Ecobank has delivered a strong 2025 performance, crossing the N1 trillion profit mark as treasury income rises and begins to close the gap with traditional lending.
With deposits growing faster than loans, the bank is increasingly deploying liquidity into high-yield government instruments, boosting margins and overall earnings.
Gross earnings rose to about N4.88 trillion, up 16% year-on-year, while profit after tax climbed 23% to N904.7 billion.
But beneath the strong numbers, asset quality pressures and earnings concentration remain key risks to watch.
Treasury income gains ground as liquidity rises
At the centre of the earnings story is a gradual shift in income composition. Loans to customers remain the single largest contributor to gross earnings, accounting for roughly a third of total income.
However, income from treasury bills and investment securities has expanded rapidly, narrowing the gap with lending.
Combined, these instruments generated over N1.4 trillion interest income, contributing about 29% to gross earnings, compared to about 33% from loans.
This shift is closely linked to the bank’s balance sheet dynamics. Customer deposits grew by about 15% to N36.4 trillion, outpacing loan growth of about 10%.
With liquidity building, the bank opted to channel excess funds into treasury instruments and securities rather than accelerate credit expansion in a still uncertain macro environment.
It increased its holdings in treasury bills by about 28%, reaching N3.3 trillion, and investment securities by 19% to N12.7 trillion, significantly outpacing loan growth of about 10%.
This approach, alongside low cost of funds and a current and savings account ratio of over 87%, supported margins, as net interest margin improved to 6.2%.
Diversified income and efficiency gains support margins
Non-interest revenue also strengthened, supported by higher fees from cash management services, credit-related activities and rising card transactions, alongside increased trading income and foreign exchange gains driven by treasury management actions and strong client demand.
Overall, non-interest income now accounts for over 40 per cent of total revenue, highlighting a more diversified earnings base.
The combined effect of stronger revenue growth and disciplined cost control drove operating income higher, while operating expenses grew at a slower pace.
This divergence pushed the cost-to-income ratio down to a record low of 48.3%, the lowest in 5 years, reflecting improved efficiency under the Group’s transformation strategy.
Corporate bank dominates earnings
A segmental view of performance highlights where these gains are being realised. The Corporate and Investment Banking division gave the group N2.518 trillion interest income and N1.1 trillion of profit before tax.
The dominance of this segment reflects a combination of corporate lending activity and treasury operations, with the latter benefiting from elevated yields and contributing meaningfully to interest income.
While this hybrid model has supported strong margins and earnings growth, it also points to concentration of profits and increased sensitivity to interest rate movements.
However, performance across regions remained uneven. While Central, Eastern and Southern Africa (CESA) and Anglophone West Africa (AWA) delivered strong profit growth, the Nigerian business recorded a pre-tax loss despite growth in operating income.
The weakness in Nigeria appears largely driven by a deterioration in asset quality following the exit from the Central Bank of Nigeria’s forbearance regime.
This led to a one-off reclassification of legacy exposures and a sharp increase in non-performing loans, resulting in significantly higher impairment charges of N125 billion, up 306% YoY.
So, the group’s impairment charges rose by over 40% year-on-year, to N707.529 billion, while the non-performing loan ratio edged higher.
Outlook: Strong execution, but risks remain
Over a longer horizon, Ecobank’s results point to a mix of structural improvement and emerging pressures.
- Efficiency has improved steadily, while the earnings base has become more diversified.
- However, rising cost of risk and increased reliance on treasury-driven income suggest that earnings are becoming more sensitive to interest rate movements and macroeconomic conditions.
Management expects a slowdown in new non-performing loan formation as stricter risk controls take effect.
Still, Jeremy Awori, CEO of Ecobank Group, cautioned that geopolitical tensions and shifting global conditions could affect performance in the near term.
- For now, Ecobank is benefiting from a favourable mix of strong margins, diversified revenue streams, and disciplined execution.
The challenge will be sustaining this balance as interest rate conditions evolve, and asset quality pressures are brought under control.
The Group has also resumed dividend payments, declaring 0.16 cents per share, up from 0.11 cents previously, signaling management’s confidence in the sustainability of current earnings.
The return to payouts, alongside a 60.51% year-to-date gain in the stock, reinforces improving shareholder returns.
Yet, despite the strong rally, Ecobank’s valuation remains notably undemanding.
The stock trades at a price-to-earnings ratio of 2.63 times, a price-to-book ratio of 0.38 times, and a price-to-sales multiple of 0.22 times, while its PEG ratio of 0.1 suggests that earnings growth is not fully reflected in current pricing.
