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CardinalStone Earnings Update - Ecobank Transnational Incorporated Q1'24 unaudited results - Q1'24 PAT grew by 19.9%
(Source: CardinalStone Research, Date: 21-May-2024)

ETI: Q1'24 PAT grew by 19.9%

In its unaudited Q1'24 financials, Ecobank Transnational Incorporated (ETI"”TP: N26.07) reported a PAT growth of 19.9% to $105 million with an EPS of $0.28 (vs. Q1'23: $0.26). The result was primarily driven by modest growth in net interest income (NII), which offset the 5.0% decline in non-interest revenue and the 12.0% uptick in impairment charges.

On specifics, NII expanded by 8.9% to $289.4 million despite a meagre growth of 0.9% in interest income, as the 10.6% decline in interest expenses to $163.9 million proved more material to income support. We link the improvement in interest expense to an expansion in ETI's CASA ratio (Q1'24: 78.0% vs Q1'23: 74.7%). Consequently, cost-of-funds (CoF) moderated by 30bps to 2.9%, with net Interest Margins (NIM) expanding by 80bps to 5.6%.   

Elsewhere, Non-interest Revenue (NIR) contracted by 5.0% to $206.5 million, largely due to a 2.1% decline in net fees and commission income. However, we observed a slight uptick in trading income and FX gains, which was driven by the higher FX translation gain of $96.5 million (vs $87.8 in Q1'23).

Furthermore, we observed a 12.0% increase in impairment charges to $79.0 million. In particular, gross impairment charges on loans and advances tripled (+218.2%) to $105.3 million and drove the cost of risk higher by 2ppts to 2.6%. Interestingly, the bank recorded an increase in loan loss recoveries to $35.3 million (vs $15.6 million in Q1'23). Elsewhere, operating expenses (OPEX) declined by 3.6% as a result of lower staff expenses and depreciation & amortisation costs. Therefore, the cost-to-income ratio (CIR) moderated to 53.8% (vs 57.3% in Q1'23).

In terms of profitability metrics, annualised ROAA and ROAE expanded to 1.5% (vs. 1.2% in Q1'23) and 23.5% (vs. 17.5% in Q1'23), respectively. 

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