ETI’s tough measures yielding results as it posts $322 million profit

Ecobank Transnational Incorporated (ETI) says its measures to strengthen its foundations and position the bank to deliver long-term shareholder values is yielding positive results.

“When we implemented our roadmap to leadership strategy which targets the achievement of a sustainable return on equity above the cost of equity over the long-term, it became apparent that the amount of work that it required was onerous. I’m glad to say that we have made tremendous progress. ” Ecobank Group Chairman Emmanuel Ikazoboh told shareholders at its annual general meeting held in Lome, Togo.

He said to drive efficiency and returns in Nigeria, the bank downsized its operations and deleveraged its balance sheet, thereby reducing risks.

“We improved its cost profile by reducing both headcount and branches, while at the same time investing in technology,” he said.

Financial Performance

On financial performance for the period under review Mr Ikazoboh said the company performed remarkably well and hope it would be sustained.

Mr Ikazoboh

ETI delivered $322 million profit in 2018, up $140 million, or 77 per cent, compared to $182 million in 2017. This is the second year of a profitable bounce back by the Group, after it posted a loss in 2016.

The Ecobank Group generated profits attributable to shareholders of  ETI of $265 million,  an increase of 47 per cent from 2017, which translates into earnings per share of 1.06 US dollar cents, up 47 per cent in 2017.

This indicates an improvement in the return on tangible shareholders equity to 21 per cent from 13.6 per cent a year ago.

“These results reflected the continued discipline in cost management commitment to risk management and our ongoing clean-up of the credit portfolio. The efficiency, or cost-to-income ratio, has steadily improved and was 61.5 per cent in 2018, despite tepid revenue growth,” Mr Ikazoboh said.

He said the health of the credit portfolio measured by the cost-of-risk has improved to 2.4 per cent compared to 3.3 per cent in 2017.

Dividend

The Group Chairman assured shareholders that ETI would pay dividends to shareholders as soon as the earnings for the Group improve.

“The Board recognises the importance of dividends payouts to our shareholders… However, having considered factors such as the impending regulatory capital requirements of the Group and the need to build the holding company’s liquidity buffers, we are not recommending the payment of a dividend…” he explained.

He said, “Over the last few years, we have taken strong measures to ‘Secure the Foundations’ of Ecobank and the board is confident that our strategy, and the actions that we have taken so far, have positioned the company for sustainable future growth with a return on equity above the cost of equity.”

Digital drive

He said the bank would continue to invest in technology to drive its digital agenda.

 He shared some of the group’s other highlights of the year, which included Ecobank being named Africa’s Best and Most Innovative Retail Bank by African Banker magazine and winning the Best Digital Strategy Award from Retail Banker International.

The bank also received nominations for the Best Payment Innovation for Ecobank Xpress Cash and Product Innovation of the Year for our Ecobank Mobile App.

“We have embraced digitisation with a fierce passion as we are keenly aware of the impact that technology – particularly financial technology – is having on the banking industry. We have developed some amazing digital products that are enriching our customers’ experience,” he stated.

And Ecobank Group Chief Executive Officer, Ade Ayeyemi said, “It is the long-term financial success of the company that remains paramount. As such, we will continue to build on and enhance the technology platforms that enable us to engage with more customers and partners and deploy a robust digital communications strategy.”

“The traditional bank model that we all know is rapidly changing with technology and we must continue to position ourselves effectively to succeed in this technological journey of transformation,” he explained.

By David Adadevoh

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