Bamidele Famoofo
Ecobank Transnational Incorporated (ETI) market value climbed in the Nigerian stock market as investors priced in the pan-African lender’s low-cost Eurobond raise.
With reduced borrowing costs, investors bet on Ecobank stock on the back of an enhanced financial stability following a recent successful foreign capital raise.
Ecobank Group also received shareholders’ approval to raise up to $250 million through an Additional Tier 1 (AT1) capital qualifying instrument to further boost the bank’s capital position.
Data obtained from the Nigerian Exchange showed that its share price rose N31.55, up by 7 percent from the beginning of the trading week.
Ecobank’s market value surge came on the back of a two-day rally, supported by a significant increase in trading activities. At the close of trading sessions, the market value of the group’s 18.349 billion shares outstanding was lifted to about N579 billion.
Ecobank reported a 16.6 percent year-on-year increase in profit after tax (PAT) to $122.5 million in its unaudited Q1’25 results, with earnings per share
Analysts at CardinalStone Securities Limited said the strong performance was supported by growth in non-interest revenue (NIR) and net interest income (NII), which drove total operating income to $516.3 million from $495.9 million in Q1-2024.
The group’s net interest income rose by 2.1 percent year-on-year to $295.4 million, primarily driven by a 2.9 percent year-on-year decline in interest expense to $159.2 million.
Analysts said the reduction had a more pronounced effect on core earnings than the modest 0.3 percent increase in interest income. The decline in interest expense reflects a drop in borrowed funds to $2.2 billion from $2.5 billion, which led to an 11.4 percent YoY decrease in interest expense on other borrowed funds.
Ecobank Group’s cost-to-income ratio (CIR) improved to 51.6 percent , down from 53.8 percent in Q1-2024. Asset quality improved, with non-performing loans (NPLs) declining by 3.4 percent to $693.0 million, bringing the NPL ratio down to 6.6 percent from 7.0 percent in Q1-2024.
The group’s cost of risk also edged down by 1 bps to 4.0 percent in the first quarter of 2025. In terms of profitability metrics, annualised return on average asset (ROAA) and return on average equity (ROAE) expanded to 1.8 percent from 1.5 percent in Q1-2024 and 27.6 percent from 23.5 percent in Q1-2024, respectively.
Ecobank announced the successful tap of its U.S.$400 million 10.125 percent notes due 15 October 2029 for an additional U.S.$125 million. The Notes will be consolidated and will form a single series with the U.S.$400 million 10.125 percent Notes issued on 15 October 2024.
The banking group said the offering was issued at a premium with a new issue price of 102.634, or an effective yield of 9.375 percent , representing a 100-basis-point tightening in yield compared to the original issue.
According to Ecobank, the improved yield demonstrates investor confidence in Ecobank’s strategy execution and growth prospects.
Investor demand was also robust, achieving a final order book oversubscription rate of more than 2x, with strong participation from asset managers, banks, and development finance institutions across Africa, the United Kingdom, Europe, the United States, Asia, and the Middle East.
The net proceeds from the issuance of the Notes will be used for general corporate purposes, primarily to refinance upcoming debt maturities.
Jeremy Awori, group chief executive officer , ETI, said, “We are encouraged by the strong support received from international investors, which underscores their continued belief in Ecobank’s resilience and progress in executing our Growth, Transformation, and Returns (GTR) strategy.
“This tap enhances our financial flexibility and further reinforces our presence in the global capital markets.”
Ayo Adepoju, group chief financial officer of ETI, added, “This successful tap further strengthens ETI’s financial position in line with its strategic objectives and reflects the institution’s commitment to proactively manage its balance sheet by diversifying funding sources and extending the average debt maturity profile of the group.
“We remain grateful for the support and partnership from Absa, Africa Finance Corporation, African Export-Import Bank, Mashreq, and Standard Chartered Bank, which acted as Joint Lead Managers and Joint Bookrunners; Ecobank Development Corporation, which acted as Co-manager; and Renaissance Capital Africa, which served as the Financial Adviser for the transaction.”
