Ecobank Records 68% Decline in Profit After Tax to N21.2 Billion

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Ecobank Transnational Incorporated (ETI) has recorded a dip of 68 per cent in profit after tax (PAT) for the year ended December 31, 2015 in line with its warning of revenue drop for the period. ETI was among the five banks that sent profit warnings to the capital market community that revenue growth would be lower than expected due to a combination of low oil prices as weaker currencies hampered economic performance across the continent.

The audited results of the bank released yesterday showed that profit before tax (PBT) declined by 53 per cent from N86.4 billion in 2014 to N40.6 billion in 2015. PAT dipped by 68 per cent from N65.7 billion to N21.25 billion.

Although the company reported a growth of 11 per cent in operating PBT, huge provisions for impairment charges depressed the bottom line.

Commenting on the performance, Group CEO of ETI, Mr. Ade Ayeyemi said: “Our 2015 results were disappointing. We did a comprehensive review of our processes and portfolio leading to elevated impairment charges in the fourth quarter.

Impairment losses were significantly increased by $265 million to $532 million. This was unacceptable to us, and we have taken drastic steps to address asset quality and strengthen our processes. Also, we were faced with a difficult operating environment due to the slowdown in economic growth across Africa, as a result of lower commodity prices. These developments affected both households and businesses. Our cost-income ratio was 64.9 per cent, flat compared to prior year.

However, he said the diversified business model of the company is a source of competitive strength. “Our diversified business model is a source of competitive strength and stability. In the last few months, management and I, have worked to revise our strategy and operating model around our customers, our products, and our geographical footprint. We have made some management changes and developed a strategic plan aimed at ensuring we generate sustainable long-term performance,” Ayeyemi stated.

ETI’s main operations are in West Africa, particularly Nigeria, that is biggest oil producer. The country has suffered revenue decline as a result of the plummeting price of crude and the weakened naira.