The pan-African group Ecobank suffered the coronavirus epidemic in the first half of the year. Currency conversion accentuated the impression of a downturn in results, which are rather encouraging expressed in local currencies. The good surprise came from Nigeria.
In a difficult context, the Ecobank banking group recorded a rather favorable first half-year, if we analyze the data in African currencies.
Indeed, since the publication of the 2019 results, the Pan-African group rather expresses its consolidated accounts in dollars, according to the exchange rates of the end of the period considered. In this reading grid, the results are then down, given the decline in African currencies in the first half of the year.
In local currencies, therefore, net banking income increased by 1.95%, at constant exchange rates, to 459.216 billion F.CFA (700 million euros) against 450.397 billion F.CFA in the first half of 2019.
Ecobank’s outstandings amount to CFAF 9,786.705 billion (nearly €15 billion) against 9,327.603 billion as of June 30, 2019. At the same time, the amount of loans and receivables stood at 5,049.988 billion. of CFAF (7.7 billion euros) against 5,039.047 billion CFA francs as of June 30, 2019.
Ecobank, like other African banks, has adjusted its strategy, by increasing its offer of digital products. “Customers are increasingly using our digital channels, thanks to our mobile application, Ecobank Pay, OMNI, online and self-service on our vending machines”, underlines the management. “The number of branch transactions decreased by around 64% compared to the previous year, while digital engagements increased by 56%.”
Despite health measures, operating costs fell by 1.58% to 294.32 billion CFA francs. Unsurprisingly, however, the cost of risk rose 2.59% to 34.113 billion.
Good surprise in Nigeria!
As a result, operating income jumped 10.76% to 130.693 billion CFA francs against 118.076 billion CFA francs a year earlier. Finally, the profit of the pan-African banking group increased by 13%, to 106.02 billion euros (161.7 million euros), against 95.66 billion CFA francs as of June 30, 2019.
As of June 30, 2020, the group’s equity stood at CFAF 1,124.964 billion, an increase of 83.357 billion. Note the decrease in debts of 103.786 billion F.CFA, to 1 194.030 billion.
Commenting on the consolidated results of the holding company, Managing Director Ade Ayeyemi called the financial performance “encouraging”. This “despite the adverse impact of currency conversion and Covid-19.” In fact, expressed in dollars, the group generated a consolidated profit before taxes of 170 million.
Present in many African countries, the group has suffered depreciation of African currencies, once the results are expressed in dollars or euros. As a result, net banking income fell 1% to $771 million, from $776 million a year earlier. While interest income was up 18%, the rest of the business was down 17%. In addition, given the current situation, the group has intensified its policy of provisions for credit and financial risks. This charge jumped 57%.
In fact, the net profit attributable to the holding company was $89 million, against $120 million for the same period in 2019. The group suffered from low pre-tax margins, achieved in the subsidiaries of Uemoa (-23% ) and those of central and southern Africa (-40%).
In contrast, business and results in Nigeria are much better. The profit before tax there is more than quintupled. Nigeria, the group’s black spot in recent years, therefore became the pleasant surprise in the first half of the year, which cushioned the setbacks observed elsewhere.
Despite a difficult first half, cash flow, although declining, remained strong. Ecobank has therefore significantly reduced its indebtedness, after having sold a large part of its public securities and limited its borrowings. Operationally, Ecobank benefits from the strength of its core business, corporate and investment banking.
“The operating environment remains challenging as the pandemic continues to progress across the continent … Economic activity in sub-Saharan Africa is expected to decline. But our commitment to the continent, our stakeholders and our people, remains unwavering,” concluded Ade Ayeyemi.
Reference: https://www.ecobank.com/zw/personal-banking/countries
