Is ETI The Only Bank Using CBN Rates To Convert Its USD Results Into NGN and Vice Versa?


Friday, November 09, 2018   04:39PM / OpEd By Esiri Giwa, Proshare Research


One of the stated objectives of IFRS is comparability, i.e. QC20 Users’ decisions involve choosing between alternatives, for example, selling or holding an investment, or investing in one reporting entity or another.


Consequently, information about a reporting entity is more useful if it can be compared with similar information about other entities and with similar information about the same entity for another period or another date.


Conversions / Translations – Unique Peculiarity of ETI

Ecobank, or as known in bourses - Ecobank Transnational Inc. (ETI), is a pan-African banking conglomerate headquartered in Togo but listed on the Nigeria Stock Exchange (NSE) and having banking operations in thirty-six (36) African countries, of which Ecobank Nigeria exist as an OpCo.


ETI is the leading independent regional banking group in West Africa and Central Africa, serving wholesale and retail customers, by spread. ETI therefore, like all the other banking entities (and quoted companies) listed on the NSE has to publish its results in Naira (NGN).


The difference however with ETI is that, unlike most; it has to convert/translate all the local currencies of/from all the different operating countries to USD before conversion/translating the results back to Naira.


As we noted in ETI 2017 Results In Light Of Guidance From Fitch And PWC On Exchange Rates Per IFRS , PWC issued a guidance for banks that provided the rationale/justification for the use of NAFEX rate from 2017; a position supported by Fitch who equally affirmed its advisory to banks to use NAFEX rate convert results.


Recall the January 2018 PWC’s published report under their current Financial reporting issues “Accounting considerations for foreign Currency transactions and balances in Nigeria under IFRSs” where in on page 6, it stated clearly that:

The translation of the financial statements of a foreign operation located in Nigeria should be translated at the NIFEX OR NAFEX rate because these are the two applicable rates at which they can remit proceeds from the investment whether from dividends or sale. This also applies to any associate, joint venture or branch investments in a foreign operation that Entity A might have within Nigeria.” 



Review of Application (Note Disclaimer)

From our computations, we represent that for year ended 2017 results - GT Bank, Zenith Bank, Access Bank and StanbicIBTC all used the NIFEX rate of 331 Naira to the US Dollar (approx.).; and for the period ended 30th September 2018, GT Bank used N354.49 Naira, Access Bank used 344.94 Naira; and StanbicIBTC used 363.72 Naira to USD. 


It is important for the reader/user of this information to note that “not every entity discloses its exchange rates.  ETI apparently discloses average exchange rates which it uses for income statements and they further disclose the closing rate for balance sheet (or can be computed).


The rates the banks cited in this report is derived from internal computation using closing rates on loans, debts and other indicators gleaned from the financial reports; as they do not always disclose their averages rates (sometimes they do) but for quarterly results; and these are sometimes not so easy to determine/find.  See appendix below.


Rate(s) of Conversion for Financial Reporting (N to $)



Year End 2017 Results

September 2018 Results


GT Bank








Access Bank











Source: NSE, Banks & Research




ETI would appear to be the only bank using the official CBN rates to convert its results for year-end 2017 and September 2018. 


How does ETI results compare to the other Banks mentioned in this article if they do not use the same USD rates to convert their results?


ETI discloses the impact of using the NAFEX rate in its investor presentations on PBT and equity but does not disclose the additional impact on foreign currency translation losses which will severely impact its equity.


Fitch raised the concern of the impact of foreign currency translation losses in its rating report on ETI in its 10 August 2017 release:


"We believe that ETI's capitalisation remains under pressure. ETI's Fitch core capital ratio (FCC) declined to 11.1% at end-2016, from 14.1% at end-2015, due to its net loss for the year and substantial foreign currency translation losses on foreign operations (as included in other comprehensive income). For these reasons, ETI's tangible common equity / tangible assets ratio also declined to 7.1% at end-2016 from 9.2% at end-2015. 


ETI is heavily exposed to structural foreign exchange risk from its operations in different currencies. Prominent currency exposures are to the CFA franc (which is effectively pegged to the euro), Nigerian Naira and Ghanaian Cedi. During 2016 all of the main currencies depreciated heavily against ETI's reporting currency, the US dollar. The cumulative effect was a USD625 million translation loss upon consolidation at end-2016, equalling 25% of the group's opening shareholders' equity. Net investment hedges (as per IFRS) are not in place to mitigate this material risk as suitable derivative instruments are often not available. Therefore, we expect translation losses to be an ongoing source of volatility for the group's capitalisation"


The impact on equity and capitalisation will be severely impacted by using the NAFEX rate of 363.42 vs the 306.65 official CBN rate as at 7 November 2018.  It is well documented that Ecobank cancelled a bond issue earlier in 2018 to raise additional capital.



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Impact on share price performance:


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Source: Proshare IR Portal



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Source: FT



For further information, perspective and additional insight for our team, kindly e-mail us vide


Find out more information, Click here to access Ecobank’s IR Portal in Proshare Markets


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Ecobank (ETI)

Ecobanks Internal Exchange rate reports shows the fluctuations in the FCFA,CEDI & NGN closing rates in 2016 (source Ecobank Finance)

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Ecobank Full Year 2017:

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Ecobank September 2018:

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Zenith Bank Plc

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GT Bank Sep 2018 at 354.49 and Dec 2017 at 331 (calculated):

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Access Bank 2017 results:

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Access Bank September 2018:

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Stanbic IBTC 2017:

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Stanbic IBTC 2018:

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Diamond Bank 2017

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