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Business News of Tuesday, 6 June 2017

Source: GN Research

Fall in profits could dent ETI share performance

First Quarter 2017 [Q1-2017] financial performance of Ecobank Transnational Incorporated [ETI] was not impressive owing to the fact that there was a dip in the company’s fundamentals. Profit before Tax [PBT] fell by 16%; from GHS 398,752,000 same period prior year to GHS 395,214,000 in Q1-2017.

Strong economic headwinds and uncertainties in some countries of operations contributed to the bank’s sub-standard performance. Interest Income, which grew by 2% during the period under review could not reflect positively on the bank’s operating profits. Discontinued operations in certain countries on the African continent led to a fall in total operating income of the bank. The bank’s revenue fell by 1% whereas the profit for the period also fell by 13%; from GHS 313,250,000 in Q1-2016 to GHS 273,531,000.

The value of total assets equally fell during the period by 0.4% to GHS 88,683,356,000. Total Customer Deposits mobilized during Q1-2017 fell by 4%; from GHS 60,863,263,000 to GHS 58,720,995,000. Nevertheless, the bank managed to decrease its cost-to-income ratio from 66.1% in Q1-2016 to 64.5% in Q1-2017 reflecting strong efficiency gains. The size of the loan book of the bank fell by 6% for the period. This directly shows ETI’s conservative position in shielding its loans portfolio from rising credit risks. Earnings per share [EPS] fell by 19% from GHS 1.14 in Q1-2016 to GHS 0.92 in Q1-2017.

ETI shares remain very liquid hence an attraction for retail investors. The low price of the equity offers investors the upper hand for huge gains on marginal price increases. YTD price change of the stock is currently pegged at 10%. The dip in profits however could dent the short term performance of the stock on the local bourse.

Trading activity on the bourse ended with 2 gainers [FML and SCB] and 1 loser [GOIL] yesterday. UTB topped the trading chart in terms of volume as 195,000 shares worth GHS 11,700.00 changed hands. Returns on the Composite and Financial Stock Index pegged at 13.61% and 16.23% 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 yesterday. The local currency exchanged at a mid-rate of GHS 4.2865 to the USD, GHS 5.5289 to the GBP and GHS 4.8109 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 4.70%.

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