Rising or spiraling impairment charges has dealt a serious blow on Ecobank Transnational Inc., as the Africa’s most geographically diverse recorded a 73 percent drop in full year profit.
The disappointing results saw net income fall to N21.25 billion in December 2015 from N65.68 billion as at December 2014.
We in Nairametrics believe the lender should take drastic steps about its asset quality and strengthen its operating process.
The lender’s impairment charges on financial assets increased by 137 percent to N105.22 billion as at December 2015. This was fueled by continuous writing off of loans that are irrecoverable or loss.
Investigation by Nairametrics shows Ecobank is navigating through stormy sea as a slow economy and depreciating exchange rate in an import dependent country like Nigeria may further dampen the lender’s asset quality.
“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,” said Ade Ayeyemi, the Group Managing Director of Ecobank.
“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.” said Ayeyemi.
