Ecobank Posts Record Q2 Profit on Solid Net Interest Income

Ecobank Transnational Inc., the pan African lender, posted quarterly profit that blew past analysts’ expectations as the pan African lender benefited from growth in net interest income.

Ecobank’s impressive second-quarter results strongly reflected its favorable business mix as net income or profit after tax increased by 22 percent to N38.98 billion in June 2022 from N31.95 billion the previous year.

Net interest income, which reflects the difference between the revenue generated from a bank’s interest-bearing assets and the expenses associated with paying on its interest-bearing liabilities, also followed the same growth trajectory as it jumped by 10.11 percent to N205.56 billion as at June 2022.

Interest income that benefitted from a gradual uptick in yields environment was up 12.19 percent to N317.22 billion in June 2022 from N282.74 billion as at June 2021.

Analysts are optimistic the hawkish stance or consistent hike in monetary policy rate by central banks in Africa, Europe, United States, and Asia will bolster the lender’s profit margins.

Usually, banks park their money in fixed income securities when yields are high so as to earn sizable income from treasury bills.

The apex bank has raised the interest rate to 14 per cent as it seeks to curb rising inflation and a rise in the price of grains brought on by the war in East Europe. The new interest rate hike comes barely two months after the apex bank raised the interest rate to 13 per cent.

Ecobank is facing some challenges in the Nigeria market that is pivotal to Group’s earnings due to a hike in the Cash Reserve (CRR) Ratio which is one of the highest in the world.