THUR. 08 DEC, 2022-theGBJournal| Ecobank Group, the pan-African banking institution, has posted profit before tax (PBT) of $401 million in the third quarter of fiscal 2022, ended September, a up 14% or 48% at constant currency (i.e. excluding currency movements).
The 14% increase was primarily driven by strong revenue growth and disciplined cost and credit loss management, partially offset by a one-off non-conversion premium of $25m resulting from the repayment of the $250m convertible loan facility representing the first tranche of the $400m convertible debt issued in September 2017.
The bank noted that the PBT was adversely affected by net monetary losses due to hyperinflation in Zimbabwe and South Sudan.
Net revenue went up 7% or 24% at constant currency to $1.4bn, reflecting strong net interest income and non-interest revenue growth and the continued benefits of diversification. Revenues in its Payments business grew 17% or $24m to $178m (13% of Group revenues), driven by merchant acquiring, cards, and wholesale payments
In Q3, Profit available to ETI shareholders went up 7% to $196m, and diluted EPS of 0.80 US cents, went up as well by 8%.
Ade Ayeyemi, CEO, Ecobank Group, said ”these results reflect the resilience, strong brand and diversification of our pan-African franchise. We saw decent client activity in consumer and wholesale payments, trade finance and foreign currency markets.”
It reported a record cost-to-income ratio of 56.3% which benefited from higher revenue growth and stringent cost containment measures in an inflationary environment.
Meanwhile, customer deposits (end-of-period, EOP) decreased 2% or at constant currency increased 17% to $18.4bn. Gross customer loans (EOP) increased 5% or 23% at constant currency to $9.9bn. The non-performing loans (NPL) ratio improved to 6.4% compared to 6.9% a year ago and NPL coverage ratio increased to 112.5% from 91.2% a year ago.
The volume of digital transactions rose by 44% to $59.1 billion for the nine months to September 2022.
ETI has repaid upon maturity the 5-year $400 million convertible debt issued in September and October 2017. ETI redeemed the debt at 110% of the principal amount, in line with the terms of the convertible debt agreements.
”The repayment did not affect ETI’s regulatory capital since the debt had been fully amortised for capital in 2021,” the Bank said.
Ade Ayeyemi emphasised that the bank continued to deliver on its strategic priorities and are on track to meet full-year targets despite the complex operating environment.
Commenting further on the Bank’s performance, Ade Ayeyemi said: ”Group-wide return on tangible equity reached a record 21%, and profit before tax increased by 14%, or 48% at constant currency (i.e., excluding currency movements). Additionally, despite inflationary pressures, we maintained a tight lid on costs, thereby improving our cost-to-income ratio to 56.3% from 58.3% in the previous year.
”The dampened economic outlook necessitated maintaining a sound balance sheet with adequate levels of liquidity and capital. As a result, our total capital adequacy ratio at 14.4% is well above our internal and minimum regulatory limits. Also, we hold sufficient gross impairment reserves that fully cover our non-performing loans. Moreover, we have fully repaid the five-year $400 million convertible debt we issued in September and October of 2017.
Ecobankers have worked extremely hard to serve our customers’ financial needs, and I am proud of them. As always, we will passionately work towards realising our vision and remaining the bank that Africa and friends of Africa trust.”
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