GSE: ETI shares still attractive despite drop in earnings

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Ecobank Transnational Incorporated [ETI] achieved modest financial performance for the first half of 2016.

The listed multi-national bank which also doubles as the holding company for Ecobank Ghana managed to churn out fair results after the company endured market uncertainty coupled with subdued economic activity across Africa for the first half of the year.

Net Interest Income grew marginally by 7% over the 52-week period; from GHS2,112,955,000 in HY2015 to GHS2,265,425,000 in HY2016.

The company managed to maintain a flat interest expense figure which was pegged at GHS1,130,704,000 over the period.

Net Trading Income of the listed bank decreased marginally by -5%; from GHS 773,702,000 in HY2015 to GHS 737,555,000 in HY2016.

Non-Interest Revenue decreased by -14%; falling from GHS 1,933,836,000 in HY2015 to GHS 1,606,954,000 in HY2016. Impairment Losses on Financial Assets increased by 82%; from GHS 340,987,000 in HY2015 to GHS 620,790,000 in HY2016.

After tax Profit [PAT] for the period fell sharply by -36% relative to same period last year. PAT decreased from GHS 921,448,000 in HY2015 to GHS 586,244,000 in HY2016. Unsurprisingly, Earnings-Per share [EPS] also dipped by -44%; from GHS 3.65 in HY2015 to GHS 2.03 in HY2016.

Total Asset Value of the company also went down by -18% over the 52-week period; dipping from GHS 101,034,383,000 in HY2015 to GHS 82,534,778,000 in HY2016. Total Liabilities recorded decreased marginally by -20%; falling from 69,863,999,000 in HY2015 to GHS 55,946,637,000 in HY2016.

ETI remains very liquid on the Accra bourse; a feature of the equity investors, especially retail investors look out for on the Ghana Stock Exchange (GSE).

This makes the equity still very attractive. Despite a dip in PAT, ETI could still record impressive capital gains to investors. The low price of the equity makes creates room for a high possibility of an above-average return to investors’ on the bourse. On the back of the a fore-mentioned factors GN Analysts recommend a BUY for ETI shares.

Trading activity on the bourse ended with 3 gainers [ETI, TLW & PZC] and 2 losers [GOIL & PZC] yesterday. ETI topped trading chart as 30,200 shares worth GHS 4,798.00 changed hands. Returns on the Composite and Financial Stock Index pegged at -9.20% and -10.83% respectively.

Trading activity on the alternative market was hushed as no shares traded yesterday.

HORDS currently lead record capital gains on the GAX, appreciating by 25% from year open.

The Cedi lost marginally to all the major trading currencies yesterday.

The local currency exchanged at a mid-rate of GHS 3.9463 to the USD, GHS 5.2462 to the GBP and GHS 4.4167 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 2.92%.



Source: Ghana/ Research

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