Ecobank Nigeria Slips Into Loss as Group Battles $541m Tax Exposure

Ecobank Transnational Incorporated (ETI) delivered solid growth in 2025, but a loss in its Nigerian business and a rising tax exposure across its subsidiaries cast a shadow over an otherwise strong performance.

The pan-African banking group grew earnings, expanded its balance sheet, and improved efficiency, according to a Pinnacle Daily review of its 2025 audited financial statements released on Tuesday.

However, challenges in Nigeria and ongoing tax reviews across multiple countries remain key risks investors are watching closely.

Strong Group Growth Masks Nigeria’s Weakness

For the year ended December 31, 2025, Ecobank recorded a 14 per cent rise in gross earnings to $3.2 billion, while total revenue increased by 17 per cent to $2.45 billion.

Profit before tax climbed 21 per cent to $800.9 million, and profit after tax rose 20 per cent to $594.1 million.

The bank also expanded its operations significantly, with total assets jumping 23 per cent to $34.5 billion, customer deposits growing 24 per cent to $25.3 billion, and loans increasing 19 per cent to $11.8 billion.

Profitability remained stable, with improved efficiency as the cost-to-income ratio dropped to 48.3 per cent.

Despite this strong group performance, its Nigerian operations stood out as a weak link.

Ecobank Nigeria Records Loss on Rising Bad Loans

Ecobank’s Nigerian unit posted a loss before tax of $31.3 million in 2025, reversing expectations in one of the group’s largest markets.

The loss was mainly driven by a sharp rise in bad loans, as impairment charges on financial assets surged from $20.7 million in 2024 to $82.2 million in 2025.

This increase wiped out much of the income generated during the review year.

Although operating income in Nigeria rose to $154.6 million, it was not enough to cover the combined weight of loan losses, operating expenses, and other costs.

A cursory review of the audited results shows that expenses alone stood at $98.1 million, further squeezing margins.

The situation was made worse by pressure on the bank’s capital position, indicating that Ecobank Nigeria’s capital ratio fell below the required regulatory level, forcing the bank to engage regulators and take steps to restore compliance.

Other Regions Drive Profit Growth

While Nigeria struggled, other regions delivered strong results and supported the group’s overall profitability.

Central, Eastern and Southern Africa (CESA) emerged as the top performer, posting $450.3 million in profit before tax. This was driven by high income and very low loan losses, allowing more revenue to translate into profit.

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Anglophone West Africa followed with $401.9 million in profit, supported by solid income and tight cost control. Francophone West Africa also contributed strongly with $384.3 million.

These regions succeeded because they balanced revenue growth with careful risk and cost management, unlike Nigeria, where rising loan losses overwhelmed earnings.

$541m Tax Exposure Raises Concern

Beyond operational performance, Ecobank is facing a significant tax risk across its subsidiaries.

As of December 2025, the group’s total estimated tax exposure stood at $541 million, up sharply from $317 million a year earlier.

This exposure comes from ongoing tax reviews in several countries where the bank operates.

Despite the large figure, management believes the actual amount likely to be paid is much lower, estimating its probable liability at about $20 million and has already made provisions for this amount in its accounts.

This gap between the total exposure and expected liability reflects uncertainty around tax disputes, which depend on negotiations and final decisions by tax authorities in different jurisdictions.

The bank noted that these assessments are still ongoing and could change if new information emerges, meaning the outcome remains uncertain.

Outlook Remains Stable Despite Risks

While the performance of its Nigerian business and the outcome of tax reviews will be critical in shaping investor confidence going forward, Ecobank maintains that its overall financial position is strong.

The group’s capital and liquidity levels remain above regulatory minimums, and directors say there is no threat to its ability to continue operations.

Commenting on the results, Ecobank Group Chief Executive Officer, Jeremy Awori, said the bank’s 2025 performance shows that its Growth Transformation and Returns (GTR) strategy and diversified business model are delivering results.

He added that earnings per share rose by 23 per cent, while tangible book value jumped by 82 per cent. The bank also expanded access in its Consumer Banking segment by growing digital account openings across more markets.

“We became more active in lending, especially in financing trade in soft commodities, increasing support for women-led small businesses through our Ellevate program, and offering digitally enabled consumer loans. As a result, loans increased by $2.3 billion to $12.8 billion. Given our relatively small consumer lending portfolio, there is ample room for growth without taking on disproportionate risks,” Awori said.

Looking ahead, he said the bank remains confident about executing its strategy but is mindful of global risks.

“As we look ahead to 2026, we remain confident in our ability to execute our GTR strategic initiatives. However, we are fully aware of the potential implications for economic and financial conditions stemming from geopolitical tensions in the Middle East, as well as macroeconomic impacts across Africa and globally. Our focus remains on executing with agility, resilience, and disciplined risk and expense management across all our markets,” Awori added.

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