Ecobank Group reports $352m profit before tax at end-September 2021
The Ecobank Group for the the period ended-September 2021, recorded a profit before tax of $352 million.
Increasing by $102 million or 41% [compared to what was recorded in 2020], profit before tax was driven by positive operating leverage, efficiency gains, and improving credit quality. Considering the goodwill impairment charge of the prior year of $159 million, profit before tax of $352 million, increased $261 million, or 288%.
Net revenue, (operating income) was $1,265 million, increasing by $52 million, or 4%, or in constant currency by 6%. Revenue benefited from increases in net interest income and non-interest revenue, both increasing by $26m from the prior year, with solid revenue growth in Commercial and Consumer Bank.
Net interest income was $697 million, an increase of $26 million, or 4%. Interest income rose $46 million, or 4%, mainly driven by interest income on higher investment securities balances, modest loan growth within Consumer and Commercial Bank, and the net impact of higher yields with AWA and CESA. Interest expense increased $19 million, or 5%, driven by the net impact of higher rates and modest increase in interest-bearing liabilities.
As a result, the net interest margin (NIM) declined marginally to 5.1% from 5.2% in the prior year. The average cost of interest-bearing liabilities was 2.35%, down ten basis points compared to the preceding year. Non-interest revenue was $568 million, increasing $26 million, or 5%.
Net fees and commission income increased $37 million, or 13%, to $316 million, driven by higher cash management fees, an increase in gross dollar volume on mobile and online payment activity, brokerage and credit-related fees, and other associated fees.
Gross loans and advances to customers were $9.5 billion as of 30 September, down $330 million, or 3%, from 31 December 2020, but up $294 million, or 3%, from the preceding year. Net loans were $8.9 billion, down $367 million, or 4% from 31 December 2020, but up $334 million, or 4%, from the prior year. Loan growth within Nigeria and AWA was more than offset by decreased loans within UEMOA and CESA. The net decrease in loans reflected tepid market loan demand partly due to lingering effects of the pandemic, and episodic loan prepayments.
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Deposits from customers were $18.9 billion as of 30 September, increasing by $556 million, or 3%, from 31 December 2020, and $1.5 billion, or 9%, from 30 September 2020. The growth in deposits reflected robust payment activity on our online and mobile platforms, agency banking and physical branches across our lines of business and strong growth in digital onboarding, primarily within small business clients.
Tier 1 CAR and Total CAR were 9.9% and 14.7%, respectively, as of 30 September 2021, compared with 9.4% cent and 12.3% as of 31 December 2020. The increase in capital adequacy ratio is primarily due to internal profit generation and the June 2021 issuance of a $350 million 10-year Subordinated (Tier 2 capital) Sustainability Eurobond. The issuance of $75 million AT1 in September, along side solid profit growth, are expected to boost capital ratios by yearend.
Non-performing loans were $653 million as of 30 September 2021 compared with $749 million as of 31 December 2020 and $906 million as of 30 September 2020. A mix of loan recoveries, collections, upgrades, and write-offs across all business lines continued to drive NPLs down. As a result, the NPL ratio improved further to 6.9% compared to 7.6% at year-end 2020 and 9.9% in the prior-year period, driven equally by recoveries, collections, upgrades, and write-offs.
Also, the NPL coverage ratio improved significantly to 91.2% from 74.5% at year-end 2020 and 70.1% from a year ago. This improvement brings us closer to our year-end target of 90% or more and progress towards our 100% target in the very near term.
