Ecobank Transna-tional Incorporate (ETI) Plc, Ecobank Group’s holding company, recorded a net loss of N52.6 billion in 2016 following a voluntary decision of the financial group to adopt full impairment charge for its legacy loan portfolio.
ETI made a provision of N221.7 billion in the 2016 audited accounts, an increase of 110.7 per cent on N105.2 billion recorded in 2015.
Key extracts of the audited report and accounts of the ETI Group release yesterday at the Nigerian Stock Exchange (NSE) showed 29 per cent increase in operating profit before impairment losses to N188.65 billion in 2016 as against N146.04 billion in 2015. However, with the decision for the full impairment of the legacy loan, the group recorded loss before tax of N33.71 billion in 2016 as against pre-tax profit of N40.59 billion in 2015. After taxes, net loss stood at N52.6 billion in 2016 compared with net profit of N21.25 billion in 2015. Earnings per share thus reversed from 56 kobo in 2015 to a loss of N2.58 in 2016.
The report showed that gross earnings rose by 23 per cent to N665 billion in 2016 as against N542.7 billion in 2015. Net interest income similarly rose by 25.3 per cent to N284 billion compared with N226.6 billion in 2015.
The balance sheet of the group meanwhile emerged stronger as total assets rose by 33 per cent from N4.69 trillion in 2015 to N6.26 trillion in 2016. Loans and advances also grew by 27 per cent from N2.23 trillion to N2.82 trillion. Customers’ deposit increased by 26 per cent to N4.12 trillion in 2016 as against N3.27 trillion in 2015. Total equity improved by seven per cent from N502.88 billion in 2015 to N538.04 billion in 2016.
Group Chief Executive Officer, Ecobank Transnational Incorporated (ETI) Plc, Ade Ayeyemi said the group’s year-end bottom line performance was impacted by the group’s voluntary adoption of a full impairment charge regarding its legacy loan portfolio, for which a resolution vehicle was set up, the first private sector funded resolution vehicle of its kind in Nigeria, with the sole objective of ring-fencing the legacy loans from Nigeria’s core bank.
He said the resolution of the legacy loan portfolio would allow management to focus on delivering results adding that this business philosophy was founded on international best practice in terms of accounting and asset quality.
“So whilst the impairment charge has impacted our earnings, our accounting treatment has been for the right reasons and we are in better shape for the future as a result,” Ayeyemi said.
According to him, the group revenues remained resilient despite a tough year of macro- economic headwinds including a weaker economic environment, particularly in Nigeria, and the strengthening of the reporting currency – the United States dollar – against all African currencies particularly the Nigerian Naira where 40 per cent of the group’s revenues have historically been generated.
Ayeyemi said that the funds from the proposed $400 million convertible bond issue by the group will be used sensibly and profitably, of which $200 million would be used to repay the short-term financing used in setting up the resolution vehicle while the remaining $200 million will be used for a conscious debt restructure of the maturity profile of the ETI Holdco balance sheet.
“Our ability to deliver a leading service for our customers which will be reflected in improved key performance indicators in 2017 and beyond. Ecobank’s twin goals are generating sustainable returns above the cost of equity whilst maintaining the highest international standards and we treat both goals equally. Reputations are hard won and easily lost and we will never compromise that. We have a bright future ahead and I look forward to the future with confidence,” Ayeyemi said.
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