Ecobank Transnational Inc. experienced a roundabout turn from a 34 percent cut in loan loss expenses in the second quarter to a jump of 135.6 percent to N131.7 billion at the end of the third quarter.
The figure is also close to two and half times the half-year closing credit losses of N50.5 billion, as more than N81 billion was thrown off in bad loan losses from earnings in the third quarter.
The figure is more than 10 times the loan impairment expenses of less than N8 billion the bank recorded in the same quarter in 2022.
Credit losses for the nine months of operations are already well above the N84.6 billion the bank recorded for the entire 2022 financial year. The bank had cut loan loss charges from N32.6 billion in the first quarter to less than N18 billion in the second quarter.
The audited financial report of the transnational bank for the third quarter ended September 2023 however shows a much improved third quarter in terms of revenue growth, accounting for 42.5 percent of gross earnings and 42.5 percent of after-tax profit for the nine-month period.
Profit growth accelerated in the third quarter from a 36 per cent increase at half year to 94 percent year-on-year for the quarter. The stronger profit delivery in the quarter reflects accelerated growth in earnings combined with a slowdown in the cost of funds.
Gross earnings accelerated from an increase of 38 percent year-on-year to about N696 billion at half-year to 60 percent to close at N1.2 trillion in September 2023.
Interest income accelerated from 41 per cent at half-year to 113 per cent to over N359 billion in the third quarter, while non-interest earnings also sped up from 38 per cent at half-year to 73 per cent in the third quarter to N147 billion.
On the other hand, the cost of funds slowed down from growing ahead of interest income at half a year to growing below it in the third quarter.
This compared to the half-year position when interest expenses rose by 60 per cent against 41 per cent increase in interest income, the position reversed in the third quarter with the cost of funds increasing by 104 per cent against the 113 percent growth in interest earnings.
The cost saving from interest expenses enabled a leap of 118 percent in net interest income to N231.6 billion for the third quarter which improved margins down the line.
The bank’s nine-month earnings figures reflect further strengthening in revenue and profit deliveries in the third quarter. Interest income rose by 66 per cent year-on-year to over N805 billion at the end of the third quarter, up from 41 per cent growth at the half year.
Non-interest earnings grew by 49 percent to N386 billion at the end of the third quarter, advancing from 38 percent growth at the half-year.
Interest expenses continued to pose a challenge despite the relative slowdown in the third quarter as the cost of funds maintained a more rapid increase than interest earnings at the end of the the third quarter, closing at 76 percent to rise to N306.5 billion from 66 percent increase in interest income.
Net interest income grew by 60 percent to N498.6 billion over the review period, improving from 30 per cent growth at the half year. This was diluted by the 49 per cent increase in non-interest income, which lowered the increase in operating profit to 55 percent to close at N884.6 billion at the end of September 2023.
A relative slowdown in operating expenses recorded at half year was maintained at the end of the third quarter despite that total operating expenses accelerated from a 29 percent increase at half year to a 48 percent rise to over N475 billion.
The high rise in loan impairment charges claimed a significantly increased share of operating profit before charges. That lowered the margin of increase in pre-tax profit to 52 percent to 277.6 billion from 64 percent growth in operating profit before charges.
Pre-tax profit still accelerated from growth of 38 percent to N150 billion at half year to 52 percent recorded at the end of the third quarter. This reflects a strong growth of 87 percent in pre-tax profit to about N112 billion achieved within the third quarter.
After-tax profit accelerated from a 36 percent increase to N105 billion at the half-year to 56 percent to close at almost N183 billion at the end of the third quarter. This is an increase of 56 percent from N117 billion in the same period last year.
Earnings per share at the end of the third quarter amounted to N5.30 for ETI, which is an increase from N3.35 per share in the same period last year.
Comments are closed.