BUSINESS REPORTER
Ecobank Group’s profit before tax expanded by 24% to US$261m in the half year ended June 30, 2022 from US$210m in the comparable period last year due to a rise in income which outpaced the increase in operating expenses.
If adjusted for the impact of foreign currency translation (or at constant currency), profit before tax increased by 53%, driven by positive operating leverage, said the group with banking operations in 35 African countries including Zimbabwe.
Profit before tax increased in each of the pan African bank’s business lines with Corporate and Investment Banking, Consumer Banking and Commercial Banking, growing their profit before tax by 33%, 43%, and 15%, respectively, in the first half of 2022.
Net interest income advanced 8% to US$493m benefitting from higher interest rates as several central banks increased their benchmark interest rates to curb inflationary pressures. This resulted in net interest spread increasing by 12 basis points.
Non interest increased by 13% to US$417m, reflecting strong client and customer activity, the pan African banking group said,
Net fees and commission income rose 12% to US$231m, driven by significantly higher spending on cards, cash management fees, and credit-related fees.
Net trading income was up 24% to US$$164m, driven by solid client activity in the trading of currencies, partially offset by lower fixed-income trading income.
Operating expenses grew by 5% to US$509m. Revenue expansion and stringent cost containment measures improved the cost-to-income ratio to a record 56% from 58.7% in the same period last year.
In terms of regional performance, Francophone West Africa Francophone recorded a 24% rise in profit before tax to US$123m in the period under review.
The group said results were adversely impacted by the depreciation of the CFA franc against the US dollar by 8.3%. Excluding the impact of currency translation effects, profit before tax increased by 57%, benefiting from higher revenues and lower impairment charges.
Ecobank said Nigeria delivered a profit before tax of U$18m for the first half of 2022, increasing by 74%. Excluding the net impact of currency translation effects, profit before tax increased by 78%.
Anglophone West Africa delivered a profit before tax of US$130m in the period under review which was 8% from the same period last year.
Ecobank said results in this region were adversely impacted by the YTD depreciation of the Ghana cedi versus the US dollar by approximately 17%. Excluding the adverse impact of the currency translation, profit before tax increased by 17%, the group said.
Central, Eastern and Southern Africa region delivered a profit before tax of US$107 million for the first half of 2022, an increase of 37%. Ecobank said the region’s financial results were adversely impacted by mainly the depreciation of the currencies of Zimbabwe (70.3%), Malawi (20.7%), and the CFA franc (8.3%) against the US dollar. Also impacting the results was the negative impact of hyperinflation in Zimbabwe and South Sudan, the pan African banking group said.
Net revenue advanced by a fifth to US$281m.
Ecobank CEO Ade Ayeyemi said the group performed well despite a challenging operating environment of “high inflation, weakening African currencies, worsening government fiscal balances and lowering economic growth”.
“Our investments in technology and digital capabilities have contributed to a reduction in our cost-to-serve. Along with revenue growth, the outcome is our record cost-to-income ratio of 56%,” Ayeyemi said.
“In addition, we increased impairment charges to reflect heightened credit risks. More importantly, we have proactively built central impairment reserves of U$206m, which we can deploy in a stressed credit environment. At the same time, our balance sheet remains liquid and adequately capitalised, providing us the capacity to serve our customers better.”
