Ecobank Group reports performance for the half-year, 2021. From the result, Ecobank Groupâs revenues rose 7% to $825 million, despite the challenging operating environment with the third wave of coronavirus infections threatening economic recovery.
Key financial highlights (First six months of 2021 vs. First six months of 2020)
- Profit before tax was $210 million, increasing by $40 million, or 23%, or in constant currency, by 28%, driven by positive operating leverage, efficiency gains, and improving credit quality, partially offset by higher net monetary losses in the current period.
- Profit after tax up 19% to $152 million.
- Net revenue (operating income) was $825 million, increasing by $54 million, or 7%, or in constant currency by 9%. Revenue benefited from increases in both net interest income, up 6%, and non-interest revenue, up 8%, driven by multiple factors including moderate economic growth across its markets, an uptick in customer and business activity, and the net impact of lower rates on funding cost.
- Also, all Ecobank’s business lines grew revenues, especially strong within Commercial and Consumer, where revenue growth was up 13% and 6%, respectively.
- Expenses were $484 million, decreasing by $10 million, or 2%, or 3%, in constant currency. Staff-related expenditures fell by $17 million, or 7%, partially offset by a $6 million, or 3%, increase in other operating expenses. Total expenses continue to decline because of stringent costs management across all our business lines.
- As a result, the cost-to-income ratio (efficiency ratio) improved by 840 basis points to 58.7% from 64.1% in the prior year. Likewise, the cost-to-assets ratio, which measures costs in relation to average assets, fell and was 3.7% in the first half of 2021 compared with 4.1% in the prior-year period.
- Taxation – Income taxes were $58 million in the first half of 2021 compared with $43 million in the prior-year period. The effective income tax rate (ETR) was 27.4% versus 25.1% in the prior year.
- Gross loans and advances to customers were $9,454 million, down $344 million, or 4%, year-to-date (YTD), but increased $242 million, or 3%, YoY. Net loans were $8,850 million, down $390 million, or 4% YTD, but up $229 million, or 3%, from the prior year. The YTD decrease in loans reflected tepid loan demand in what still is a fragile economic recovery.
- Also, the decrease reflected our more cautious credit underwriting approach. As a result, net loans in Corporate decreased by $383 million or 6% to $6,403 million, and in Commercial loans fell $34 million or 2% to $1,331 million, YTD.
- Deposits from customers were $19,143 million, up $2,436 million, or 15%, from the prior year. On a YTD basis, deposits increased $846 million, or 5%. All our business lines contributed to driving the increase in YoY growth in deposits.
- Corporate deposits grew $992 million, or 14%, to $8,171 million, Consumer Bank deposits increased $612 million, or 11% to $6,352 million, and deposits at Commercial increased by $843 million, or 23%, to $4,585 million, on a YoY basis.
- On a YTD basis, Corporate and Commercial Bank deposits grew 8% and 7%, respectively, while deposits decreased by 2% in Consumer. The YTD growth in deposits outpaces that of the prior-year period, reflecting stickiness in digital adoption trends among customers and the pandemicâs continued impact.
- All Ecobank’s geographical regions recorded significant increases in both digital and in-branch transactions.
- Ecobank’s digital platforms and its capabilities to switch payments across 33 African countries is driving symbiotic partnerships with Fintechs, Telcos, and International Money Transfer Organisations.
Ade Ayeyemi, Ecobank Group CEO, said:
âWe saw continued and sustained resilience in our performance, which is indicative of the success of our âexecution momentumâ drive. As a result, we generated a return on tangible equity of 16.1% versus 15.2% a year ago and increased diluted EPS and tangible book value per share by 19% and 6%, respectively. In addition, profit before tax increased 23% to $210 million.
Our diversified pan-African business model continued to rise to the challenge. Revenues grew 13% and 6% in our Commercial and Consumer businesses, while our focus on growing the trade business led to increased trade assets. The slowly increasing business and spend activity drove a 20% rise in our Payments businessâs revenue to $90 million.
Deposits growth was strong, with total deposits now over $19 billion, an increase of $1.0 billion in the second quarter and $2.4 billion in a year, driven by our omnichannel strategy. Though loan growth remained flat, we are focused on providing support to MSMEs for growth,â
I am proud of the teamâs hard work in driving efficiency, which continues to reflect in our cost-to-income ratio of 58.7% ahead of guidance and progressing well toward our medium-term goal of approximately 55%. In addition, credit quality continued to be exceptionally strong.
As a result, our NPL ratio of 7.4% is a substantial improvement from the prior yearâs 9.8%, as we also build reserves to insulate the balance sheet with an NPL coverage ratio of 86.7% and pushing towards our near-term target of 90%,â
We successfully raised $350 million Tier 2 Sustainability Notes in June, the first-ever by a financial institution in sub-Saharan Africa and the first to have a Basel III-compliant 10-year non-call 5 structure outside South Africa in 144A/RegS format.
The Bond was 3.6 times oversubscribed, demonstrating strong confidence in the Ecobank Group and our commitment to the sustainability of our communities and their social needs. I am deeply grateful to all stakeholders and must thank our clients for continuing to put their trust in Ecobank for their diverse banking needs.â