ETI Throws Off N106bn In Loan Losses, Records N141bn Profit In Q1 

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Ecobank Transnational Inc. (ETI) threw off N106 billion in bad loan charges in the first quarter, as loan impairments surged for the second year. Loan loss expenses are accelerating from the N213.7 billion the group threw overboard at the end of the last financial year.

The interim financial report of the transnational bank for the first quarter ended March 2024 shows galloping year-on-year growth of 226 per cent in credit losses for the three months of operations, speeding up from an increase of 153 percent for the full year in 2023.

Notwithstanding the high rise in credit losses, ETI jerked up the bottom line almost three and half times year-on-year to close the first quarter with the group’s after-tax profit in the region of N141 billion.

The high-profit capacity for the period came from a favourable combination of strong earnings growth and a slowdown in costs that sum up the bank’s earnings story in the first quarter.

Interest earnings grew by 193.6 per cent in the quarter to stand at over N608 billion, providing a robust shock absorber for rising costs.

Interest expenses moderated relative to interest income at an increase of 160 per cent to N220 billion over the period.

The savings from the cost of funds enabled more than tripling of net interest earnings at 217 per cent to N388 billion.

Other outstanding earnings growth came from trading income and foreign exchange gains that rose by 202 per cent to close at over N107 billion for the quarter.

Fee and commission income also jumped by 189 per cent to N183 billion, but other operating income led revenue growth for the period, multiplying about 39 times year-on-year to N6.8 billion.

The strong revenue gains added up to gross earnings of over N904 billion for ETI for the first quarter, which is an increase of 193 per cent year-on-year.

The bank posted gross earnings of about one-half of the gross income of N1.83 trillion for the 2023 full year. It is accelerated growth from the 69 per cent increase in gross earnings recorded last year.

Operating income more than tripled at 205 per cent to N665.4 billion over the review period, further reinforcing relative slowdowns in operating costs.

Total operating expenses rose by 181 per cent to close at almost N358 billion for the quarter, indicating a reduced average cost for generating the naira of operating income.

This afforded the bank another level of cost saving that elevated operating profit by 241 percent to N307.5 billion at the end of March 2024.

The increase in operating profit was equally big enough to absorb the huge rise of 226 per cent in bad loan losses – which extended the cost-saving stream for the bank and powered an increase of 249 per cent in pre-tax profit to N201.5 billion.

Pre-tax profit growth has gained much speed from an increase of 63 per cent to N376.5 billion at the end of last year. This reflects the much stronger growth in earnings so far this year that has enabled the bank to achieve all-round cost savings that stretched out profit margins.

Net profit margin is up for ETI from 13.1 per cent in the same quarter last year to 15.6 per cent at the end of the first quarter in March 2024. The bank earned N3.74 per share at the end of the first quarter, which is an increase from N1.17 per share in the same quarter last year.