Ecobank Transnational Incorporated : FY 2021 Earnings Release

New ReleaseLomé 29 March, 2022

• • Ecobank Group reports audited FY 2021 profit before tax increase of 174% to $478m.

• • Record ROTE of 19.0%, TBVPS of 5.70 US cents, and Diluted EPS of 1.063 US cents.

• • Proposed dividend per ordinary share of 0.16 US cents ($0.0016).

2021 proved to be a transformational year for Ecobank, says Ade Ayeyemi, CEO, Ecobank Group.

"The Bank made significant progress with its strategic priorities and delivered strong business and financial returns. We grew revenues, remained efficient, improved credit quality, strengthened the balance sheet and, for the first time since 2016, our Board has recommended the payment of dividends to shareholders. "

"We increased profit before tax by $140 million to $478 million, after adjusting for the $164 million goodwill charge in 2020 and generated a record return on tangible shareholders' equity of 19%. Net revenues were $1.8 billion, up 5%, benefiting from our diversified operating model and the continued focus on growing our trade finance, payments, fixed income, currencies, and commodities businesses. Furthermore, the efficiency ratio of 58.9% was the best in over a decade," Ayeyemi said.

"Credit quality continues to be particularly strong, with non-performing loans at a historic low of 6.2% of total loans and a reduction in the concentration risk of the credit portfolio. Moreover, we proactively built provision reserves to above 100% of non-performing loans. In addition, deposit growth was robust, increasing by $1.4 billion, or 8%, which significantly boosted liquidity and supported our modest loan growth. The investments in pivoting Ecobank as a credible enabler of economic activity for households, businesses and governments in Africa strengthened our optimism for 2022 and beyond, while complementing the expectation of a strong global economic recovery following the easing of Covid-19 restrictions. "

"However, a word of caution following two critical global setbacks: IMF's cut of global growth forecast, in a high inflation environment with about 60% of low- income countries in or at risk of 'debt distress'; and Russia's recent invasion of Ukraine. In this mix, African economies hang in the balance as contagion risks spread, US Fed and other developed-world central banks hike interest rates, energy prices soar, and geopolitical tensions exacerbate inflation and supply chain bottlenecks. Already the reverberations from these developments have forced some central banks in Africa to hike rates, as prices of goods and services soar and currencies are under pressure, all with security implications. In all this turmoil, we at Ecobank remain highly focused on conducting our business responsibly, observing ESG principles, and discharging our investment in the Ecobank Foundation. We will continue to be aggressive in driving our strategic priorities, leading with technology, and serving our clients and communities. "

"Finally, I want to thank all Ecobankers for their unwavering commitment to realising our vision and remaining the bank that Africa and friends of Africa trust."

Income Statement ($M)

FY21

FY20

Net revenue (operating income) 1,757 1,680

Pre-provision, pre-tax operating profit 722 626

Profit before tax 478 174

Profit befort tax (excl. goodwill charge ) 478 338

Profit available to ETI shareholders Diluted EPS ($ cents)

262 4 1.063 0.010

Balance Sheet ($M)

FY21

FY20

• Net loans and advances to customers (EOP) 9,576 9,240

• Deposits from customers (EOP) 19,713 18,297

• Cost of funds 2.3% 2.4%

• Non-performing loans (NPL) ratio 6.2% 7.6%

• NPL coverage ratio 102.1% 74.5%

• Tangible book value per share ($ cents) 5.70 5.47

• Basel II/III Total CAR3 14.8% 12.3%

Profitability Metrics

FY21

FY20

• Return on average total assets (ROA)1 1.3% 0.4%

• Normalised ROA (excl. goodwill charge ) 1.3% 1.0%

• Return on tangible shareholders' equity (ROTE)2 19.0% 0.3%

• Normalised ROTE (excl. goodwill charge ) 19.0% 13.3%

• Net interest margin (NIM) 5.1% 5.3%

• Cost-to-income ratio (CIR) 58.9% 62.7%

• Cost-of-risk (CoR) 1.69% 1.85%

(1) ROA (annualised)is calculated as the Group's profit after tax divided by average end-of-period total assets

(2) Profit available (attributable) to ETI shareholders divided by the average end-of-period tangible shareholders' equity

(3) Basel II/III Total CAR of 14.8% for FY21 is provisional and not final EOP = End-of-Period

REGIONS	PBT ($M)	% YoY	ROE	CIR
UEMOA	192	27	20.3%	54.2%
NIGERIA	57	61	7.2%	81.2%
AWA	239	14	25.8%	46.4%
CESA	194	62	22.3%	52.7%

• • Record ROTE of 19.0% above cost-of-equity.

• • PBT of $478m, up $304m (or up $140m if adjusted for the $164m goodwill charge of 2020). Growth reflecting positive operating leverage and lower credit losses.

• • Profit available to ETI shareholders of $262m increased by $258m (unadjusted for goodwill charge).

• • Net revenue increased $77m, or 5%, to $1.8bn, reflecting an increase in earning asset balances, cash management, cards, and credit-related fees.

• • Payments business grew $39m, or 23%, to $208m (12% of total Group revenue), driven mainly by Omni, card spend volumes, and merchant acquiring transaction volumes.

• • Record cost-to-income ratio of 58.9% benefiting from our 'One bank', 'Manufacture Centrally, Distribute Locally' strategy.

• • Customer deposits (EOP) increased $1.4bn, or 8%, to $19.7bn, benefiting from our omnichannel strategy and growth in customers across our digital platforms.

• • Customer loans (EOP) increased $336m or 4% YoY, to $9.6bn, driven mainly by corporate loans.

• • Reset the credit portfolio by reducing NPL ratio to 6.2% compared to 7.6% in 2020, and proactively improved NPL coverage ratio to 102.1%, surpassing our near-term target of a 100%.

• • Book value per share (BVPS), up 2% YoY to 6.20 US cents, and tangible book value per (TBVPS) up 4% to US 5.70 cents.

• • Continue to see strong client adoption of our digital platforms (Omni plus, Omni Lite, EcobankPay, Ecobank App, Xpress Points) across our businesses. Value of digital transactions increased by $22bn to $64bn in 2021.

Investor Contact: Ato Arku([e-mail])

Media Contact: Christiane Bossom([e-mail])

TOTAL VALUE OF TRANSACTIONS ON OUR DIGITAL CHANNELS (in millions of US dollars)

2021

2020

YoY %

Omni Plus

38,917

27,739 40

OmniLite

4,866

3,936 24

5,044

3,343 51

279

185 51

Ecobank Mobile App Ecobank Online Ecobank USSD

1,819

1,051 73

Xpress Points (Agency Network) RapidTransfer App

3,191

1,552 106

3.2

2.2 44

Indirect Channels

10,133

3,977 155

Cards

9,630

7,401 30

Bank Collect POS Ecobank Pay e-Commerce

4,946

3,378 46

1,174

462 154

152

124 23

338

85 298

SUMMARY FINANCIAL REVIEW OF THE ECOBANK GROUP

Selected Income Statement Highlights

For the year ended 31 December

(in millions of US dollars except per share data)

2021

2020

YoY % CCy1 %

Net interest income

4 3

Non-interest revenue

944 812

907 773

5 8

Operating income (net revenue)

Operating expenses

1,757 (1,035)

1,680 (1,054)

5 (2)

6 (2)

Pre-provision, pre-tax operating profit

722

626

• 15 18

• Gross impairment charges on loans

  (374)

  (312)

• 20 23

  205

  131

• 57 68

• Loan recoveries and impairment charge releases Net impairment charges on loans

  (170)

  (182)

• (7) (6)

  (48)

  (45)

  6 7

  Impairment charges on other assets Impairment charges on financial assets

  (218)

  (227)

• (4) (4)

  (26)

  (61)

• (57) (57)

Net monetary loss arising from hyperinflationary economies Share of post-tax results of associates

Profit before tax and goodwill impairment Goodwill impairment

Profit before tax Taxation

(0.5)

(0.3)

66 41

-

478 -

(164)

338

--

Profit after tax from continuing operations Profit after tax from discontinued operations Profit for the year

(122)

478

356

2

174

(89)

85

3

174 37 319 (50)

199 - - -

357

88

• 305 384

Profit available to ETI shareholders

262

4

n.m.

-

Per Share Data (US cents)

• Basic EPS 1.063 0.010

• Normalised Basic EPS 1.063 0.671

• Diluted EPS 1.063 0.010

• Normalised Diluted EPS 1.063 0.671

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

(1) Constant currency = year-on-year percentage change on a constant currency basis n.m. = not meaningful

Full Year 2021 vs. Full Year 2020

Profit before tax was $478 million, increasing by $304 million, or 174%, from 2020. However, if profit before tax is normalised to account for the one-off goodwill charge of $164 million in 2020, the increase in profit before tax is $140 million, or 41%.

Net revenue, (operating income) was $1.8 billion, increasing by $77 million, or 5%, driven by a $37 million, or 4%, increase in net interest income, and a $40 million, or 5%, increase in non-interest revenue. If the exchange rate impact is excluded net revenue increased $93 million, reflecting benefits of our diversified operating model and the continued investments in people, technology, and processes.

Net interest income was $944 million, increasing $37 million, or 4%. Interest income rose $83 million, or 6%, mainly driven by interest income on investment securities balances and modest loan growth within Consumer and Commercial Banking portfolios, partially offset by net interest margin compression. Interest expense increased $46 million, or 10%, driven by the net impact of higher funding costs. As a result, the net interest margin declined marginally to 5.1% from 5.3% in 2020. The average interest rate paid on all funding sources improved to 2.3% because of a better deposit mix compared to 2.4% in 2020.

Non-interest revenue was $812 million, increasing $40 million, or 5%. Net fees and commission income increased $62 million, or 16%, to $451 million, driven by higher cash management fees, higher debit and prepaid cards spend volumes, and credit-related fees, reflecting the rebound in economic activity across most of our markets. Net trading income decreased $51 million, or 15%, to $296 million, predominantly driven by a significant reduction in client-driven foreign currency trading fees. Other income of $65 million increased by $28 million, or 75%, driven by the sale of non-core assets and dividend income associated with investee entities of some of our subsidiaries. As a result, the contribution of non-interest revenue to total net revenues (NIR ratio) improved slightly to 46.2% versus 46.0% in 2020.

Expenses were $1.0 billion, decreasing by $19 million, or 2%, or in constant currency, by 2%. Employee-related expenditures decreased by $8 million to $455 million, partly due to a decrease in headcount. The depreciation and amortisation charge increased $4 million to $109 million, driven by digital and mobile capability enhancements to improve the customer experience and drive revenue growth. Other expenses fell $16 million partly due to the one-off non-recurring restructuring costs of $31 million incurred in 2020. Overall, cost reductions benefit from our 'One Bank', 'Manufacture Centrally, Distribute Locally' strategy, driven by initiatives such as our regional cost centres (RCCs) and other structural changes to reduce costs. Consequently, the cost-to-income ratio (efficiency ratio) improved to 58.9%, the lowest in a decade, compared to 62.7% in 2020. Also, the cost-to-assets ratio, which measures costs to average assets, improved to 3.9% compared with 4.3% in 2020.

Impairment charges on loans (provision for credit losses), net of loan recoveries and impairment releases were $170 million compared with $182 million in 2020. Gross impairment charges were $374 million, $62 million more than a year ago, driven by higher impairment charges in our Francophone West Africa and Central, Eastern and Southern Africa regions. The credit impairment charges for 2021 includes a central macro-overlay of $85 million, a provision buffer on top of the model computed estimate for expected credit losses (ECL) to cater to lingering uncertainties in the credit environment. The net impact of loan collections, recoveries and provision releases was $205 million for 2021, increasing by $74 million from 2020. The current period's loan recoveries include $32 million from the Resolution Vehicle (RV). The Bank's credit quality is strongly evident in the cost-of-risk, which improved to 1.69% compared to 1.85% in 2020.

Taxation - Income taxes were $122 million compared with $89 million in the prior-year period. The effective income tax rate (ETR) was 25.6% versus 26.4% (excluding the impact of the goodwill impairment charge) in the prior year.

BALANCE SHEET SUMMARY

Selected Balance Sheet Information

As at 31 December (in millions of US dollars, except per share amounts)	2021	2020	YoY %	Ccy* %
Gross loans and advances to customers (EOP)	10,228	9,798	4	12
Less allowance for impairments (expected credit losses)	652	558	17	-
Net loans and advances to customers (EOP)	9,576	9,240	4	11
Average net loans and advances to customers	9,060	8,797	3	-
Deposits from customers (EOP)	19,713	18,297	8	15
Average deposits from customers	18,953	17,109	11	-
Total assets	27,562	25,939	6	14
Equity attributable to owners of ETI	1,532	1,503	2	-
Total equity to all owners	2,164	2,028	7	19
Loan-to-deposit ratio	51.9%	53.6%	-	-
Tier 1 capital adequacy ratio	10.7%	9.4%	-	-
Total capital adequacy ratio (CAR)1	14.8%	12.3%	-	-
Risk-weighted assets (RWA)2	15,273	15,628	(2)	-
End-of-period ordinary shares outstanding (millions of shares)	24,730	24,730	-	-
# of ordinary shares to be issued if convertible bond converts	6,667	6,667	-	-
Per Share Data (in US Cents)
Book value per ordinary share, BVPS3	6.20	6.08	2	-
Tangible book value per ordinary share, TBVPS4	5.70	5.47	4	-
Share price (EOP)	2.10	1.58	33	-

(1) Basel II/III CAR is a provisional estimate for 31 December 2021. 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; The Group extended its transitional schedule for the recognition of IFRS 9 Day 1 impairments in regulatory capital from three years to five years, the latter being the widely adopted ECB/PRA schedule

• (2) RWAs for 2021 is a provisional estimate.

• (3) ETI shareholders' equity divided by end-of-period ordinary shares outstanding

• (4) 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

EOP = End-of-period

*Ccy = year-on-year percentage change on a constant currency Average deposits and loans is on a quarterly basis

Gross loans and advances to customers (EOP) were $10.2 billion as of 31 December 2021, an increase of $430 million, or 4%, from 31 December 2020. End-of-period net loans (gross loans less accumulated credit losses) were $9.6 billion, an increase of $336 million, or 4%, from 31 December 2020. Excluding exchange rate impact, net loans increased by $914 million. The gradual recovery in household and business activity supported net loan growth across our businesses, with Corporate Banking loans increasing by $347 million, mainly in the fourth quarter, and Consumer Banking by $10 million, partially offset by a decrease of $21 million within Commercial Banking. Net loans grew in AWA, Nigeria, and CESA in our geographic regions, while UEMOA experienced muted loan demand.

Deposits from customers (EOP) were $19.7 billion as of 31 December 2021, increasing by $1.4 billion, or 8%, from 31 December 2020. Excluding exchange rate impact, customer deposits grew by $2.5 billion in 2021. Deposit growth was driven by Corporate Banking, $1.0 billion, and Commercial Banking, $479 million, mostly in non-interest-bearing current accounts. Consumer banking deposits were down $81 million, with growth in current accounts offset by a decrease in more expensive time deposits. On a regional basis, deposits increased robustly in Nigeria, AWA, and CESA. Overall, current and savings account deposits (CASA) increased by about $1.0 billion and term or time deposits increased by $406 million. CASA constituted 82% of total customer deposits.

Estimated Tier 1 CAR and Total CAR were 10.7% and 14.8%, respectively, as of 31 December 2021, compared with 9.4% and 12.3% as of 31 December 2020. The increase in capital adequacy ratios reflected the robust growth in profits in 2021, the positive impact of a $350 million 10-year subordinated sustainability Eurobond raised in June and a $75 million perpetual subordinated notes (Additional Tier 1 capital) instrument raised in September.

Equity available (attributable) to ETI shareholders was $1.53 billion as of 31 December 2021, a marginal increase of $29 million from the $1.50 billion as of 31 December 2020. ETI shareholders' equity growth reflected strong attributable profit generation of $262 million in 2021, partially offset by mark-to-market losses on debt securities of $62 million and foreign currency translation reserve losses of $176 million. In addition, in September 2021, ETI raised $75 million ofperpetual subordinated notes (Additional Tier 1 capital), which is part of overall total Shareholders' equity under 'Other Equity Instruments'. But does not form part of ETI shareholders' equity.

Asset Quality

For the year ended 31 December	2021	2020
(in millions of US dollars)
Gross impairment charges on loans and advances	(374)	(312)
Less: recoveries and impairment releases	205	131
Net impairment charges on loans and advances	(170)	(182)
Impairment charges on other assets	(48)	(45)
Impairment charges on financial assets	(218)	(227)
Cost-of-risk(1)	1.69%	1.85%
As at 31 December	2021	2020
Gross loans and advances to customers	10,228	9,798
Of which Stage 1	8,547	7,808
Of which Stage 2	1,043	1,241
Of which Stage 3 (non-performing loans)	639	749
Less allowance for impairments (accumulated expected credit losses)	652	558
Of which stage 1: 12-month ECL(2)	80	90
Of which stage 2: Life-time ECL	143	93
Of which stage 3: Life-time ECL	429	375
Net loans and advances to customers	9,576	9,240
Non-performing loans (Impaired loans)	639	749
NPL ratio	6.2%	7.6%
NPL coverage ratio	102.1%	74.5%
Stage 3 coverage ratio	67.1%	50.1%
(1) Cost-of-risk is computed on an annualised basis
(2) Expected Credit Losses
Note: totals may not add up due to rounding.

Non-performing loans (impaired loans or stage 3 loans) were $639 million as of 31 December 2021 compared with $749 million as of 31 December 2020. The decrease in non-performing loans year-on-year reflected the net impact of loan recoveries, collections, upgrades, and write-offs across all business lines. As a result, the NPL ratio improved further to 6.2% compared to 7.6% in 2020.