Increase in EGH Profitability to drive share performance

On the Ghana Stock Exchange-  

Ecobank Ghana Limited [EGH] recorded an impressive performance for the Q1-2017 performing above the usual industry average in terms of profitability. Profit before tax [PBT] increased by 16.53%; from GHS 104,297,000 in Q1-2016 to GHS 121,534,000 in Q1-2017. Revenue for the period grew by 16.82% to GHS 295,111,000; from GHS 252,631,000 in Q1-2016. EGH’s profitability was mainly driven by the bank’s mobile app and the Xpress Account App launched in 2016. EGH’s conscious effort to expand its digital footprint in order to meet customer banking needs employing 21st century approach seems to be paying off. Interest Income also went up by 17.31% to close Q1-2017 at GHS 236,325,000 compared to GHS 201,458,000 recorded same period last year.

Net Fees and Commission for the bank inched up by 2.9% in Q1-2017. Net Trading Income also went up by 25.25%; from GHS 30,248,000 in Q1-2016 to GHS 37,886,000 in Q1-2017. This reflects the improvement in trade profits of the bank within the period under review. The size of the loan book of EGH grew marginally by 1.7% in Q1-2017 compared to prior year. Customers deposits also went up significantly by 25.62%; further confirming the bank’s success in effectively mobilizing deposits through contemporary IT approach. Cost to Income ratio fell marginally from 50.44% in Q1-2016 to 47.05% in Q1-2017. This reflects the bank’s efficiency in generating income at a lower cost.

Total Assets of EGH increased by 16.38%; from GHS 7,073,579,000 in Q1-2016 to GHS 8,232,263,000 in Q1-2017. Capital Adequacy Ratio [CAR] of the bank stood at 15.49%; well above the statutory requirement of 10% by the industry regulator. Non Performing Loans [NPL] however increased to 17.53% in Q1-2017 from 16.80% in Q1-2016. This reflects the bank’s continuous exposure to bad loans especially from the energy sector debts. Return on Assets [ROA] increased to 4.54% compared to 4.50% recorded in Q1-2016; this further affirms the bank’s efficiency in using the bank’s assets to generate returns for shareholders. Return on Equity [ROE] likewise increased marginally from 32.90% to 34.88%.

EGH has returned 14.69% YTD on the local bourse. The share price has risen from GHS 6.40 to GHS 7.34 in the past 4 months. EGH current share performance reflects the company’s strong fundamentals. A little increase in the BUY pressure on the stock could see a short term price rally on the exchange. GN Analysts recommend a BUY on EGH.

Trading activity on the bourse ended with 3 gainers [BOPP, FML and GOIL] and 1 loser [UTB] yesterday. CAL topped the trading chart in terms of volume as 755,400 shares worth GHS 558,997.00 changed hands. Returns on the Composite and Financial Stock Index pegged at 12.81% and 16.54% respectively.

On the Ghana Alternative Market [GAX]-

Trading activity on the Alternative market was hushed as no shares changed hands.
HORDS currently lead record capital gains on the GAX, appreciating by 25% from 2016 year open.

On the Currency market –

The Cedi GAINED marginally to the British Pound and Euro but LOST to the Dollar on the interbank market yesterday.
The local currency exchanged at a mid-rate of GHS 4.1983 to the USD, GHS 5.4324 to the GBP and GHS 4.5612 to the EURO.

The GCFM Cedi index, a measure of the holistic performance of the Cedi on the inter-bank market now records a year-to-date depreciation of 1.60%.



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