Wednesday, July 29, 2020 / 3:24 PM / ByCardinalStone Research / Header Image Credit: Togo First

EcobankTransnational Incorporated (ETI: TP - N5.72: BUY) result highlights: 

• Earningsfell 8.0% dragged by higher net impairments (+29.4% QoQ) and weakernon-interest income (-13.3% QoQ)

• Credit-relatedimpairments rose 28.6% QoQ to $74.5 million, reflecting the impact of thepandemic on credit quality. To this point, cost of risk rose to 1.7% (Q1'20:1.5% ). NPL ratio eased slightly to 9.8% (Q1'20: 9.9%) likely due to loanwrite-offs during the period

• Non-interestincome fell 13.3% weighed by weaknesses in fee income (-8.0% QoQ) and Nettrading gains (-30.4% QoQ)

• Positively,net interest income (+4.7% QoQ) and operating expenses (-9.5% QoQ) providedsupport for performance during the review quarter

• Grossloans fell 1.9% while deposits improved 3.8% relative to Q1'20

• Acrossregions, the lender's Nigeria business recorded a remarkable 2.7x QoQ increasein earnings (3.8x earnings growth ex-currency translation impact), supported byhigher net interest income and recoveries

• Also,the Francophone West Africa (UEMOA) and Anglophone West Africa (AWA) businessesgrew earnings by 15.4% and 1.8% respectively, while the Central, Eastern andSouthern Africa (CESA) business saw earnings contract by 33.5%.

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