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ETI Ecobank Transnational : Ecobank Reports Profit Before Tax of $90 million on net revenues of $393 million for the first-quarter of 2020

04/24/2020 | 06:23am EDT

News Release

Lomé 24 April, 2020

Ecobank Reports First Quarter 2020 Profit Before Tax of $90 million

Diluted EPS of $0.0020, and Tangible Book Value Per Share (TBVPS)1 of $0.05

Ade Ayeyemi, Group CEO said: "Quarter 1, 2020 was the beginning of

We have made it safer to visit our physical locations by providing

an unprecedented, uncharted and disturbing period for businesses,

temperature checks, crowd control, hand sanitisers and social distancing,

governments and individuals globally, owing to the rapid spread of the

among other measures. Our ATMs and call centres remain open 24/7, and

coronavirus pandemic. For us, as a bank, our focus is on making sure

the full range of our banking services are available via our digital

that we can meet the needs of our customers despite the pandemic,

platforms. Ecobank Mobile and Ecobank Online are available to our

while also ensuring their wellbeing and safety as well as those of our

consumer customers, and Ecobank Omni Lite and Ecobank Omni meet the

employees. All our countries have successfully activated our business

needs of SMEs and large businesses. To further help alleviate the adverse

continuity plan in line with the needs of each local environment.

impact of the pandemic on our customers, we have waived some of the

Through our investment in technology over the years, working from

fees on our digital channels and we are closely monitoring events to

home has been seamless and indeed a pretext to a possible new

anticipate situations that may require our support to customers as

normal post COVID-19."

circumstances evolve," Ayeyemi added.

"As the leading pan-African bank, Ecobank embraced the call to duty

"That said, our quarterly performance was resilient, again reflecting the

with a sense of urgency. With our knowledge of Africa and its

strength of our diversified business model. We delivered $90 million in

intricacies in the fight against the spread of COVID-19, we have

pre-tax profits, an increase of 27% if adjusted for currency translation

contributed about $3 million in the form of cash, healthcare

effects, and a return on tangible shareholders' equity of 17.1%. We are

equipment and supplies, in addition to mounting sustained and robust

managing impairment losses prudently, and as a result, our cost-of-risk

awareness campaigns, while we are also using our digital banking

increased to 1.5%, versus 0.5% in the prior-year quarter."

platforms to provide money to some of the most vulnerable members

in our communities."

"Operating conditions will be extraordinarily challenging in the coming

months, as the duration and severity of COVID-19 on Africa remains

In recognition of the effects of the pandemic on a significant sector of

uncertain. While the G-20 has decided to freeze bilateral loan repayments

African businesses, MSMEs, we are further co-leading, with the

for most African countries until the end of the year, the World Bank is still

African Union-NEPAD, and are actively committed to an initiative to

forecasting a continent-wide recession. Thus, we are extremely cautious

support MSMEs with technical knowledge, mentoring, knowledge

and are taking the necessary actions to ensure that our firm remains

sharing and financial support, thus playing a vital role in helping their

stable and continues to serve our customers efficiently, effectively, and

businesses survive the pandemic.

safely, while preparing for a new era of banking post COVID-19"

Finally, I would like to thank all Ecobankers for their hard work and

"For the safety of our customers, we continue to adhere strictly to

dedication to serving our customers during these difficult times, and our

guidance from the WHO, governments, and health agencies in

customers for their continued loyalty to our brand." Ayeyemi concluded.

operating our physical locations, where they have to remain open.

Business Highlights

  • Recorded significant increases in customer adoption rates on our digital/online channels across our businesses. Adoption rates are expected to accelerate as COVID-19 induced lockdowns changes consumer behavior
    • The number and value of transactions grew by 8% and 15% to 4m and $6.1bn, respectively, on Ecobank Omni+, Corporate and Investment Bank's corporate clients' online banking platform in the first quarter of 2020
    • OmniLite, Commercial Bank's online banking platform designed specifically to meet the unique financial needs of SMEs increased number of transactions by 40,000 to 126,000, which amounted to $435m
    • Ecobank Pay, our payments platform saw a 61% increase in merchant acquisition numbers to 195,000 merchants
    • Transaction numbers and value on Ecobank Mobile increased 72% and 32% to 9m and $613m, respectively
    • Registered customers increased by 3,000 to 9,000 year-on-year on our Africa RapidTransfer App, which facilitates low-cost money transfer across 33 African countries
  • The number of XpressPoints (our physical agency network) grew by approximately 4,000 agents to 43,700, with the value of transactions reaching $445m

Financial Highlights

Operating income

Profit before tax

Annualised ROE / ROTE2

Tangible BVPS

$393 million

$90 million

13.5% / 17.1%

$0.05

Cost-to-income ratio

Profit after tax

Basic/Diluted EPS

Basel II/III CAR3

66.0%

$67 million

$0.0020

11.6%

UEMOA

NIGERIA

AWA

CESA

ROE 18.4%

ROE 3.2%

ROE 27.9%

ROE 23.8%

  1. TBVPS is computed by dividing tangible shareholders' equity with the end-of-period number of ordinary shares outstanding
  2. The Group changed its computation of ROE and ROTE to more align better to the way investors and analysts assess the Group's use of equity. ROE is computed using profit attributable to ETI (parent company) shareholders divided by the average end-of-periodETI shareholders' equity.
    ROTE is computed using profit attributable to ETI shareholders divided by the average end-of-period tangible shareholders' equity. Tangible shareholders' equity is ETI shareholders' equity less non-controlling interests, goodwill, and intangible assets.
  3. Group consolidated Basel II/III CAR as at 31 December 2019.

Ecobank Reports

Three months ended 31 March 2020 Earnings Results

  • PBT of $90m, down 12% on a reported basis, but up 27% in constant currency, driven by positive operating leverage
  • Operating income (net revenue) of $393m, up 1% on a reported basis and 14% in constant currency
  • Operating expenses of $259m, up 1% on a reported basis and 6% in constant currency
  • Pre-impairmentprofit of $133m, up 2% on a reported basis and 34% in constant currency, on positive operating leverage
  • Customer deposits of $16,103m, up 6% on a reported basis and 11% in constant currency
  • Loans and advances to customers (net) of $8,788m, up 2% on a reported basis and 7% in constant currency

SUMMARY FINANCIAL REVIEW OF THE ECOBANK GROUP

Comparisons noted in the commentary below are calculated for the three months ended 31 March 2020 versus the three months ended 31 March 2019, unless otherwise specified.

Notable Item: COVID-19 Impact

The COVID-19 outbreak has developed rapidly in 2020, with a significant number of infections worldwide. Consequently, most countries have taken measures to contain the virus. These include limiting the movement of people, restricting flights, closing borders, temporarily closing businesses and schools, and cancelling social events. These restrictions are having an immediate impact on industries such as tourism, transport, retail, and entertainment, which is affecting economic activity in Africa. In response, the central banks of countries where ETI operates, along with respective governments, have intervened with monetary and fiscal measures aimed at mitigating market concerns and providing liquidity to the market.

At Ecobank, the management team has taken appropriate steps to assess the impact on the Group's financial statements based on the information available as of date. We carried out the following tasks and measures:

  • Identification of the macro-economic and financial impact of the pandemic on our economies. Our teams are evaluating the potential impact of the coronavirus pandemic across the Group.
  • The duration and impact of the COVID-19 pandemic, as well as the effectiveness of governments and central banks responses, remains unclear currently. It is not possible to reliably estimate the duration and severity of these consequences, as well as their impact on the financial position and results of the Company for future periods.
  • We will review and amend the key parameters accordingly for the impairment model such as Forward-Looking Information (FLI), Probability of Default (PD) and Loss Given Default (LGD), as and when we obtain a better knowledge of the likely implication of the pandemic. If necessary, any amendment of our impairment model parameters will be performed during the year when we will be able to refine our understanding of the forecast of future economic conditions.
  • Depending on the duration of the disruption caused by the coronavirus pandemic and the length of recovery, our financial results for the remainder of the year could be adversely affected by increased Expected Credit Loss (ECL), lower revenue, other impairments, and volatility in our financial results. Management is closely monitoring the evolution of this pandemic, including how it may affect the Group.

Key Ratios

Page 2

Ecobank Reports

Three months ended 31 March 2020 Earnings Results

Summary Financial Review

Selected Income Statement Highlights

Three months ended 31 March

Constant

(in millions of US dollars except per share data and ratios)

2020

2019

YoY

Currency1

Net interest income

209

172

21%

31%

Non-interest revenue

183

216

(15)%

(1)%

Operating income (net revenue)

393

388

1%

14%

Operating expenses

(259)

(257)

1%

6%

Operating profit before impairment losses & taxation

133

131

2%

34%

Gross impairment losses on loans

(58)

(81)

(28)%

(26)%

Loan recoveries and impairment losses releases

23

68

(67)%

(66)%

Net impairment losses on loans

(35)

(12)

189%

191%

Impairment losses on other assets

(7)

(16)

(57)%

(57)%

Impairment losses on financial assets

(42)

(29)

48%

49%

Net monetary loss arising from hyperinflationary economy

(1)

-

-

-

Profit before tax

90

103

(12)%

27%

Profit after tax from continuing operations

66

82

(19)%

-

Profit after tax from discontinued operations

1

3

(59)%

-

Profit after tax

67

85

(20)%

6%

Profit attributable to ETI shareholders

48

62

(22)%

-

Basic EPS (In US dollars )

0.0020

0.0025

(22)%

Diluted EPS (In US dollars )

0.0020

0.0025

(22)%

Note: Selected income statement lines only and totals may not sum up.

(1) Constant currecy = year-on-year percentage change on a constant currency basis

Operating income of $393 million, increased 1% on a reported basis and 14% in constant currency, primarily driven by a significant increase in net interest income.

Net interest income (NII) of $209 million, increased 21% on a reported basis and 31% in constant currency. The increase in NII was mainly driven by a significant decrease in interest expense driven by a reduction in the rates paid on funds and modest growth in earning assets. The decline in interest expense reflected an increase in non-interest-bearing customer deposits, mainly due to an acceleration in transactions on our digital channels. The net interest margin (NIM) was 5.4% compared to 4.8% in the prior year, while the cost of funds decreased to 2.6% in the first quarter of 2020.

Non-interestrevenue (NIR) of $183 million, declined 15% on a reported basis and 1% in constant currency. An increase in credit-related fees and income derived from trading fixed-income securities (mostly government bonds) were offset by a decrease in client-driven foreign exchange sales, lower cash management fees, particularly within the Euro/CFA franc currency market in our Francophone Africa regions, and a decrease in asset management and investment banking fees.

Operating expenses of $259 million, increased 1% on a reported basis and 6% in constant currency, as a decrease in depreciation and amortisation expenses were offset by increased personnel and other operating expenses. Growth in costs related to technology and communication and operations and processes required to support our mobile and online consumer channels, coupled with higher cards and online processing costs, drove the increase in other operating expenses. These were partially offset by the continued decline in rent and utility cost as the need for physical channels reduced with increasing digital adoption by customers. The cost-to-incomeratio (efficiency ratio) was 66.0%, compared with 66.2% in the prior year.

Impairment losses on loans (net) were $35 million in the first quarter of 2020, compared with $12 million in the prior year. The quarter's net impairment losses reflected lower recoveries of non-performing loans, partially offset by a decrease in gross impairments in the current quarter. These reductions indicated a declining balance in loans in stages one and two, which drove the decline in associated impairment losses. Impairment losses on other financial assets were $7 million compared with $16 million in the prior-year period. Total impairment losses on financial assets were $42 million versus $29 million in the prior year. The cost-of-risk, as a result, increased to 1.5% from 0.5% in the prior year.

Income taxes were $24 million in the first quarter of 2020 compared with $21 million in the prior year period. The effective income tax rate (ETR) was 26.4% for the first quarter of 2020 versus 20.0% in the prior year period. The increase in the ETR was mainly due to higher income in higher tax jurisdictions.

Page 3

Ecobank Reports

Three months ended 31 March 2020 Earnings Results

Selected Balance Sheet Information

31 Mar

31 Dec

31 Mar

Period As At: (in millions of US dollars, except per share amounts)

2020

2019

2019

YoY

Ccy*

Gross loans and advances to customers

9,391

9,834

9,192

2%

7%

Less: allowance for impairments

603

557

609

(1)%

5%

Net loans and advances to customers

8,788

9,277

8,583

2%

7%

Deposits from customers

16,103

16,246

15,191

6%

11%

Total assets

23,217

23,641

21,751

7%

12%

Equity attributable to owners of ETI

1,396

1,477

1,502

(7)%

-

Total equity to all owners

1,818

1,886

1,806

1%

8%

Loan-to-deposit ratio

58.3%

60.5%

60.5%

Total capital adequacy ratio (CAR)1

11.6%

11.6%

Tier 1 capital adequacy ratio

8.8%

8.8%

End-of-period ordinary shares outstanding (millions of shares)

24,730

24,730

24,730

# of ordinary shares to be issued if convertible bond converts

6,667

6,667

6,667

Per Share Data (In US dollars)

Book value per ordinary share, BVPS2

0.06

0.06

0.06

Tangible book value per ordinary share, TBVPS3

0.04

0.05

0.05

Share price

0.01

0.02

0.04

  1. Basel II/III CAR is as 31 December 2019. It is reported semi-annually to the regulator, the Central Bank of West African States (BCEAO). CAR for 31 December is submitted 30 April and for 30 June submission is 31 October. CAR ratios are based on transitional adjusted capital; ETI is phasing in the $299 million day 1 impact of IFRS 9 by $100 million per year over three years i.e. 2018, 2019, and 2020
  2. ETI shareholders' equity divided by end-of-period ordinary shares outstanding
  3. Tangible ETI shareholders' equity divided by end-of-period ordinary shares outstanding. Tangible ETI shareholders' equity is ETI shareholders' equity less goodwill and intangible assets
    *Ccy = year-on-year percentage change on a constant currency

Loans and advances to customers (gross) were $9,391 million as of 31 March 2020, compared to $9,834 million and $9,192 million for 31 December 2019 and 31 March 2019, respectively. The year-to-date decrease in customer loans was driven by a decline in overdraft facility utilisations, partially offset by an increase in mortgage lending. On a reported basis, loans increased 2% year-on-year and 7% in constant currency, driven by loan growth in AWA and Nigeria, especially within Consumer Bank and Corporate and Investment Bank.

Deposits from customers were $16,103 million as of 31 March 2020, compared to $16,246 million and $15,191 million as of 31 December 2019 and 31 March 2019, respectively. Customer deposits fell 1% year-to-date, mainly driven by a decrease in current account deposits and term deposits, partially offset by higher balances in savings deposits. On a year-on-year basis, customer deposits increased 6% and 11% in constant currency, driven by growth in AWA, CESA and Nigeria. The decrease in current accounts was concentrated towards the end of March as the coronavirus pandemic caused panic buying and stockpiling among households. Save that, volume growth and mix of our customer deposits continue to gain traction on our digital channels. As a result, the cost of funds improved to 2.6% versus 3.2% in the prior year.

Equity attributable to ETI shareholders was $1,396 million as of 31 March 2020, compared with $1,477 million (restated) and $1,502 million as of 31 December 2019 and 31 March 2019. The year-on-year and year-to-date declines in attributable equity were driven by a few factors. Firstly, the beginning equity balances for 2019 include the impact of the $79.5 million of interest income reversal associated with the government-related loans made to petroleum marketing companies in Nigeria for the 18 months to 31 December 2018, and secondly the adverse impact of foreign currency translation effects.

The Group's Basel II/III Tier 1 and Total Capital Adequacy Ratios were 8.8% and 11.6%, respectively, as at 31 December 2019 and

continued to exceed the regulatory minimums of 7.25% and 9.5%, respectively.

Page 4

Ecobank Reports

Three months ended 31 March 2020 Earnings Results

Asset Quality

In millions of US dollars

31 Mar

31 Dec

31 Mar

For the period ended:

2020

2019

2019

Gross impairment losses on loans and advances

(58)

(324)

(81)

Less: recoveries and impairment releases

23

214

68

Net impairment losses on loans and advances

(35)

(110)

(12)

Impairment losses on other assets

(7)

(24)

(16)

Impairment losses on financial assets

(42)

(134)

(29)

Cost-of-risk(1)

1.5%

1.1%

0.5%

As at:

Gross loans and advances to customers

9,391

9,834

9,192

Of which stage 1

7,318

7,733

7,398

Of which stage 2

1,147

1,145

895

Of which stage 3, credit impaired loans (non-performing loans)

925

955

898

Less: allowance for impairments (Expected Credit Loss)

603

557

609

Of which stage 1: 12-month ECL (2)

156

53

136

Of which stage 2: Life-time ECL

40

74

61

Of which stage 3: Life-time ECL

407

430

411

Net loans and advances to customers

8,788

9,277

8,583

Impaired loans or non-performing loans (NPLs)

925

955

898

NPL ratio

9.9%

9.7%

9.8%

NPL coverage ratio

65.1%

58.3%

67.8%

Stage 3 coverage ratio

44.0%

45.0%

45.8%

  1. Cost-of-riskis computed on an annualised basis
  2. Expected Credit Losses

Note: totals may not add up due to rounding.

Impaired loans (non-performingloans) declined by $30 million to $925 million from $955 million as at 31 December 2019. The reduction in non-performing loans in UEMOA and Nigeria were partially offset by marginal increases in AWA and CESA. As a result, the NPL ratio for first quarter of 2020 inched up marginally to 9.9% compared with 9.7% as at December 2019. The coverage of NPLs by impairment losses allowance was 65.1% (44% on stage 3 coverage) compared with 67.8% for 31 March 2019 (45.8% on stage 3 coverage).

Page 5

Ecobank Reports

Three months ended 31 March 2020 Earnings Results

SUMMARY FINANCIAL REVIEW OF ECOBANK GEOGRAPHICAL REGIONS

Ecobank segments its businesses into four geographical regions. These reportable operating segments are Francophone West Africa (UEMOA), Nigeria, Anglophone West Africa (AWA), Central, Eastern and Southern Africa (CESA). Additionally, the financial results of the constituent affiliates of Ecobank Development Corporation (EDC), the Group's Investment Banking (IB) and Securities, Wealth, and Asset Management (SWAM) businesses across our geographic footprint are segmented into each country of their domicile and included accordingly into applicable regional segments of UEMOA, Nigeria, AWA, and CESA.

Comparisons noted in the commentary below are calculated for the three months ended 31 March 2020 versus the three months ended 31 March 2019, unless otherwise specified.

Summary performance - Geographical Regions (In millions of $, except for ratios)

UEMOA

NIGERIA

AWA

CESA

ETI &

Ecobank

OTHERS (1)

Group

Income statement highlights

Net interest income

72

40

74

47

(24)

209

Non-interest revenue

46

30

41

57

9

183

Operating income (net revenue)

118

70

116

104

(15)

393

Total operating expenses

74

57

55

63

10

259

Operating profit before impairment losses & taxation

44

13

61

42

(25)

133

Impairment losses on financial assets

9

(0)

12

(0)

23

42

Profit before tax

35

13

49

41

(48)

90

Profit after tax

32

12

33

31

(41)

67

Balance sheet highlights

Loans & advances to customers (gross)

3,635

2,457

1,324

1,614

361

9,391

Of which stage 1

3,311

1,241

1,115

1,247

404

7,318

Of which stage 2

184

643

98

223

-

1,147

Of which stage 3, credit impaired loans (non-performing loans)

140

573

111

143

(43)

925

Less: accumulated impairments

(78)

(275)

(111)

(146)

8

(603)

Of which stage 1: 12-month ECL(1)

(25)

(11)

(49)

(21)

(50)

(156)

Of which stage 2: Life-time ECL

(11)

(20)

(5)

(4)

-

(40)

Of which stage 3: Life-time ECL

(43)

(245)

(57)

(120)

58

(407)

Loans and advances to customers, net

3,556

2,182

1,212

1,468

370

8,788

Total assets

8,436

5,485

4,178

5,148

(30)

23,217

Deposits from customers

5,820

3,517

2,876

3,616

275

16,103

Total equity

714

719

492

532

(639)

1,818

Ratios

ROA

1.5%

0.4%

3.3%

2.3%

1.2%

ROE

18.4%

3.2%

27.9%

23.8%

13.5%

Cost-to-income ratio

63.0%

81.9%

47.8%

60.1%

66.0%

NPL ratio

3.9%

23.3%

8.4%

8.9%

9.9%

NPL coverage

56.0%

48.1%

100.2%

101.4%

65.1%

Loan-to-deposit ratio

62.5%

69.9%

46.0%

44.6%

58.3%

  1. Also included in the Nigeria region are the results of the Resolution Vehicle
  2. ETI & Others comprise the financial results of the parent company (ETI), eProcess (the Group's technology shared services company owned by ETI), Paris subsidiary, other owned ETI affiliates and structured entities, and the impact of accounting eliminations arising from Group consolidation.
  3. ROE for the regions are computed using profit after tax divided by total equity. ROE for the Group is profit attributable to ETI divided by ETI's shareholders' equity

Page 6

Ecobank Reports

Three months ended 31 March 2020 Earnings Results

Francophone West Africa (UEMOA)

Three months ended 31 March (in millions of US dollars)

2020

2019

YoY

Ccy*

Net interest income

72

67

7%

11%

Non-interest revenue

46

50

(9)%

(7)%

Operating income

118

118

0%

3%

Operating expenses

(74)

(74)

1%

4%

Operating profit before impairment losses & taxation

44

44

(1)%

2%

Gross impairment losses on loans

(14)

(20)

(30)%

(28)%

Loan recoveries and impairment releases

5

33

(84)%

(83)%

Net impairment losses on loans

(9)

13

n.m.

n.m.

Impairment losses on other assets

-

-

n.m.

n.m.

Impairment losses on financial assets

(9)

13

n.m.

n.m.

Profit before tax

35

57

(39)%

(37)%

31 Mar

31 Dec

31 Mar

As at: (In millions of US dollars)

2020

2019

2019

YoY

Ccy

Loans & advances to customers (gross)

3,635

3,848

3,527

3%

Of which stage 1

3,311

3,498

3,144

5%

-

Of which stage 2

184

191

185

(1)%

-

Of which stage 3, credit impaired loans (non-performing loans)

140

159

198

(29)%

-

Less: allowance for impairments (Expected Credit Loss)

(78)

(79)

(87)

(9)%

-

Of which stage 1: 12-month ECL(1)

(25)

(28)

(40)

(38)%

-

Of which stage 2: Life-time ECL

(11)

(11)

(11)

(4)%

-

Of which stage 3: Life-time ECL

(43)

(41)

(35)

23%

-

Loans & advances to customers (net)

3,556

3,769

3,440

3%

(2)%

Total assets

8,436

8,960

8,208

3%

(2)%

Deposits from customers

5,820

5,737

5,565

5%

(2)%

Total equity

714

697

625

14%

(2)%

Cost-to-income

63.0%

59.4%

62.5%

ROE

18.4%

22.8%

31.4%

Loan-to-deposit ratio

62.5%

68.2%

63.4%

NPL ratio

3.9%

4.1%

5.6%

NPL coverage ratio

56.0%

50.1%

43.9%

Stage 3 coverage ratio

30.8%

25.6%

17.7%

Note: Selected income statement line items only and thus may not sum up

  • Ccy = year-on-year percentage change on a constant currency
    (1) ECL = Expected Credit Loss

Performance Highlights - UEMOA

Francophone West Africa posted a profit before tax of $35 million, a decrease of 39% on a reported basis and 37% in constant currency, as modest increase in pre-impairment profits were offset by higher impairment losses.

Net revenue of $118 million was flat on a reported basis but increased 3% in constant currency, driven by an increase in net interest income.

Net interest income of $72 million, increased 7% on a reported basis and 11% in constant currency, mainly driven by a significant decrease in interest expenses due to a decline in rates paid on funds, partially offset by a decrease in interest income. The decrease in interest income reflected lower net interest margin in the first quarter, partially offset by balance sheet growth and mix.

Non-interest revenue of $46 million, decreased 9% on a reported basis and 7% in constant currency, driven by lower asset management and investment banking fees, a decrease in cash management fees, and lower client-driven foreign exchange fees. The decrease in AM/IB fees reflected lower portfolio management fees, while lower client-driven FX fees reflected reduced client activity in the Euro/CFA franc currency market.

Expenses of $74 million were largely unchanged on a reported basis versus prior year, but increased 4% in constant currency, driven by investments in technology and communication, and operations and processes. These were investment spend made to enhance digital banking products and expand financial inclusion. The cost-to-income ratio of 63% was largely unchanged versus prior year.

Net impairment losses were $9 million in the first quarter of 2020 compared with an impairment benefit of $13 million in the prior year. Impairment losses for first quarter 2020 were driven by lower recoveries compared with prior year's quarter.

Page 7

Ecobank Reports

Three months ended 31 March 2020 Earnings Results

NIGERIA

Three months ended 31 March (in millions of US dollars)

2020

2019

YoY

Ccy*

Net interest income

40

19

107%

108%

Non-interest revenue

30

32

(7)%

(6)%

Operating income

70

52

35%

37%

Operating expenses

(57)

(62)

(7)%

(6)%

Operating profit before impairment losses & taxation

13

(10)

n.m

n.m

Gross impairment losses on loans

(7)

(11)

(42)%

(38)%

Loan recoveries and impairment releases

8

28

(70)%

(69)%

Net impairment losses on loans

2

17

(89)%

(89)%

Impairment losses on other assets

(2)

(2)

1%

3%

Impairment losses on financial assets

0.3

15

(98)%

(98)%

Profit before tax

13

5

148%

129%

31 Mar

31 Dec

31 Mar

As at: (In millions of US dollars)

2020

2019

2019

YoY

Ccy

Loans & advances to customers (gross)

2,457

2,504

2,454

0%

7%

Of which stage 1

1,241

1,175

1,568

(21)%

-

Of which stage 2

643

731

547

18%

-

Of which stage 3, credit impaired loans (non-performing loans)

573

598

339

69%

-

Less: allowance for impairments (Expected Credit Loss)

(275)

(279)

(246)

12%

20%

Of which stage 1: 12-month ECL(1)

(11)

(22)

(23)

(53)%

-

Of which stage 2: Life-time ECL

(20)

(56)

(43)

(54)%

-

Of which stage 3: Life-time ECL

(245)

(201)

(181)

35%

-

Loans & advances to customers (net)

2,182

2,225

2,207

(1)%

6%

Total assets

5,485

5,933

5,636

(3)%

8%

Deposits from customers

3,517

3,715

3,556

(1)%

6%

Total equity

710

785

761

(7)%

2%

Cost-to-income

81.9%

94.9%

119.3%

ROE

3.2%

0.4%

1.9%

Loan-to-deposit ratio

69.9%

67.4%

69.0%

NPL ratio

23.3%

23.9%

13.8%

NPL coverage ratio

48.1%

46.6%

72.8%

Stage 3 coverage ratio

42.8%

33.6%

53.4%

Note: Selected income statement line items only and thus may not sum up

  • Ccy = year-on-year percentage change on a constant currency
    (1) ECL = Expected Credit Loss

Performance Highlights - NIGERIA

Nigeria posted a profit before tax of $13 million, an increase of 148% on a reported basis and 129% in constant currency, primarily driven by higher revenues and lower impairment losses.

Net revenue of $70 million, increased 35% on a reported basis and 37% in constant currency, driven by a significant increase in net interest income.

Net interest income of $40 million, increased 107% on a reported basis and 108% in constant currency, mainly driven by a significant reduction in interest expenses due to a decline in borrowed funds and improved customer deposits mix.

Non-interest revenue of $30 million, decreased 7% on a reported basis and 6% in constant currency as growth in income from fixed- income securities trading and higher fees from trade finance and loans were partially offset by lower cash management and ATM- related fees.

Expenses of $57 million, decreased 7% on a reported basis and 6% in constant currency, driven by cost reductions across the board, including staff costs and depreciation and amortization expenses. The cost-to-income ratio improved significantly to 81.9% in the current quarter compared to 119.3% in the prior year's quarter.

Net impairment losses were $0.3 million compared with $15 million in the prior year. The lower impairment losses for the first quarter of 2020 primarily reflected the release of impairment losses no longer required on loans in stages one and two.

Page 8

Ecobank Reports

Three months ended 31 March 2020 Earnings Results

Anglophone West Africa (AWA)

Three months ended 31 March (in millions of US dollars)

2020

2019

YoY

Ccy*

Net interest income

74

60

23%

33%

Non-interest revenue

41

40

5%

12%

Operating income

116

100

16%

25%

Operating expenses

(55)

(49)

13%

22%

Operating profit before impairment losses & taxation

61

51

19%

27%

Gross impairment losses on loans

(13)

(13)

(3)%

3%

Loan recoveries and impairment releases

2

2

(20)%

(16)%

Net impairment losses on loans

(12)

(12)

0%

6%

Impairment losses on other assets

-

(1)

n.m.

n.m.

Impairment losses on financial assets

(12)

(12)

(6)%

(1)%

Profit before tax

49

39

27%

36%

31 Mar

31 Dec

31 Mar

As at: (In millions of US dollars)

2020

2019

2019

YoY

Ccy

Loans & advances to customers (gross)

1,324

1,376

1,238

7%

15%

Of which stage 1

1,115

1,203

1,058

5%

-

Of which stage 2

98

67

30

221%

-

Of which stage 3, credit impaired loans (non-performing loans)

111

106

149

(25)%

-

Less: allowance for impairments (Expected Credit Loss)

(111)

(86)

(70)

58%

71%

Of which stage 1: 12-month ECL(1)

(49)

(38)

(13)

268%

-

Of which stage 2: Life-time ECL

(5)

(2)

(0)

945%

-

Of which stage 3: Life-time ECL

(57)

(46)

(56)

1%

-

Loans & advances to customers (net)

1,212

1,290

1,167

4%

12%

Total assets

4,178

3,595

3,387

23%

32%

Deposits from customers

2,876

2,704

2,495

15%

23%

Total equity

492

449

402

22%

(7)%

Cost-to-income

47.8%

46.9%

49.0%

ROE

27.9%

30.1%

28.7%

Loan-to-deposit ratio

46.0%

50.9%

49.6%

NPL ratio

8.4%

7.7%

12.0%

NPL coverage ratio

100.2%

80.9%

47.2%

Stage 3 coverage ratio

51.1%

43.1%

37.9%

Note: Selected income statement line items only and thus may not sum up

  • Ccy = year-on-year percentage change on a constant currency
    (1) ECL = Expected Credit Loss

Performance Highlights - AWA

Anglophone West Africa delivered a profit before tax of $49 million, an increase of 27% on a reported basis and 36% in constant currency, from the prior year.

Net revenue of $116 million, increased 16% on a reported basis and 25% in constant currency, driven by strong growth both in net interest income and non-interest revenue.

Net interest income of $74 million, increased 23% on a reported basis and 33% in constant currency. An increase in earnings assets and net interest margin, coupled with a decrease in interest expenses, accelerated the growth in net interest income.

Non-interest revenue of $41 million, increased 5% on a reported basis and 12% in constant currency. The increase reflected higher gains from fixed-income securities trading, partially offset by lower fees from cash management and client-driven FX income.

Expenses of $55 million, increased by 13% on a reported basis and 22% in constant currency, as higher expenses in operations and processing, business promotion, and insurance, were partially offset by a decrease in expenses related to technology and communication, and rent and utilities. The cost-to-income ratio of 47.8% was an improvement on the 49.0% in the prior year.

Net impairment losses for the first quarter of 2020 was $12 million same as impairment losses recorded in the prior year period.

Page 9

Ecobank Reports

Three months ended 31 March 2020 Earnings Results

Central, Eastern and Southern Africa (CESA)

Three months ended 31 March (in millions of US dollars)

2020

2019

YoY

Ccy*

Net interest income

47

45

4%

18%

Non-interest revenue

57

77

(26)%

13%

Operating income

104

122

(15)%

15%

Operating expenses

(63)

(61)

3%

11%

Operating profit before impairment losses & taxation

42

61

(32)%

22%

Gross impairment losses on loans

(6)

(6)

(2)%

10%

Loan recoveries and impairment releases

8

6

31%

42%

Net impairment losses on loans

2

(0)

n.m.

n.m.

Impairment losses on other assets

(1)

(2)

(42)%

(40)%

Impairment losses on financial assets

0.5

(2)

(120)%

(123)%

Profit before tax

41

59

(30)%

28%

31 Mar

31 Dec

31 Mar

As at: (In millions of US dollars)

2020

2019

2019

YoY

Ccy

Loans & advances to customers (gross)

1,614

1,699

1,660

(3)%

(0)%

Of which stage 1

1,247

1,382

1,345

(7)%

-

Of which stage 2

223

175

132

68%

-

Of which stage 3, credit impaired loans (non-performing loans)

143

143

183

(22)%

-

Less: allowance for impairments (Expected Credit Loss)

(146)

(152)

(144)

1%

3%

Of which stage 1: 12-month ECL(1)

(21)

(33)

(28)

(24)%

-

Of which stage 2: Life-time ECL

(4)

(5)

(7)

(35)%

-

Of which stage 3: Life-time ECL

(120)

(114)

(110)

9%

-

Loans & advances to customers (net)

1,468

1,547

1,516

(3)%

(0)%

Total assets

5,148

5,598

4,738

9%

12%

Deposits from customers

3,616

3,903

3,410

6%

9%

Total equity

532

517

481

11%

16%

Cost-to-income

60.1%

58.3%

49.8%

ROE

23.8%

23.6%

36.9%

Loan-to-deposit ratio

44.6%

43.5%

48.7%

NPL ratio

8.9%

8.4%

11.0%

NPL coverage ratio

101.4%

106.4%

79.0%

Stage 3 coverage ratio

83.8%

79.8%

60.2%

Note: Selected income statement line items only and thus may not sum up

  • Ccy = year-on-year percentage change on a constant currency
    (1) ECL = Expected Credit Loss

Performance Highlights - CESA

Central, Eastern and Southern Africa posted a profit before tax of $41 million, a decrease of 30% on a reported basis, but an increase of 28% in constant currency, mainly due to adverse foreign currency translation effects, largely from Zimbabwe, which accounts for approximately 37% of CESA's profit before tax.

Net revenue of $104 million, decreased 15% on a reported basis, but increased 15% in constant currency, driven by growth in both net interest income and non-interest revenue.

Net interest income of $47 million, increased 4% on a reported basis and 18% in constant currency driven by interbank activities and higher yields on earning assets.

Non-interest revenue of $57 million, decreased 26% on a reported basis, but increased 13% in constant currency. Fees and commissions earned from trade finance activities mostly in DR Congo and Zimbabwe drove the underlying increase in NIR. Also contributing to the increase were higher fees in cash management, particularly in Central Africa Republic, South Sudan, and DR Congo.

Expenses of $63 million, increased 3% on a reported basis and 11% in constant currency, mostly reflecting revenue-driven expenses. The cost-to-income ratio, as a result, deteriorated to 60.1% compared with 49.8% in the first quarter of 2019.

Net impairment losses of $0.5 million for the first quarter of 2020 were lower than impairment losses of $2 million from the prior year. The lower impairments versus prior year were driven by higher recoveries of non-performing loans compared with prior year.

# # #

Page 10

Ecobank Reports

Three months ended 31 March 2020 Earnings Results

About Ecobank: Incorporated in Lomé, Togo in 1986, Ecobank Transnational Incorporated ('ETI') is the parent company of the leading independent pan-

African banking group, Ecobank. It currently has banking subsidiaries in 33 African countries, namely: Benin, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Congo (Brazzaville), Congo (Democratic Republic), Côte d'Ivoire, Equatorial Guinea, Gabon, Gambia, Ghana, Guinea, Guinea Bissau, Kenya, Liberia, Malawi, Mali, Mozambique, Niger, Nigeria, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, South Sudan, Tanzania, Togo, Uganda, Zambia and Zimbabwe. ETI also has a banking license in Paris-France and representative offices in Addis Ababa- Ethiopia, Johannesburg - South Africa, Dubai - United Arab Emirates, London - UK and Beijing - China. The Group is owned by more than 600,000 local and international institutional and individual shareholders. Ecobank employs 14,719 people in 39 different countries. It provides consumer, commercial banking, corporate and investment banking, and securities, wealth and asset management to about 24 million customers, ranging from individuals, small and medium-sized enterprises, regional and multinational corporations, financial institutions, international organisations and governments via 847 branches and offices, and approximately 2,700 ATMs, the internet (www.ecobank.com), and mobile banking. ETI is listed on the Nigerian Stock Exchange in Lagos, the Ghana Stock Exchange in Accra, and the Bourse Régionale des Valeurs Mobilières in Abidjan. Additional information may be found on the Group's corporate website at: www.ecobank.com

Cautionary note regarding forward-looking statements

Certain statements in this document are "forward-looking statements". These statements are based on management's current expectations and are

subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements.

Conference Call Information

Ecobank will not be holding an Earnings Conference Call to discuss the financial results for the three months ended 31 March 2020. The financial results, which have been submitted to the NSE, BRVM and GSE, can be accessed, including the Earnings Press Release, by visiting www.ecobank.com. If you should have any questions related to these results, please contact Ecobank Investor Relations via ir@ecobank.com

Investor Relations

Ecobank is committed to continuous improvement in its investor communications. For further information, including any suggestions as to how we can communicate more effectively, please contact Ecobank Investor Relations via ir@ecobank.com.

Full contact details below:

Investor contact:

Ato Arku

  1. +228 22 21 03 03
  1. +228 92 40 90 09
  1. aarku@ecobank.com

POTENTIAL DILUTIVE INSTRUMENTS

ETI $400 million convertible debt

The $400 million convertible debt due 2022 will have a maturity of five (5) years from date of issuance, a coupon rate comprising a reference rate of 3-month LIBOR plus a spread of 6.46% (i.e. 3-monthLIBOR + 6.46%), payable semi-annually in arrears. The debt will be convertible into ETI ordinary shares at an exercise price of 6.00 $ cents ($0.06) (NGN23.34, GHS0.34, XOF36.37 at current exchange rates for illustrative purposes only) during the conversion period of 19 October 2019 to 13 October 2022. The convertible debt will be redeemed at 110% of principal amount if the conversion option is not exercised.

Page 11

Ecobank Reports

Three months ended 31 March 2020 Earnings Results

Ecobank Group

Condensed Unaudited Consolidated Statement of

3 Month Period ended

Comprehensive Income

31 March

In thousands of US dollars, except per share amounts

2020

2019

Interest Income

340,111

322,537

Interest Expense

(130,768)

(150,182)

Net Interest Income

209,343

172,355

Fee and commission income

105,173

118,939

Fee and commission expense

(8,138)

(10,292)

Net trading income

80,242

96,032

Other operating income

6,038

11,146

Non-interest revenue

183,315

215,825

Operating income

392,658

388,180

Staff expenses

(118,350)

(117,119)

Depreciation and amortisation

(23,353)

(26,215)

Other operating expenses

(117,603)

(113,694)

Operating expenses

(259,306)

(257,028)

Operating profit before impairment losses and taxation

133,352

131,152

Impairment charges on loans and advances

(57,926)

(80,587)

Recoveries

22,759

68,344

Impairment charges on financial assets

(42,234)

(28,663)

Operating profit after impairment losses before taxation

91,118

102,489

Net monetary loss arising from hyperinflationary economy

(781)

-

Share of post-tax results of associates

(81)

28

Profit before tax

90,256

102,517

Taxation

(23,814)

(20,551)

Profit after tax from continuing operations

66,442

81,966

Profit after tax from discontinued operations

1,045

2,574

Profit after tax

67,487

84,540

Profit after tax attributable to:

Owners of the parent

48,372

62,410

- Continuing operations

47,808

61,020

- Discontinued operations

564

1,390

Non-controlling interests

19,115

22,130

- Continuing operations

18,634

20,946

- Discontinued operations

481

1,184

67,487

84,540

Earnings per share from continuing operations attributable to owners of the parent during the

period (expressed in United States cents per share):

Basic (cents )

0.20

0.25

Diluted (cents )

0.20

0.25

Page 12

Ecobank Reports

Three months ended 31 March 2020 Earnings Results

Ecobank Group

Condensed Unaudited Consolidated Statement of Financial

Position

As at 31 March

As at 31

In thousands of US dollars

2020

December 2019

ASSETS

Cash and balances with central banks

3,264,555

2,829,313

Trading financial assets

115,580

182,662

Derivative financial instruments

141,260

65,459

Loans and advances to banks

1,709,249

1,891,889

Loans and advances to customers

8,788,305

9,276,608

Treasury bills and other eligible bills

1,603,915

1,632,749

Investment securities

4,573,006

4,857,763

Pledged assets

215,240

351,478

Other assets

1,455,907

1,184,770

Investment in associates

4,088

3,664

Intangible assets

294,940

309,974

Property and equipment

817,866

831,182

Investment properties

21,214

21,710

Deferred income tax assets

124,217

116,424

23,129,342

23,555,645

Assets held for sale and discontinued operations

88,005

85,539

Total Assets

23,217,347

23,641,184

LIABILITIES

Deposits from banks

1,855,852

2,207,593

Deposits from customers

16,102,763

16,246,120

Derivative financial instruments

118,528

51,255

Borrowed funds

1,801,452

2,075,001

Other liabilities

1,141,306

845,970

Provisions

77,669

68,482

Current income tax liabilities

87,368

54,756

Deferred income tax liabilities

57,413

67,556

Retirement benefit obligations

47,780

31,082

21,290,131

21,647,815

Liabilities held for sale and discontinued operations

109,094

107,592

Total Liabilities

21,399,225

21,755,407

EQUITY

Share capital and premium

2,113,957

2,113,957

Retained earnings and reserves

(717,638)

(637,264)

Equity attributable to owners of the parents

1,396,319

1,476,693

Non-controlling interests

421,803

409,084

Total equity

1,818,122

1,885,777

Total liabilities and equity

23,217,347

23,641,184

Page 13

Ecobank Reports

Three months ended 31 March 2020 Earnings Results

Ecobank Group

Condensed Unaudited Consolidated Statement of Cash Flows

3 Month Period ended

In thousands of US dollars

31 March 2020

31 March 2019

Cash flows from operating activities

Profit before tax

90,256

102,517

Adjusted for:

Foreign exchange income

(23,268)

(55,972)

Impairment losses on loans and advances

35,167

12,243

Impairment losses on other financial assets

7,067

16,420

Depreciation of property and equipment

18,637

21,078

Net interest income

(209,343)

(172,355)

Interest expense on lease liabilities

-

875

Amortisation of software and other intangibles

4,716

5,137

Profit / (loss ) on sale of property and equipment

(1,282)

58

Share of post-tax results of associates

81

(28)

Income taxes paid

60,688

(45,376)

Changes in operating assets and liabilities

Trading financial assets

67,082

(131,316)

Derivative financial instruments

(75,801)

3,601

Treasury bills and other eligible bills

16,694

221,641

Loans and advances to banks

(149,920)

23,147

Loans and advances to customers

442,590

615,545

Pledged assets

136,238

(31,925)

Other assets

(271,137)

(148,125)

Mandatory reserve deposits with central banks

48,797

(200,757)

Deposits from customers

(143,357)

(744,779)

Other deposits from banks

(533,574)

96,042

Derivative liabilities

67,273

(585)

Other liabilities

295,336

(32,394)

Provisions

9,187

10,708

Interest received

340,111

322,537

Interest paid

(130,768)

(150,182)

Net cashflow from / (used in) operating activities

101,470

(262,245)

Cash flows from investing activities

Purchase of software

(10,217)

(3,575)

Purchase of property and equipment

(10,759)

(10,852)

Proceeds from sale of property and equipment

1,269

4,053

Purchase of investment securities

(141,573)

(494,900)

Redemption of investment securities

379,351

554,836

Net cashflow from investing activities

218,071

49,562

Cash flows from financing activities

Repayment of borrowed funds

(378,503)

(355,483)

Proceeds from borrowed funds

132,946

188,165

Dividends paid to non-controlling shareholders

(1,651)

(4,491)

Net cashflow used in financing activities

(247,208)

(171,809)

Net increase /(decrease) in cash and cash equivalents

72,333

(384,492)

Cash and cash equivalents at beginning of period

2,559,766

2,141,855

Effects of exchange differences on cash and cash equivalents

(114,827)

(142,519)

Cash and cash equivalents at end of the period

2,517,272

1,614,844

Page 14

Disclaimer

ETI - Ecobank Transnational Inc. published this content on 24 April 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 April 2020 10:22:06 UTC


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