earnings grew by +5.36% from N384.59bn in H1'18 to N405.20bn in H1'19(see chart 1 below)

Chart 1 ETI Gross Earnings (N'm) H1 2019

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Source: ETI's financial statement for 2014 -H1 2019


Interest income grew by +1.80% to N246.57bn in H1'19 from N242.22bn in H1'18. Net interest income dipped by -10.70% to N130.89bn in H1'19 from N146.57bn in H1'18. Non-interest income increased by +13.01% to N 149.22bn in H1'19 from 132.04bn in H1'18. Non-interest income constitutes 53.27% of operating income in H1'19 as against 52.61% recorded in H1'18. Operating income increased marginally by +0.54% from N278.61bn in H1'18 to N280.11bn in H1'19.

A Better Loan Book

Impairment charges fell by -49.72% to N20.68bn in H1'19 from N41.13bn in H1'18(see chart 14 below). The Impairment to loan ratio fell to -0.66% in H1'19 as against -2.46% recorded in Dec'18. The ratio of total liabilities to total assets stood at 91.95% in H1'19 as against 91.97% in Dec'18. Return on total asset stood at 0.91% in H1'19 while return on equity stood at 11.27% in H1 2019.


Chart 2 ETI Impairments to Loans in H1 2019

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Source: ETI financial statement 2014-H1 2019


Finding A New Paradigm

ETI and its local Nigerian subsidiary (Ecobank Nigeria) will be pushing for new growth paradigms in the coming months if both institutions are to make a success of their operations in years ahead. Top line earnings need to grow faster and cost to income ratios need to fall. To the groups credit. its non-Nigerian operations in French speaking West Africa (UMEOA) and Ghana are doing appreciably better than the Nigerian operations, but even the Nigeria business is gradually turning a corner as the bank pursues a number of strategic initiatives such as right sizing and digitalizing local operations.

However, digitalization and rationalization are not strategies but measures that are part of an overarching intent to improve the bank's business process, this is a start to achieving larger domestic market share. The groups 11% return on equity (ROE) is modest measured against the domestic Nigerian inflation rate of 11.02% (August 2019), indeed the group needs to address the issue of its high leverage (see ROE illustration below).  

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In reviewing ETI's H1 2019 performance it is important to separate the report of the group ETI (an entity listed on the Nigerian Stock Exchange (NSE)) from Ecobank Nigeria which is a private limited liability subsidiary of ETI.  

Download Full H1 2019 Banking Sector PDF Report Here


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4.       FBNH Searches For Growth; H1 Operating Income Drops -0.3% - Sept 22, 2019

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