Ecobank Transnational Inc., a lender with operations across much of sub-Saharan Africa has been able to effectively use its well diversified business model to bolster 2014 full year profit which surged 179 percent, amid tough operating environment.
For the year ended December 2014, Ecobank’s net income surged by 179 percent to N65.44 billion from N23.57 billion the same period of the corresponding year 2013.
“Our performance in 2014 was a great example of the benefit of our diversified business model,” said Albert Essien, Chief operating officer of the Togo based bank, in a statement released on its website.
“In what was a tough operating environment, we remained focused on the importance of serving the financial needs of our customers across Middle Africa,” said Essien.
The impressive results is coming amid tight macroeconomic environment stoked by the CBN’s tightening stance, weak naira and slump in oil price that exposes Nigeria lenders to increased risks from their lending to oil and gas sector.
Several Nigeria lenders will also have to raise capital or restructure their balance sheets in order to shore off the impact of low oil prices.
In November 2014, the Abuja based regulator increased CRR on private sector funds from 15% to 20% while MPR was moved from 12% to 13%. CRR for public sector funds remained at 75%.
Further analysis of Ecobank’s balance showed interest income increased by 12.90 percent to N288.10 billion in 2014 from N255.17 billion in 2013; driven by strong in interest income from loans and advances and treasury bills.
Net income, a measure of profitability and efficiency moved to 13.42 percent in 2014 from 8.60 percent in 2013.
Earnings per share EPS spiked by 219.09 percent to 304.47k in 2014 as against 95.40k in 2013.
Ecobank is cutting costs while boosting profit, as cost to income ratio dropped to 65.40 percent in 2014 compared with 70.1 percent in 2013.
It means the lender is efficiently cutting costs amid regulatory induced costs.
The Pan African lender is also aggressive about lending, as its loans to customers spiked by 25 percent to N2.28 trillion in 2014 as against N1.82 trillion in 2013.
Deposits increased by 23 percent to N3.23 trillion in 2014 from N2.63 trillion in 2013.
In order to boost expansion of operations with a view to increasing its share of the market, the bank successfully raised a USD 200 million loan facility from Deutsche Bank in December 2014.
A new USD 50 million loan facility brings total funding arranged by Deutsche Bank to $250 million.
Ecobank is using the resources of its owners in generating higher profit as return on average equity (ROAE) moved to 15.75 percent in 2014 from 6.90 percent in 2013.
Return on average assets (ROAA) increased to 1.62 percent in 2014 as against 0.70 percent in 2013.
“Going forward, we remain confident in the prospects for growth in Africa and in our dedicated staff, and are positioning the company for long-term success to achieve outstanding results for all our stakeholders,” said Essien.
Source : BusinessDay