The pan-African banking institution, in its audited full-year 2016 results, filed with the Nigerian Stock Exchange on Tuesday, said its gross earnings fell by six per cent to $2.6bn (increased by 23 per cent to N665bn).
Its operating profit before impairment losses dropped by 0.5 per cent to $735.1 m (up 29 per cent to N188.6bn), with a loss before tax of $131.3m (N 33.7bn).
ETI’s total assets declined by 13 per cent to $20.5bn (up 33 per cent to N 6.3tn), while loans and advances to customers dipped by 17 per cent to $9.3bn (up 27 per cent to N2.8tn).
It said deposits from customers fell by 18 per cent to $13.5bn (rose by 26 per cent to N4.1tn), while total equity dropped by 30 per cent to $1.8bn (up seven per cent to N538bn).
The Group Chief Executive Officer, ETI, Mr. Ade Ayeyemi, said, “The financial results show the benefits of progress of our strategy but also reflect the frustrating reality of poor financial performance in announcing a loss before tax of $131m and revenue of $2bn for the year ended 31 December 2016.”
He said the group revenues remained resilient despite a tough year of macroeconomic headwinds including a weaker economic environment, particularly in Nigeria, and the strengthening of their reporting currency – the US dollar – against all African currencies, particularly the Nigerian currency.
According to him, 40 per cent of the group’s revenues have historically been generated in Nigeria.
Ayeyemi said, “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.”
He said the funds from the group’s proposed $400m convertible bond issue would be used sensibly and profitably, of which $200m would be used to repay the short-term financing used in setting up the resolution vehicle.
According to the GCEO, the remaining $200m is for a conscious debt restructure of the maturity profile of the ETI Holdco balance sheet.
He said, “We are delighted to have very high subscription levels to the issue from existing shareholders, in the region of $300m. The conversion price of the offer is $0.06 compared to a current price of $0.03 with an interest rate of 6.46 per cent above LIBOR.
“Good businesses should always match operational expansion with cost control, and this is a fundamental belief of ours which we practise. We maintain our cautious stance on lending in this challenging period, but will continue to implement a number of exciting new customer initiatives such as our pan-African banking app and leveraging our blue-chip partnerships to benefit our customers across 40 countries.”