Ecobank Transnational Incorporated (ETI) has released its 2024 consolidated financial statement, reporting a post-tax profit of N735.9 billion ($494 million), up 179% YoY.
Pre-tax profit more than doubled to N980.7 billion from N376.5 billion in 2023.
In reported currency, the Nigeria segment remained the dominant earnings driver, with post-tax profit soaring 179.3% YoY to N455.7 billion, accounting for 61.9% of the Group’s total profit.
However, in constant currency, Nigeria’s contribution to the Group’s $494 million post-tax profit was 0.63%, reflecting the impact of currency translation adjustments.
Beyond its strong profitability, ETI’s gross earnings surged 130.6% YoY to N4.22 trillion, driven by both interest and non-interest income.
Key highlights (2024 v. 2023):
- Gross earnings: N4.219 trillion +130.61% YoY
- Interest Income: N2.759 trillion +128.30% YoY
- Interest Expense: N1.007 trillion +122.91% YoY
- Net interest income; N1.752 trillion +131.52% YoY
- Fees and commission income: N879.906 billion +151.81% YoY
- Fees and commission expense: N97.994 billion +136.37% YoY
- Trading and FX gains: N538.799 billion +130.32% YoY
- Non-interest revenue: N1.362 trillion, +135.02% YoY
- Operating income: N3.114 trillion, +133.04% YoY
- Operating expenses: N1.651 trillion, +129.21% YoY
- Profit after tax: N735.897 billion +179.25% YoY
- Basic EPS: N20.19 +166.45% YoY
- Cash and cash equivalent with banks: N7.894 trillion +110.99% YoY
- Loan and advances to customers: N15.346 trillion +52.93% YoY
- Total Assets: N43.303 trillion +67.08% YoY
- Customers’ deposit: N31.636 trillion +66.41% YoY
- Shareholders’ funds: N2.780 trillion +68.41% YoY
What drove ETI’s performance?
A deep dive into ETI’s financials reveals that core operating income was the key driver of its remarkable earnings growth, supported by both interest and non-interest revenue streams.
Interest income: The backbone of growth
Interest income remained the largest revenue source, contributing over 65% of gross earnings. This was primarily driven by:
- Higher lending activity as ETI expanded loans and advances to customers.
- Increased investments in securities, which grew from N6.3 trillion to N10.68 trillion, providing a steady revenue stream despite market fluctuations.
However, this aggressive expansion came at a cost impairment charges on loans surged, leading to a higher NPL ratio of 6.7% and a cost of risk of 1.8%, the second highest in five years.
- Interest expenses also climbed sharply, reflecting the rising cost of deposits and borrowings in a high-interest-rate environment.
- Customer deposits expanded, pushing interest expenses on deposits from N257.2 billion to N559.4 billion, while borrowings nearly tripled to N306 billion.
- Despite this, net interest income remained strong, a testament to ETI’s ability to manage its lending spread effectively.
Beyond interest income, non-interest revenue played a crucial role in driving profit growth. Fees and commissions saw an impressive jump, fueled by increased cash management services and credit-related fees.
Meanwhile, trading and foreign exchange gains more than doubled. This robust non-interest income stream helped cushion the impact of rising costs and bolstered overall earnings.
- Cost efficiency also played a role in ETI’s performance. The bank managed to lower its cost-to-income ratio to 53%, the best in five years, signaling improved operational efficiency despite inflationary pressures and rising expenses.
- In reported currency, Nigeria remained the dominant earnings driver, contributing significantly to the Group’s bottom line.
- However, in constant currency terms, the contribution appears far less pronounced due to the impact of foreign exchange translation.
Overall, ETI’s strong profit growth was fueled by a combination of higher interest income, increased fee-based earnings, and better cost management. However, rising impairment charges and higher borrowing costs are key areas to watch moving forward.
