Ecobank announces N52.6bn loss in 2016

Ecobank Transnational Incorporated has announced a loss after tax of N52.6 billion in 2016 from N21.52 billion reported in 2015
The financial institution announced a 23 per cent increase in gross earnings to N665 billion in financial year ended December 2016 from N542.7 billion recorded in 2015 following operating profit before impairment losses that appreciated by 29 per cent to N188.6 billion in 2016 from N146 billion in 2015.
The pan-African bank in its financial year report and accounts to The Nigerian Stock Exchange yesterday, reported a loss before tax of N33.7 billion in 2016 as against N40.6 billion profit before tax in 2015. The financial institution also reported a.
From the balance sheet position, total assets gained 33 per cent to N6.3 trillion in 2016 from N4.69 trillion reported in 2015.
The bank in a statement said “The financial results show the benefits of progress of our strategy but also reflect the frustrating reality of poor financial performance in announcing a loss before tax of $131million and revenue of $2billion for the year ended December 31, 2016.
“Our Group revenues remained resilient despite a tough year of macroeconomic headwinds including a weaker economic environment, particularly in Nigeria, and the strengthening of our reporting currency – the US dollar – against all African currencies particularly the Nigerian Naira where 40 per cent of the Group’s revenues have historically been generated. Separately, our end of year bottom line performance has been impacted by our voluntary adoption of a full impairment charge regarding our legacy loan portfolio, for which a resolution vehicle was set up, the first private sector funded resolution vehicle of its kind in Nigeria, with the sole objective of ring-fencing the legacy loans from Nigeria’s core bank. This, among others, would allow management to focus on delivering results.
“Our business philosophy was founded on international best practice in terms of accounting and asset quality, so whilst the impairment charge has impacted our earnings, our accounting treatment has been for the right reasons and we are in better shape for the future as a result.
“The funds from our proposed $400million convertible bond issue will be used sensibly and profitably, of which $200million would be used to repay the short-term financing used in setting up the resolution vehicle. The remaining $200million is for a conscious debt restructure of the maturity profile of the ETI Holdco balance sheet. We are delighted to have very high subscription levels to the issue from existing shareholders, in the region of $300million. The conversion price of the offer is 6 USD cents compared to a current price of 3 USD cents with an interest rate of 6.46 per cent above LIBOR.
“Good businesses should always match operational expansion with cost control, and this is a fundamental belief of ours which we practise. We maintain our cautious stance on lending in this challenging period, but will continue to implement a number of exciting new customer initiatives such as our pan-African banking app and leveraging our blue-chip partnerships to benefit our customers across 40 countries. As the gateway to global trade finance in Africa, the role we are playing at the centre of the intra-Africa trade and cash management for governments, corporate clients, suppliers and distributors will benefit the economies in which we operate and consequently the income of Ecobank.
“The Francophone West Africa and Anglophone West Africa regions continue to perform positively generating over 40 per cent of the Group’s revenues at a return on equity above 24per cent and 32per cent respectively. We remain the leading bank in these regions.
“I remain confident in the result of the cost efforts and in our ability to deliver a leading service for our customers which will be reflected in improved key performance indicators in 2017 and beyond. Ecobank’s twin goals are generating sustainable returns above the cost of equity whilst maintaining the highest international standards and we treat both goals equally. Reputations are hard won and easily lost and we will never compromise that. We have a bright future ahead and I look forward to the future with confidence,” the statement stated.