Ecobank Nigeria posted strong revenue growth in 2025 but ended up in the red due to a sharp rise in impairment charges from a one-time asset quality adjustment.

The subsidiary, still the Group’s second-largest market by assets, contributed only about 6 per cent of total net revenue, highlighting a gap between its scale and earnings contribution during the period.

Net revenue jumped 22 per cent year-on-year to $155 million from $126 million in 2024, fueled by solid growth in both interest and non-interest income. Net interest income rose 24 per cent to $104 million, thanks to treasury management gains and lower funding costs following a partial repayment of a $300 million Eurobond. Non-interest revenue also grew 19 per cent to $50 million, driven by higher transaction volumes, stronger fixed-income trading, and better fee income from cash management and card services.

Operational efficiency saw a big boost, with costs rising just 3 per cent to $104 million, well below the pace of revenue growth. This led to a strong jump in pre-provision operating profit, almost doubling to $51 million from $26 million a year earlier. As a result, the cost-to-income ratio dropped to 67.0 per cent from 79.4 per cent, showing better cost control and stronger operating leverage.

The earnings trend took a hit as impairment charges jumped sharply to $82 million from $21 million in 2024. This pushed the company into a pre-tax loss of $31 million, down from a $5 million profit the year before, while post-tax loss widened to $37 million from a $3 million profit. Return on equity slipped to a negative 13.8 per cent from 1.1 per cent, showing the strain of higher credit provisions.

The jump in impairments was mainly due to a deliberate clean-up of old exposures after leaving the Central Bank of Nigeria’s forbearance regime. Management explained that the sharp rise in non-performing loans, from 9.7% to 42.1%, came from reclassifying a small number of oil and gas exposures in the Corporate and Investment Banking portfolio, rather than a widespread drop in asset quality. They framed the move as a sensible way to tidy up the loan book and improve transparency.

On the balance sheet, gross loans declined by 3 per cent to $1.58 billion, reflecting a cautious lending stance, particularly in higher-risk segments. Customer deposits grew by 9 per cent to $2.53 billion, strengthening the bank’s funding base, while total equity rose 27 per cent to $299 million, supported by retained earnings and foreign exchange translation gains. The loan-to-deposit ratio improved to 62.5 per cent from 69.7 per cent, indicating better liquidity positioning.

Despite the pressure on asset quality metrics, group-level risk buffers remain supportive. Ecobank maintains approximately $576 million in accumulated expected credit loss reserves, with about $491 million allocated to Nigeria-related exposures, providing a cushion against further downside risks. Management expects a meaningful reduction in the non-performing loan ratio in the first half of 2026, driven by planned asset disposals and recovery efforts.

On the regulatory front, Ecobank Nigeria has met the Central Bank’s minimum paid-up capital requirement of N200 billion for a national banking licence. However, its capital adequacy ratio remains below the 10 per cent threshold, with a Board-approved Capital Restoration Plan currently in execution to address the shortfall and restore compliance.

At the Group level, Nigeria’s performance had an outsized impact on overall credit costs, accounting for the bulk of the $465 million impairment charge recorded during the year. Management indicated that, absent the Nigeria-related provisioning spike, Group profitability would have recorded significantly stronger growth, reinforcing the one-off nature of the adjustment.