Ecobank Nigeria secures US$126m10-Year bilateral subordinated loan for SMEs

NIGERIAEcobank Transnational Incorporated, the parent company of the Ecobank Group, has announced that one of its significant subsidiaries, Ecobank Nigeria, secured N50 billion (US$126.72m), 10-Year bilateral subordinated loan.

According to a statement signed by Adenike Laoye, Group Head, Corporate Communications, the bilateral funding provides stable medium-term liquidity to the balance sheet of Ecobank Nigeria and positively improved its balance sheet ratios, especially the capital adequacy ratio by circa 300 basis points.

The transaction proceeds would be deployed to support Micro, Small and Medium Scale Enterprises and small corporates.

Ecobank Group reported N461.2 billion (US$1.17bn) revenue during the nine months ended 30th September 2020, representing nine per cent increase against the corresponding period of 2019.

In its audited report submitted to the Nigeria Stock Exchange, the pan African bank also recorded a considerable performance in other key financial indices despite the harsh operating environment.

Summary of the report showed that gross earnings increased by 0.4 per cent to N13.1 billion (US$33.20m); total assets nudged up by nine per cent to N9.43 trillion (US$23.90bn) during the period under review as against the same period of the previous year.

Also, deposits from customers increased to N6.69 trillion (US$16.96bn) representing 13 per cent and total equity went up by three per cent at N708.6 billion (US$1.8bn).

The bank in a statement noted however that despite the bank’s good showing in deposits from customers, revenue and gross earnings, profit was impacted by the provisioning of about N60.5 billion (US$153.33m) for goodwill for the acquisition of Oceanic Bank in 2011.

The bank said it was optimistic that with clean book aftermath of the full provisioning for Oceanic Bank, it would improve on its profitability for the year end. Profit before tax and goodwill impairment closed at N95.1 billion (US$241.03m).

Ecobank posted a profit before tax of US$90 million for the first quarter ended March 31, 2020 down 12 per cent on a reported basis, but up 27 per cent in constant currency, driven by positive operating leverage, the lender said in a statement.

Operating income (net revenue) stood at US$393 million, up one per cent on a reported basis and 14 per cent in constant currency while operating expenses was US$259 million, up one per cent on a reported basis and six per cent in constant currency.

Subordinated loans have lower priority than other debt instruments in case of liquidation. They are only repayable after other debts have been paid.

This debt can either be secured or unsecured and it typically has a lower credit rating and higher yield than other senior debt.

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