Ecobank Transactional Incorporated (ETI) has recorded a loss of 17.2% on the Nigerian Stock Exchange since its 2019 performance results came out. On March 23, the company first lost 9.18% in a volume of 2.8 million transactions, before losing another 8.9% the following day.

According to Ade Ayeyemi, the Chief Executive Officer of the financial group, the 2019 results reflect the resilience of the company’s diversified business model. The ETI Group increased pre-tax income by 39% on a constant exchange rate basis and delivered a tangible return on equity of 16.5%. The implementation of an aggressive recovery strategy on non-performing loans is also yielding positive results with significantly higher recoveries in 2019.

No dividend distribution is planned for the 2019 financial year, the fourth consecutive year without shareholder remuneration, since 2015. While this does not have a strong impact on large institutional investors such as Nedbank, Qatar Investment Bank or Public Investment Corporation, the weight is heavy on many smaller ETI investors or those with a short-term strategy.

In addition to not receiving a dividend, the Ecobank share does not generate any capital gains on the Nigerian Stock Exchange. Its value has declined by 76.7% since 1 January 2015. An analysis of the group's accounts provides a better understanding of the current market disinterest.

On the technical side, the group has strengthened its profitability with higher returns on assets and shareholders' equity. Ecobank even managed to create shareholder value in 2019, against a deterioration in 2018. But these positive points were further supported by lower provisions for dab debt, which boosted consolidated pre-tax profit.

However, interest income declined in 2019 for the fourth consecutive year, to only $1.4 billion compared to $1.5 billion in 2018. This is the lowest level of interest income since the $1.3 billion in 2012, according to data collected by the Ecofin Agency. Fee and commission income also fell by 2.6%.

Let’s note that the perception of the group's performance may vary slightly depending on whether it is assessed in Ghana cedi, Nigeria naira or CFA franc of the WAEMU zone, the three main economies that host stock exchanges on which Ecobank is listed. The financial institution also said that its performance in Zimbabwe has been severely disrupted by the hyperinflation that hit the country in 2019. This has resulted in tens of millions of dollars in losses in revenues and asset values.

Ecobank's CEO has already warned that the year 2020 will be a difficult one with the pandemic of coronavirus.

Idriss Linge