The first quarter financial results of Ecobank Transnational Inc., Africa’s most geographically diverse lender shows the lender is not growing as earnings ebbed on the back of a low oil price and a weaker currency.
For the first three months through March 2016, the Togolese bank recorded a 35 percent drop in net income to N16.20 billion as against N24.48 billion as at March 2015.
The bank’s bottom lines was affected by 5 percent drop in gross earnings while a sky high impairment charges on financial charges also did some damage to profit.
Impairment charges on financial assets increased by 55 percent to N13.27 billion, a signal that the lender is writing off more bad and irrecoverable debt.
Investigation by Nairametrics shows lenders in Africa’s most populous nation are struggling with a slow growing economy that has hindered many bank customers from honoring obligations as at when due.
Growth in Nigeria slowed to 2.8 percent last year, the weakest level since 1999 and down from 6.2 percent recorded in 2014.
Ecobank’s slow start to the year is a signal that other lenders in the country may have earnings crimped by rising loan loss expense while Non Performing loans may break scale and exceed the 5 percent threshold.
“Our results for the first quarter was a reasonable performance in light of the very difficult and tough operating market conditions.” said Ade Ayeyemi, the chief executive of Ecobank
“Despite the challenges our clients continue to face, our diversified business model, which is a source of competitive strength and stability, allows us to continue to serve them in and across regions in Middle Africa,” said Ayeyemi. With our revised strategy and a simplified operating model we aim to be more efficient in running our businesses and serving our customers, “said Ayeyemi.
