BY DENNIS OKONNE
Ecobank Transnational Incorporated (ETI) Plc has not only survived in spite of the odds militating against it as a result of board room squabbles, it was able to churn out an excellent performance in its audited result 2014.
The impressive result has contributed in no small measure, in soaring its stock price on the Nigerian bourse.
Its stock price has been on a steady increase ever since as it leapt from N18.00 to as high as N28.00 per share, about +55.5% increase.
The bank leveraged on strong organic growth as its turnover rose significantly by +19%.
This performance has rekindle investors confidence in the company growth trajectory and in the ability to sustain its return on investment to its shareholders every year.
In its audited result, it’s Gross Earnings leaps from N411.183 billion to N489.252 billion, translating to an increase of +19%. Similarly, its Profit before tax also grew by 144.4% from N35.374 billion previously to N86.441 billion.
Its profit after tax quantum leaps by 166% from N24.890 billion in the preceding year to N66.139 billion.
Its Net Assets rose by +44.6% from N341.010 billion previously to N493.022 billion. Consequently, the company proposes a bonus 1 for 15 without dividend and closure of register of members is 25th June, 2015.
Annual General Meeting (AGM) is slated for 19th June, 2015 at Dar es Salaam, Tanzania.
The spike in revenue was primarily driven by treasury income, cash management fees and fees and commissions on loans resulting from the strong growth in loans. Efficiency gains as a result of focus on expense management and discipline. Loan growth was primarily driven by Nigeria from $3.92 billion to $4.81 billion, more than 70% of the total loans syndicated. Also, the customer deposits growth was driven by Nigeria.
Its price resurgence and icing on the cake, is its strong performance in the first quarter financial profile where its revenue went up by +21% to N104.791 billion from N86.289 billion.
Its Profit Before Tax rose by +58% from N19.265 billion previously to N30.519 billion.
Similarly, its Profit after tax also leaps by +64% from N14.922 billion to N24.479 billion. Its loans and advances to customers rose by +21% from N1.901 trillion previously to N2.308 trillion while demand deposit grew by +15% from N2.718 trillion to N3.114 trillion.
Corporate Governance: Mr. Albert Essien was appointed Chief Executive Officer of the Ecobank Group in March 2014.
Executive director of the Group since 2005, he has held several senior positions including Deputy Group Chief Executive Officer, in addition to serving as Group Executive Director for Corporate Bank & Investment Bank.
Prior to that, he was the Regional Head for Anglophone West Africa (excluding Nigeria) and Niger and Eastern and Southern Africa (ESA) regions.
He started his banking career in 1986 with the National Investment Bank in Accra, Ghana. In 1990 he joined the Corporate Banking Department of Ecobank Ghana before becoming 7 years later Country Risk Manager. He was appointed Deputy Managing Director in 2001 and became Managing Director in December 2002.
He has a degree in Economics from the University of Ghana (graduated in 1979) and is an alumnus of the Executive Development Program of INSEAD (France/Singapore). He is also an honorary fellow of the Chartered Institute of Bankers, Ghana.
Commenting on these results, Group Chief Executive Officer, Albert Essien said: “For the first three months of 2015, we grew profit for the period by US$34 million or 37 percent to US$125 million from same period last year, while earnings-per-share increased 13 percent to 0.50 US$ cents.
As expected, the quarter was characterised by macroeconomic headwinds including a strengthening US dollar, which significantly appreciated against our major functional currencies”.
Essien concluded: “We maintained adequate levels of capital to support our business.
Our total capital adequacy ratio was 19.4 percent for the quarter versus 16.1 percent in the prior year. Overall, our results are reassuring in light of the challenging operating environment.
We are deeply proud of the competitive advantage our platform provides and the work our dedicated staff continue to do for all our stakeholders.
Ecobank is a full-service bank providing wholesale, retail, investment and transaction banking services and products to governments, financial institutions, multinationals, international organizations, medium, small and micro businesses and individuals.
The company was incorporated in Lome, Togo, it is the parent company of Ecobank. It currently has a presence in 35 African countries, namely: Angola, Benin, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Congo (Brazzaville), Congo (Democratic Republic), Côte d’Ivoire, Equatorial Guinea, Ethiopia, Gabon, Gambia, Ghana, Guinea, Guinea Bissau, Kenya, Liberia, Malawi, Mali, Niger, Nigeria, Rwanda, São Tomé and Principe, Senegal, Sierra Leone, South Africa, South Sudan, Tanzania, Togo, Uganda, Zambia and Zimbabwe.
ETI is listed on the stock exchanges in Lagos, Accra, and the West African Economic and Monetary Union (UEMOA) – the BRVM.
The Group has more than 600,000 local and international institutional and individual shareholders. The group employs more than 20,000 persons with about 1,200 branches in 40 countries in Africa.
Market Sensitivity/ Perception: Brokers and investors perception of this stock is “BUY” Recommendation.
The company must assiduously work for strong growth in gross earnings and profitability through aggressive sales.
The broker is of the opinion that management will deliver growth in its revenue and profits in 2015.
The year 2015 promises to be a challenging one for the banking sector and only those banks that can focus on their deposit growth, improve margins and efficiency ratios that will survive. ETI has been able to exhibit trends that reduce cost of serving their customers, enhances cost to income ratio, and grow their market share to sustain their level of performance in the first quarter 2015 to great success. If these trends were sustained to the last quarter, they will surpass the level of the dividend payment and churns out a mouth-watering return (dividend growth and capital appreciation) to shareholders.
Industry Perspective: The banking sector is a key part of the Nigerian financial system which should account for a significant portion of the total economy.
It is a major composite of the stock market and accounts for the greatest capitalization in the Nigerian Stock Exchange.
There is no wonder, therefore, that the sector is important for sustained economic growth which will deepen and broaden the domestic financial services as well as generate higher savings rates and greater economic development.
However, in 2014, the sector has received a major battering as a whole as falling stock prices has depreciated investors’ investment by way of capital loss or capital depreciation.
Although, most of these equities appropriated fairly good dividend at the end of the year, the sector witnessed an erosion of shareholders investment amount to a colossal loss of about N1.239 trillion.