Friday, July 29, 2016 5:37pm/ Ecobank Group
Ecobank Group today reported unaudited1 results for the six months ended 30 June 2016 with profit before tax of $204 million on revenue of $1.0 billion.
· Revenue of $1.0 billion, down 5% year-on-year (flat at $1.1 billion in constant dollars)
· Cost-to-income ratio of 64.3% (62.5% in June 2015)
· Pre-impairment income of $365 million, down 9% year-on-year, ($383 million in constant dollars)
· Profit before tax of $204 million, down 35% year-on-year, ($216 million in constant dollars)
· Attributable profit to ETI shareholders of $127 million compared to $217 million in June 2015
· Diluted earnings per share of 0.51 US cents compared to 0.92 US cents in June 2015
· Return on average total assets (ROAA) of 1.4% and return on average equity (ROAE) of 13.1%
· Net customer loans of $10.2 billion, down $1.6 billion, or 14%, but up 1% in constant dollars
· Customer deposits of $14.3 billion, down $1.9 billion, or 12%, but up 3% in constant dollars
· Basel I Tier 1 capital ratio of 20.8% and total capital adequacy ratio (CAR) of 23.9%
Group CEO Ade Ayeyemi said: “Our results for the first half of the year were modest, achieved in a period of economic slowdown and market uncertainty. However, our diversified business model, a source of competitive strength, and strategy positively contributed to the underlying results.
“Revenue was flat in constant dollars from the prior year period, while earnings decreased due to higher impairments. Our efficiency ratio of 64.3% was within target, despite the revenue headwinds, supported by actions we continue to take to reduce costs which will yield future benefits. Though the economic environment broadly continues to be challenging, we are seeing progress in our initiatives to improve credit quality.
“Our balance sheet growth was significantly impacted by the depreciation of the Naira and our cautious stance on lending in the current environment. Our capital adequacy ratio at period end was 23.9% under Basel 1.
Mr. Ayeyemi concluded: “We see opportunities to serve our clients in these challenging period and applaud Ecobankers, our most valuable resource, for continuing to deepen relationships with our clients.”
Net revenue was $1.0 billion, a decrease of $51 million, or 5%, primarily driven by foreign exchange translation. Excluding the impact of foreign exchange translation, revenue growth was flat at $1.1 billion.
Net interest income was $589 million, an increase of $29 million, or 5%, primarily driven by the impact of higher yields on earnings assets.
Non-interest revenue was $433 million, a decrease of $79 million, or 16%, reflecting lower transaction services volume and lower credit-related fees due to lower client activity, partially offset by an increase in client-driven foreign exchange income driven by market volatility experienced in the second-quarter (April-June).
Operating expenses were $657 million, a decrease of $14 million, or 2%, driven by the benefit from foreign exchange translation. Excluding foreign exchange translation effects, operating expenses increased 3%, primarily driven by staff training costs, rent and utilities, card related operational costs, and partially offset by reductions in information, communications and technology (ICT) and travel costs. The cost-to-income ratio for the period was 64.3% versus 62.5% in the prior year period due to lower revenues.
Impairment losses were $161 million (of which $156 million were on loans and advances), compared to $90 million ($76 million on loans and advances) in the prior year period. The current period’s impairments reflect the elevated credit risk environment. The annualised cost-of-risk was 2.76% compared to 1.23% in the prior year period.
Profit after tax was $152 million, a decrease of $92 million, or 38%, from the prior year period. In constant dollars, profit decreased 34%, driven by higher operating expenses and impairment losses. Profit attributable to owners of ETI was $127 million, a decrease of $91 million, or 42%, from the prior year period.