Ecobank Posts Record $801m Pre-Tax Profit in 2025 — But Nigeria Remains a Open Wound

KEY METRICS AT A GLANCE — FY 2025

A Record Year by Almost Every Measure

Ecobank Transnational Incorporated (ETI) closed its 2025 financial year with a pre-tax profit of $801 million — the highest in the group’s 38-year history — marking a 21% increase from $662 million recorded in 2024.

In naira-equivalent terms, the figure translates to approximately N1.21 trillion, a 23.6% year-on-year growth.

Earnings per share rose to $0.017 (1.68 US cents), up 23%, while the group’s net revenue reached $2.45 billion, a $363 million uplift driven by both interest and non-interest income streams.

Net interest income grew 20% to $1.41 billion, powered by higher government bond holdings — particularly in the UEMOA (Francophone West Africa) region — as well as robust growth in trade finance for soft commodities and a surge in digitally enabled consumer loans across Anglophone West Africa.

On the non-interest side, revenues rose 14% to $1.04 billion, bolstered by cash management fees, foreign exchange trading income, and card transaction fees.

Perhaps the most celebrated achievement of the year was the group’s cost discipline.

The cost-to-income ratio (CIR) improved to a record low of 48.3%, down from 52.8% a year earlier and significantly better than the group’s own guidance of approximately 53%.

Operating expenses grew at just 7% — far slower than revenue growth of 17% — reflecting what Ecobank’s CEO Jeremy Awori described as a successful execution of the bank’s Growth, Transformation and Returns (GTR) strategy.

The Nigeria Problem: A 42% NPL Ratio

The group’s headline numbers, impressive as they are, mask a significant credit quality deterioration in Nigeria — the continent’s largest economy and home to one of Ecobank’s most strategically important subsidiaries.

Ecobank Nigeria (ENG) reported a pre-tax loss of $31 million in 2025, a sharp reversal from the $5 million profit posted in 2024. Its return on equity (ROE) tumbled to -13.8%.

At the root of this reversal is the expiry of the Central Bank of Nigeria’s (CBN) regulatory forbearance regime — a policy that had allowed banks to hold problem loans without mandatory reclassification.

With that protection lifted, Ecobank Nigeria was forced to move a large volume of legacy exposures — primarily in the oil and gas sector within its Corporate and Investment Banking (CIB) portfolio — into Stage 3, or non-performing status.

The result: Nigeria’s NPL ratio shot from 9.7% to a staggering 42.1%. Gross impairment charges across the group nearly tripled, surging 149% to $807 million, and the group’s cost-of-risk jumped from 1.78% to 5.0%.

Management has been at pains to stress that this is a deliberate, one-time cleansing of the balance sheet rather than a fresh credit event.

A centrally accumulated expected credit loss (ECL) buffer of $576 million — built patiently over several years — has been deployed specifically to absorb Nigeria risks, with approximately $491 million of that reserve earmarked as a Nigeria-specific buffer.

Still, with a coverage ratio of just 16.8% on Nigerian NPLs, the provisions remain thin relative to the scale of the problem.

Additionally, Ecobank Nigeria has met the CBN’s minimum paid-up capital threshold of NGN200 billion for a national bank license — but its capital adequacy ratio (CAR) remains below the regulatory minimum of 10%.

A Board-approved Capital Restoration Plan (CRP) is underway, and management expects the NPL sell-down and recovery initiative to materially reduce the ratio by the first half of 2026.

Regional Performance Breakdown

The contrast between Nigeria and the rest of the group could not be starker.

The Central, Eastern and Southern Africa (CESA) region — encompassing markets like Kenya, Uganda, Zambia, and the Democratic Republic of Congo — emerged as the group’s best performer, delivering $450 million in pre-tax profit, up 52% year-on-year.

CESA’s ROE of 36.1% and a cost-to-income ratio of 44.2% (down sharply from 51% in 2024) reflect a turnaround story playing out across several long-struggling subsidiaries.

Anglophone West Africa (AWA) — led by Ghana — contributed $402 million in pre-tax profit, up 28%, with a cost-to-income ratio of just 37.9%, the lowest across all regions.

Francophone West Africa (UEMOA) remained a steady revenue anchor at $788 million in net revenue and $384 million in pre-tax profit, supported by strong government bond income and disciplined cost management.

Deposits Surge, CASA at 87% — A Funding Story

One of the most structurally important developments in the FY 2025 results is the depth of Ecobank’s deposit franchise.

Customer deposits rose by $4.9 billion — a 24% increase — to $25.3 billion, with Current Account and Savings Account (CASA) deposits now comprising 87.1% of total funding, up from 86.4% a year earlier.

This shift has meaningfully reduced the group’s average cost of funds, which fell from 2.9% to 2.5%, providing a natural hedge against the declining yield environment as central banks across Africa eased monetary policy.

Loans grew at a robust 22% to $12.8 billion, though the loan-to-deposit ratio remained conservative at 50.5%, well below typical industry levels.

Management has flagged this as an intentional strategic posture — particularly in consumer lending — given ample liquidity buffers and a desire to grow lending without disproportionate credit risk.

The Ellevate programme for women-led SMEs and digital consumer loan products in Ghana are highlighted as growth drivers for the next cycle.

Digital Payments: A $133bn Story

Payments remains one of Ecobank’s fastest-growing and most strategically differentiated businesses. Payment revenue rose 14% to $305 million, representing 12% of total net revenues.

The value of digital transactions surged by $31 billion — or 30% — to $133 billion, even as transaction volumes dipped marginally by 5% to approximately 238 million, largely due to lower interbank fund transfer volumes.

Card-related fees grew 16% to $101 million, while disbursement (wholesale payments) revenues rose 19% to $145 million.

The group also installed 500 new ATMs during the year, extended its Direct Sales Agents network to 22 markets, and added over 1,000 personnel — signalling that the digital strategy is complementary to, rather than a replacement of, physical infrastructure across Africa’s predominantly cash-driven markets.

Customer satisfaction scores improved by 1,000 basis points to 70%.

A Dividend Returns — For the First Time Since 2022

After a three-year hiatus, Ecobank’s Board has recommended a dividend payment of $40 million — equivalent to $0.0016 (0.16 US cents) per share — pending approval at the Annual General Meeting.

The last dividend, paid on FY 2022 results, stood at $28 million ($0.0011 per share).

The resumption signals the Board’s confidence in the group’s earnings recovery and balance sheet stability — even as it navigates the Nigeria restructuring.

Tangible book value per share rose 82% to $0.0765, buoyed substantially by a $465 million positive swing in foreign currency translation reserves as key African currencies — the Ghanaian cedi, CFA franc, and Nigerian naira — stabilised or appreciated against the US dollar in 2025.

Outlook: Cautiously Confident

Looking ahead to 2026, Ecobank’s management expressed confidence in executing its GTR strategic agenda but acknowledged material headwinds.

Geopolitical tensions in the Middle East, macroeconomic uncertainty globally, and the continued unwinding of Nigeria’s forbearance-era exposures are all cited as risks.

CEO Awori noted that the group expects the Nigeria NPL sell-down to yield significant improvement by H1 2026, and that with forbearance largely behind it, new NPL formation should slow materially.

Capital adequacy at the group level remains solid — the CET1 ratio stands at an estimated 13.2%, approximately 470 basis points above the regulatory minimum, with a total capital adequacy ratio of 16.7%.

The group exited its Mozambique operations during the year after the subsidiary failed to meet performance and return criteria in a competitive market — a decision that reflects management’s increasing willingness to make hard portfolio choices in pursuit of shareholder returns.

For investors and market watchers, the key 2026 metrics to track will be the pace of Nigeria NPL resolution, the trajectory of the consumer lending book, whether CESA can sustain its breakout performance, and ultimately, whether Ecobank can close the year with its first profit contribution from Nigeria since 2023.