Ecobank Transnational Incorporated : Group reports audited results with profit before tax of $352 million for the nine months ended Sept., on net revenue of $1.3 billion. ROTE of 17.9% and TBVPS of 5.52 US cents

New Release

Lomé 6 December, 2021

Ecobank Group reports audited results with profit before tax of $352 million for the nine months ended Sept., on net revenue of $1.3 billion. ROTE of 17.9% and TBVPS of 5.52 US cents.

Audited summary result for the period:			Ade Ayeyemi, Ecobank Group CEO, said: "We reported strong results,
Income Statement ($M)	9M21	9M20	reflecting the continued diligence of Ecobankers in putting our customers first
Net revenue (operating income)	1,265	1,214	and ensuring that we meet their respective needs. For the nine months period
Pre-provision,pre-tax operating profit	528	444	up to September 2021, we earned $352 million in pre-tax profit, a 41% increase
compared to the prior year and revenues of $1.3 billion, a 4% growth. Hence
Profit before tax & goodwill charge	352	250
return on tangible equity increased to 17.9%, and we grew the per-share value
Profit before tax (PBT)	352	91
of our shareholders' equity by 11% to 5.52 US dollar cents.
Profit available to ETI shareholders	182	(32)
Diluted EPS ($ cents)	0.74	(0.13)	"These results also demonstrate the hard work invested in driving efficiency in
			all our businesses in line with our deliberate focus on driving down our cost-to-
Balance Sheet ($M)	9M21	9M20
serve, sustain improvement in the quality of our credit portfolio, and
Net loans and advances to customers, EOP1	8,873	8,539	strengthen liquidity and capital buffers. As a result, our cost-to-income ratio
Deposits from customers, EOP	18,853	17,330	has been declining consistently quarter on quarter, currently 58.3%. In
Cost of funds	2.3%	2.5%	addition, the stock of nonperforming loans as a percentage of loans
Non-performing loans (NPL) ratio	6.9%	9.9%	outstanding is now at 6.9% compared to 9.9% a year ago. At the same time, we
NPL coverage ratio	91.2%	70.1%	are proactively building loan reserves, currently at 91.2% of nonperforming
loans, close to our near-term target of 100%. We have boosted the firm's
Tangible book value per share ($ cents)	5.52	4.98
liquidity profile, thanks to growing customer deposits fueled by an acceleration
Profitability Metrics	9M21	9M20	in digital channel adoption, partnerships with Fintechs, Telcos, and businesses
Return on average total assets (ROA)2	1.3%	0.2%	in the Payments Ecosystem," Ayeyemi added.
Return on tangible shareholders' equity (ROTE)3	17.9%	14.1%	"During the quarter, Arise B.V., a major institutional shareholder of ETI made a
Net interest margin (NIM)	5.1%	5.2%
$75 million Additional Tier 1 (AT1) investment in the firm. Adding onto the
Cost-to-income ratio (CIR)	58.3%	63.4%
$350 million Tier 2 Sustainability Note ETI successfully issued to investors in
Cost-to-asset ratio	3.8%	4.3%	June. The AT1 further improves our Tier 1 capital and double leverage ratio and
Cost-of-risk (CoR)	1.43%	1.79%	demonstrates stakeholder confidence in our strategy and business prospects,"
			Ayeyemi continued.
Geographical Region (data as of 9M 2021)	CIR	ROE
Francophone West Africa (UEMOA)	54.4%	21.9%	"Finally, we continue to invest in new digital and mobile capabilities to enhance
Nigeria	79.6%	2.9%	customer experience, alongside the investments we are making in our people,
processes, and controls, to ensure the continued resilience of our business and
Anglophone West Africa (AWA)	44.3%	27.1%
service delivery to our clients. I am deeply grateful to all our customers and the
Central, Eastern and Southern Africa (CESA)	52.1%	21.6%
Ecobank team for the remarkable job." Ayeyemi concluded.

1. EOP = End-of-period
2. ROA (annualised)is calculated as the Group's profit after tax divided by average end- of-period total assets
3. Profit available (attributable) to ETI shareholders divided by the average end-of- period tangible shareholders' equity. 9M20 ROTE adjusted for $159m goodwill impairment charge

• Return on assets and tangible equity have improved and were 1.3% and 17.9%, compared with 1.0% and 14.1% for 9M20, respectively (all percentages annualised and normalised).
• Net revenue increased $52m, or 4%, to $1.3bn, driven by funded income, cash management, trade finance, mobile and online payments, and FICC.
• Strong revenue growth in the Payments business, up 34% to $140m (11% of total Group revenue).
• Profit before tax and goodwill of $352m, $102m higher than the previous year, as higher revenue and lower expenses combined to create positive operating leverage and an improvement in the cost-of-risk.
• Profit available to ETI shareholders of $182m, grew by $215m over the prior period.
• Cost-to-incomeratio (CIR) of 58.3% has been on a downward trajectory on a quarterly basis, benefiting tremendously from our
  'manufacture centrally, distribute locally' strategy, sustained cost discipline and revenue growth.
• Customer deposits increased $1.5bn, or 9% year-on-year (YoY), to $18.9bn driven by deepening client relationships, partnerships, and increasing consumption of our digital platforms.

• Customer loans increased by $334m or 4% YoY, to $8.9bn.
• The NPL ratio reduced further to 6.9% from 7.6% in 4Q20 and 9.9% in 3Q20.
• Coverage of NPLs increased further to 91.2% from 74.5% in 4Q20 and 70.1% in 3Q20 towards our goal of a 100% coverage in the near term.
• Book value per share up 8% YoY to 6.04 cents, and tangible book value per share (TBVPS) up 11% to 5.52 cents.
• Continue to see strong client adoption of our digital platforms (Omni plus, Omni Lite, EcobankPay, Ecobank App, Xpress Points etc) across all our business lines. Digital transaction values increased 52% YoY to $42bn in 9M 2021.
• Arise B.V. (major shareholder of ETI) made a $75m Additional Tier 1 (AT1) investment in ETI. The investment improves ETI's Tier 1 CAR and double leverage.
• Ecobank recently secured €100m long-term credit facility over 9 years from the European Investment Bank (EIB) to support African businesses, mostly those affected by COVID-19.
• ETI signed a 3-year loan agreement with a syndicate of Proparco, DEG and Norfund for $60m in October 2021.

New Release

Lomé 6 December, 2021

TOTAL VALUE ($m) OF TRANSACTIONS - DIGITAL CHANNELS

Nine months ended	30 Sept	30 Sept	% CHG
(in millions of US dollars)	2021	2020
Omni Plus	27,215	19,051	43%
Omni Lite	3,306	1,899	74%
Ecobank Mobile App	3,729	2,197	70%
Ecobank USSD	200	144	39%
Ecobank Online	1,318	683	93%
Xpress Points (Agency Network)	2,101	1,040	102%
RapidTransfer App	3.0	0.9	221%
Indirect Channels1	3,210	1,963	64%
.

(1) Mostly transactions on partership platforms, like with Telcos

SUMMARY FINANCIAL REVIEW OF THE ECOBANK GROUP

Selected Income Statement Highlights

	Audited financials for the nine months ended	30 Sept	30 Sept	YoY	Ccy(1)
	(in millions of US dollars except per share data )	2021	2020
	Net interest income	697	671	4%	5%
	Noninterest revenue	568	542	5%	7%
	Net revenue (operating income)		1,265	1,214	4%	6%
	Operating expenses	(737)	(769)	(4)%	(4)%
	Pre-provision,pre-tax operating profit		528	444	19%	24%
	Gross impairment charges on loans	(231)	(201)	15%	15%
	Loan recoveries and impairment charge releases		128	73	76%	73%
	Net impairment charges on loans		(103)	(128)	(19)%	(19)%
	Impairment charges on other assets		(43)	(34)	25%	25%
	Impairment charges on financial assets		(146)	(162)	(10)%	(10)%
	Net monetary loss arising from hyperinflationary economy	(30)	(33)	NM	-
	Share of profit / (loss) of associate	(0.3)	0.5	NM	-
	Profit before tax and goodwill impairment	352	250	41%	-
	Goodwill impairment charge	-	(159)	-	-
	Profit before tax	352	91	288%	236%
	Profit after tax from continuing operations	255	25	902%	-
	Profit after tax from discontinued operations	2	2	0.3%
	Profit for the year	256	27	847%	1,208%
	Profit available to ETI shareholders	182	(32)		-
	Per Share Data (US cents)			8%
	Basic EPS	0.74	(0.13)	NM
	Normalised Basic EPS	0.74	0.53	39%
	Diluted EPS	0.74	(0.13)	NM
	Normalised Diluted EPS	0.74	0.53	39%

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 NM - Not meaningful

Ecobank Reports

Audited Nine Months Ended Sept 2021 Earnings Results

First nine months of 2021 vs. First nine months of 2020

Profit before tax and goodwill was $352 million, increasing by $102 million, or 41%, driven by positive operating leverage, efficiency gains, and improving credit quality. Considering the goodwill impairment charge of the prior year of $159 million, profit before tax of $352 million, increased $261 million, or 288%.

Net revenue, (operating income) was $1,265 million, increasing by $52 million, or 4%, or in constant currency by 6%. Revenue benefited from increases in net interest income and non-interest revenue, both increasing by $26m from the prior year, with solid revenue growth in Commercial and Consumer Bank. Net interest income was $697 million, an increase of $26 million, or 4%. Interest income rose $46 million, or 4%, mainly driven by interest income on higher investment securities balances, modest loan growth within Consumer and Commercial Bank, and the net impact of higher yields with AWA and CESA. Interest expense increased $19 million, or 5%, driven by the net impact of higher rates and modest increase in interest-bearing liabilities. As a result, the net interest margin (NIM) declined marginally to 5.1% from 5.2% in the prior year. The average cost of interest-bearing liabilities was 2.35%, down ten basis points compared to the preceding year. Noninterest revenue was $568 million, increasing $26 million, or 5%. Net fees and commission income increased $37 million, or 13%, to $316 million, driven by higher cash management fees, an increase in gross dollar volume on mobile and online payment activity, brokerage and credit-related fees, and other associated fees. These increases reflected robust customer activity supported by growing economic activity in most of our regions. Net trading income decreased $48 million, or 19%, to $210 million, predominantly driven by a significant reduction in fees associated with foreign currency trading. Other income of $28 million increased by $20 million, or 228%, driven by the sale of noncore assets and dividend income associated with investee associates of some of our affiliates.

Expenses were $737 million, decreasing by $32 million, or 4%, or in constant currency, by 4%. Hence, the cost-to-income ratio (efficiency ratio) improved to 58.3%, 514 basis points better than a year ago. Also, the cost-to-assets ratio, which measures costs to average assets, was 3.8% compared with 4.3% in the prior-year period. Staff expenses decreased $17 million, or 5%, to $325 million, partly due to a decrease in headcount. The depreciation and amortisation charge increased $4 million, or 5%, to $84 million, driven by digital and mobile capability enhancements to improve the customer experience and drive revenue growth. Other expenses fell $20 million, or 6%, partly due to the nonrecurring restructuring costs incurred in the prior year. Overall, cost reductions are benefiting from 'manufacture centrally, distribute locally' strategy, which saw us set up regional cost centers (RCC) and other efficiency initiatives.

Impairment charges on loans (net) were $103 million compared with $128 million in the prior year. Gross impairment charges were $231 million, $31 million more than a year ago, driven by higher impairment charges in our Francophone West Africa and Central, Eastern and Southern regions. Ongoing effectiveness of our NPL remedial and recovery strategy, asset quality improvements, and better economic conditions continued to sustain loan recoveries, which were $128 million for the period, increasing $55 million from the prior year. The cost-of-risk was 1.43% compared to 1.79% in the prior year.

Taxation - Income taxes were $98 million compared with $65 million in the prior-year period. The effective income tax rate (ETR) was 27.7% versus 26.1% (excluding the impact of the goodwill impairment charge) in the prior year.

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Ecobank Reports

Audited Nine Months Ended Sept 2021 Earnings Results

BALANCE SHEET SUMMARY

Selected Balance Sheet Information

	30 Sept	31 Dec	30 Sept
Audited financials as at: (in millions of US dollars, except per share amounts)	2021	2020	2020	YoY	Ccy*
Gross loans and advances to customers, EOP	9,469	9,798	9,175	3%	-
Less: allowance for impairments	596	558	635	(6)%	(3)%
Net loans and advances to customers, EOP	8,873	9,240	8,539	4%	7%
Deposits from customers, EOP	18,853	18,297	17,330	9%	12%
Total assets	26,417	25,939	24,443	8%	12%
Equity available to owners of ETI	1,493	1,503	1,380	8%
Equity to all owners	2,122	2,028	1,837	16%	21%
Loan-to-deposit ratio	50.2%	53.6%	52.9%
Total capital adequacy ratio (CAR)1	14.7%	12.3%	11.6%
Tier 1 capital adequacy ratio	9.9%	9.4%	9.2%
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 cents)
Book value per ordinary share, BVPS2	6.04	6.08	5.58	8%
Tangible book value per ordinary share, TBVPS3	5.52	5.47	4.98	11%
Share price -end of period	1.32	1.58	1.10	19%

1. Tier 1 and Total CAR are as of 30 June 2021. CAR ratios are based on transitional adjusted capital; the Group is recognising IFRS 9 Day 1 impairments in regulatory capital over a 5-year period from 1 January 2018 to 1 January 2023
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 NA - Not applicable

Gross loans and advances to customers were $9.5 billion as of 30 September, down $330 million, or 3%, from 31 December 2020, but up $294 million, or 3%, from the preceding year. Net loans were $8.9 billion, down $367 million, or 4% from 31 December 2020, but up $334 million, or 4%, from the prior year. Loan growth within Nigeria and AWA was more than offset by decreased loans within UEMOA and CESA. The net decrease in loans reflected tepid market loan demand partly due to lingering effects of the pandemic, and episodic loan prepayments.

Deposits from customers were $18.9 billion as of 30 September, increasing by $556 million, or 3%, from 31 December 2020, and $1.5 billion, or 9%, from 30 September 2020. The growth in deposits reflected robust payment activity on our online and mobile platforms, agency banking and physical branches across our lines of business and strong growth in digital onboarding, primarily within small business clients.

Tier 1 CAR and Total CAR were 9.9% and 14.7%, respectively, as of 30 September 2021, compared with 9.4% cent and 12.3% as of 31 December 2020. The increase in capital adequacy ratio is primarily due to internal profit generation and the June 2021 issuance of a $350 million 10-year Subordinated (Tier 2 capital) Sustainability Eurobond. The issuance of $75 million AT1 in September, along side solid profit growth, are expected to boost capital ratios by yearend.

Equity available (attributable) to ETI shareholders was $1.5 billion as of 30 September 2021, compared with $1.5 billion and $1.4 billion as of 31 December 2020 and 30 September 2020, respectively. The YTD decline in equity by $11 million, or 1%, was driven by unrealised mark-to-market losses of $62 million on debt securities and foreign currency translation reserves losses of $129 million, partially offset by higher profit available to ETI shareholders of $182 million for the period.

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Ecobank Reports

Audited Nine Months Ended Sept 2021 Earnings Results

Asset Quality
Audited results for the period ended (in millions of US dollars)	30 Sept	31 Dec	30 Sept
2021	2020	2020
Gross impairment charges on loans and advances	(231)	(312)	(201)
Less: recoveries and impairment releases	128	131	73
Net impairment charges on loans and advances	(103)	(182)	(128)
Impairment charges on other assets	(43)	(45)	(34)
Impairment charges on financial assets	(146)	(227)	(162)
Cost-of-risk	(1)		1.43%	1.85%	1.79%
As at:			30 Sept	31 Dec	30 Sept
		2021	2020	2020
Gross loans and advances to customers	9,469	9,798	9,175
Of which stage 1		7,714	7,808	7,050
Of which stage 2		1,101	1,241	1,218
Of which stage 3, credit impaired loans (non-performing loans)	653	749	906
Less: allowance for impairments (Expected Credit Loss)	596	558	635
Of which stage 1: 12-month ECL	(2)	94	90	89
Of which stage 2: Life-time ECL		147	93	87
Of which stage 3: Life-time ECL		355	375	459
Net loans and advances to customers	8,873	9,240	8,539
Impaired loans or non-performing loans (NPLs)	653	749	906
NPL ratio			6.9%	7.6%	9.9%
NPL coverage ratio		91.2%	74.5%	70.1%
(1) Cost-of-risk is computed on an annualised basis
(2) Expected Credit Losses
Note: totals may not add up due to rounding.

Nonperforming loans (impaired loans or stage 3 loans) were $653 million as of 30 September 2021 compared with $749 million as of 31 December 2020 and $906 million as of 30 September 2020. A mix of loan recoveries, collections, upgrades, and write-offs across all business lines continued to drive NPLs down. As a result, the NPL ratio improved further to 6.9% compared to 7.6% at year-end 2020 and 9.9% in the prior-year period, driven equally by recoveries, collections, upgrades, and write-offs.

Also, the NPL coverage ratio improved significantly to 91.2% from 74.5% at year-end 2020 and 70.1% from a year ago. This improvement brings us closer to our year-end target of 90% or more and progress towards our 100% target in the very near term.

REGIONAL PERFORMANCE

The Group is divided into four geographical regions. These reportable regions are Francophone West Africa (UEMOA), Nigeria, Anglophone West Africa (AWA), and Central, Eastern and Southern Africa (CESA). 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 reported within their country of domicile and therefore in the applicable regions of UEMOA, Nigeria, AWA, and CESA.

Comparisons noted in the commentary below are calculated for the nine months ended 30 September 2021 versus the nine months ended 30 September 2020, unless otherwise specified.

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