By Dipo Olowookere
One of the leading financial institutions in Africa, Ecobank, has expressed optimism that its profitability will improve in the current 2021 fiscal year.
Last Friday, the lender released its financial results for the 2020 accounting year and from the analysis, its profits declined. This was attributed to the provisioning for goodwill for the acquisition of Oceanic Bank in 2011.
Last year, Ecobank suffered a 55 per cent year-on-year decline in pre-tax profit as it closed with N65.5 billion in contrast to N146.5 billion in the 2019 reporting period, while the post-tax profit went down by 64 per cent to N35.9 billion in FY 2020 from N99.5 billion in FY 2019.
Reacting to this development in a statement made available to Business Post, Ecobank assured its shareholders that things would be better 2021, especially based on the improvement it recorded in its top line as well as the balance sheet.
The financial institution specifically said “with clean book aftermath of the full provisioning for Oceanic Bank, it will improve on its profitability in 2021 and other years ahead.”
In the unaudited results, the bank improved its revenue for the year by 7 per cent to N630 billion from N586.9 billion of the preceding year.
Also, its net interest income improved by 27 per cent to N345.3 billion from the N271.2 billion achieved a year earlier and this was buoyed by a significant decline in the interest expense, which closed at N184.8 billion in FY20 versus N239.6 billion in FY19.
In the period under consideration, the interest income slightly increased by 4 per cent to N530.1 billion from N510.8 billion in the 2019 accounting year.
However, according to the results, fee and commission income reduced to N160.6 billion from N166.4 billion just as the fee and commission expense went down to N12.5 billion from N14.6 billion, with the net trading income going down to N121.8 billion from N138.1 billion.
Also, the other operating income fell, closing at N15.1 billion as against N25.8 billion it closed a year earlier as the non-interest revenue depreciated by 10 per cent to N285.1 billion from N315.7 billion.
In the year, Ecobank reduced its staff expenses by 2 per cent to N174.2 billion from N177.4 billion, while the operating expenses spiked by 3 per cent to N398.8 billion from N388.3 billion.
Apparently, due to the disruptions caused by COVID-19 pandemic to businesses and the violence that followed the #EndSARS protest last year, the recoveries made by the bank reduced significantly by 33 per cent to N49.9 billion from N73.9 billion.
On the balance sheet, deposits from customers went up 23 per cent to N7.3 trillion from N5.9 trillion in 2019, while loans and advances to customers grew by 9 per cent to N3.7 trillion from N3.4 trillion.
