Ecobank loses N52bn over N221.7b impairment charge
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Ecobank loses N52bn over N221.7b impairment charge

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Ecobank loses N52bn over N221.7b impairment charge

Ecobank Transnational Incorporate (ETI) recorded a net loss of N52 billion in 2016 as the group took a decision to completely clean its books of non-performing risk assets in its legacy loan portfolio.

The group made a provision of N221.7 billion in its 2016 audited accounts. The impairment charges, showed a jump of 110.7 per cent compared with N105.2 billion recorded in 2015.

The audited report and accounts of Ecobank for the year ended December 31, 2016 showed a growth of 22.3 per cent in gross earnings to N665 billion in 2016, from N542.7 billion in 2015. Net interest income similarly rose by 25.3 per cent to N284 billion, from N226.6 billion in 2015. Profit before impairment charges stood at N188 billion, up from N146 billion.

However, the N221.7 billion impairment charges led the company to close the year with loss before tax of N33.7 billion compared with a profit before tax of N40.5 billion, while loss after tax stood at N52 billion, as against a profit after tax of N21.25 billion in 2015.

Commenting on the results, the Group Chief Executive Officer of ETI, Ade Ayeyemi said the group revenues remained resilient despite a tough year of macro- economic headwinds including a weaker economic environment, particularly in Nigeria, and the strengthening of the reporting currency – the United States 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,” Ayeyemi said.

Read also: Ex Ecobank boss, 300 others lose N4.8bn in shares scam

While assuring stakeholders that the group has strengthened its entire risk management architecture, he said the bank also focus on bringing down impairment cost, improve the collection and what have been provided for so that the bottomline would be robust going forward.

He said the group will maintain its cautious stance on lending in this challenging period, but will continue to implement a number of exciting new customer initiatives such as its pan-African banking app and leveraging its blue-chip partnerships to benefit customers across 40 countries.

Ayeyemi said he remained confident in the result of the cost efforts and in the ability to deliver a leading service for its customers which will be reflected in improved key performance indicators in 2017 and beyond.

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