(Ecofin Agency) – The performance of the Ecobank group declined in the first half of 2020, compared to the same period in 2019. But behind this underperformance, there is good news. They came from the Nigerian branch and the investment bank.
The consolidated performance of the Ecobank group has been poor in the first half of 2020. Managing Director Ade Ayeyemi has pointed an accusing finger at currency fluctuations. ” Our financial performance for the period has been encouraging, despite the unfavorable impact of currency conversion and COVID-19. We generated pre-tax (consolidated) earnings of $ 170 million. It is up 12% if we do not take into account currency conversion effects. »
In fact, since the 2019 annual report, the group has decided to consolidate its results at the current exchange rate. For many African countries where the group is present, currency devaluations have therefore generated negative impacts for Ecobank. Concretely, this resulted in a decline of 1% of its net banking income, to $ 771 million ($ 776 million at the end of June 2019).
In detail, interest income up 18% was diluted by a 17% drop in income from banking activities other than the granting of loans. Over the first 6 months of 2020, despite a drop in operating expenses, the group experienced a further increase (+ 57%) in provisions for credit and financial risks.
Under these conditions, the net profit attributable to the holding company was $ 89 million, against $ 120 million for the same period in 2019. This decrease is due to the low pre-tax margins achieved in the WAEMU subsidiaries (- 23%) and those of central and southern Africa (-40%). In the two large groups of subsidiaries, operating costs increased and profitability on equity deteriorated.
The good surprise came from the branch in Nigeria. Even though the pre-tax profit generated there is the lowest of the group’s geographic segments, it was up 420% in the first half of 2020, signaling an improvement in the environment in this country, which was the main Ecobank’s point of weakness over the past decade.
The other positive point of the group is that of its cash flow. Admittedly, it fell by more than $ 524.3 million over the period analyzed. But this underperformance hides some positive points. The group has significantly reduced its debt, sold a significant portion of its public securities and limited its borrowings. Finally, Ecobank can be proud of the good performance of its corporate and investment banking activities, a segment which constitutes the core of its business.
« The operating environment remains difficult as the pandemic continues to progress across the continent … Economic activity in sub-Saharan Africa is expected to decline. But our commitment to the continent, our stakeholders and our employees, remains unwavering “Said Ade Ayeyemi, commenting on the outlook.
Idriss Linen
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