ETI Q4'15 & Q1'16 Conference Call & Earnings Presentation: The key takeaways

Proshare

Friday, April 15, 2016 5:22 PM / Proshare Markets

The macro-economic challenges remain daunting; with corresponding strict industry regulations. The new policy by Federal Government on full implementation of Treasury Single Account played a significant role on the liquidity challenges within industry. However, the reduction in harmonized CRR on private and public sector deposit to 20% from 25% for ease of liquidity challenges.

There are strong indications that microeconomic challenges that influenced business outlook in 2015 financial year are likely to persist in 2016. The low oil price, FX scarcity and market volatility would continue to adversely impact business.

As a result of difficult operating environment in the financial year, Ecobank group delivered unimpressive performance, with attendant weak performance across regional subsidiaries in both Q4’15 and Q1’16 periods- the top-line in both periods declined by 8% and 6% respectively while PAT down by 73% and 35% respectively 

This has translated to significant drop in ROE, which closed lower at 4.2% in Q4’15 against 16.5% recorded in Q4’14. However, we observed an improved ROE in Q1’16 to close at 12.9% but still underperformed when compared with 19.3% recorded inQ1’15.

Also, we observed unimpressive posture of the NPL ratio, hitting above regulatory threshold to close at 8.2% and 9.0% in both Q4’15 and Q1’16 periods respectively. This reveals below average posture of the bank towards risk assets management and strategies.

In addition, the impairment losses gained a significant weight to move up by 99% and 53% in both Q14’15 and Q1’16 respectively. Meanwhile, the operating efficiency and cost management remain slipped further as CIR remained bloated to hit new low in Q1’16 at 66.1% from 64.9% recorded in Q4’15.

Summarily, below are the key takeaways from the Q4’15 and Q1’16 earnings presentation as presented by the management of the bank;


         Depreciation of  key currencies and impairment charges impacted decline in profit

         cautious lending and Lower economic activity hinder loan book growth

         Regulatory headwinds and slower economic growth significantly impacted none interest income growth

         Scarcity of FOREX adversely impact bottom-line

         slow  and unstable economic outlook hinder general business activity

         Exposure in Ghana and Nigeria significantly contributed to impairment losses growth

         The bank continues to meet capital adequacy requirement in Nigeria

         The bank targeting to growth deposit base by 2% in 2016 against 6% decline recorded in 2015

         The bank aims to moderate NPL ratio at 7.5%

 

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