Monday, July 22, 2024

Ecobank’s Ascend: A 24.4% Stock Rise in Three Months Fuels Shareholder’s Optimism


Ecobank Shareholders Optimistic as Stock Gains 24.4% in Three Months

Shareholders of Ecobank Transnational Incorporated (ETI) are currently riding a wave of optimism, thanks to a notable 24.4% rise in the company’s stock price in the first quarter of 2024. This surge in stock value comes as a beacon of positivity amidst the various challenges that many sectors are facing in today’s economic landscape.

Analysing the performance on the Nigerian Exchange (NGX), it’s evident that Ecobank closed its latest trading session on a high note. On Friday, March 22, 2024, ETI’s stock was priced at N26.00 per share, distinguishing itself with positive dynamics while several of its industry peers struggled.

Starting the year at a share price of N20.90, ETI has experienced a commendable 24.4% increase in price valuation, positioning it 29th on the NGX for year-to-date performance.

According to a report by analysts at African ‘Xchanges, “Shareholders have every reason to be optimistic about ETI as the stock has shown an 8% growth over the past four weeks, marking it as the 28th best performer on the NGX.”

Ecobank Transnational has also been active on the Nigerian Stock Exchange, ranking as the 49th most traded stock over the past three months, from December 22, 2023, to March 22, 2024. During this period, ETI saw a total of 130 million shares traded across 4,195 deals, with a total value of NGN 3.25 billion. The trading volume peaked on February 9th with 18.8 million shares, showcasing the bank’s compelling investment appeal.

Moreover, ETI is on track to surpass its five-year performance record based on its impressive 9-month results up to September 30, 2023. The bank reported a substantial 55% year-on-year increase in profit before tax, reaching N262.171 billion. This significant growth, 14 percent higher than the full-year figure of N230.55 billion recorded in 2022, epitomizes a five-year high.

Jeremy Awori, CEO of Ecobank, highlighted, “The bank’s profit before tax for the nine months to September 2023 was an increase of 55 percent in constant currency from the prior year. We also delivered profits attributable to ETI shareholders of $224m, resulting in a return on tangible shareholders’ equity of 25.6 percent, supported by strong revenue growth of 34 percent in constant currency and an improved cost-to-income ratio of 53.7 percent.”

An analysis of the financial statements revealed a surge in operating income by 12 percent or 55 percent in constant currency to $1.518 billion. This not only signifies a notable year-on-year growth but also surpasses the full-year 5-year record of N794.860 billion set in 2022. A relatively high, yet improved, cost-to-income ratio of 53.7 percent has been crucial in achieving these results.

The bank’s geographical diversification has played a significant role in mitigating region-specific challenges. “Group profit before tax increased by 12% or 55% at constant currency to $450 million, despite the challenges posed by the exposure to Government of Ghana Eurobonds and hyperinflation in Zimbabwe and South Sudan,” the bank outlined.

In Nigeria, the group’s business contributed 12.52 percent to the net revenue in the 9-month period of 2023, maintaining a consistent performance level with the previous year.

Following its exceptional performance in 2022, Ecobank announced a final dividend of $0.11 cents per share. Given the bank’s potential to exceed its 2022 performance, shareholders remain hopeful for an increased dividend payout in 2024, which would enhance the current 3.29 percent dividend yield and further boost investor confidence.

Last year, ETI shares saw a 21.84 percent year-to-date gain, outperforming its industry and the NGXASI. The year-to-date gain surged impressively to 61.32 percent by December 2023, reflecting the growing investor confidence and optimism in Ecobank’s financial success and future growth prospects.

Alexandra Bennett
Alexandra Bennett
Alexandra Bennett is a seasoned business journalist with over a decade of experience covering the global economy, finance, and corporate strategies. With a Bachelor's degree in Economics and a Master's in Business Journalism from Columbia University, Alexandra has built a reputation for her insightful analysis and ability to break down complex economic trends into understandable narratives. Prior to joining our team, she worked for major financial publications in New York and London. Alexandra specializes in mergers and acquisitions, market trends, and economic

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