Stanbic IBTC profit beats estimates as non-interest revenue jumps

by | April 24, 2018 1:45 am

Stanbic IBTC Holdings Plc reported a higher than expected quarterly profit as the bank’s non interest revenue was boosted by increase in asset management fees while the country’s economy continues to improve.

The Nigerian lender’s earnings also got a boost from foreign exchange margins from plain vanilla forward transactions and non-derivative forward trades.

For the first three months through March 2018, Stanbic IBTC’s net income surged by 43.94 percent to N23.06 billion from N16.07 billion the previous year.

Earnings per share were 223kobo, topping analysts’ average estimate of 198kobo, according to data compiled by BusinessDay.

Gross Earnings were up 22.03 percent to N57.38 billion in March 2018 as against N47.02 billion the previous year.

The growth in gross earnings was largely driven by a 37.93 percent increase in noninterest income to N18.51 billion in the period under review as interest income was stable.

Fees and commission income, and trading revenue spiked by 35.25 percent and 43.75 percent to N17.84 billion and N9.56 billion respectively in the period under review.

Stanbic IBTC has turned each Naira invested in revenue in generating higher profit while contemporaneously deploying the resources of its owners in generating profit.

Net margin, a measure of efficiency, increased to 40.18 percent in the period under review from 34.17 percent as at March 2017.

Stanbic IBTC’s operating expenses spiked by 46.80 percent to N25 billion in March 2018, which reflects the effect of inflation on operating cost and upward adjustment made to staff cost compared to prior year.

Expectedly, cost to income ratio rose to 53.70 percent in March 2018 from 43.70 percent the previous year. A lower ratio means a lender is efficient in curtailing costs while growing profit.

Non-performing loans to total loans ratio increased to 9.9 percent In March 2018 from 7.90 percent as at December 2017.  Non-performing loans in absolute figures increased by 17 percent to N37.0 billion in the period under review from N31.70 billion as at December 2017.

The growth in NPLs can be attributed to exposure to the oil and gas sector as lenders increased lending to oil firms when commodity prices were high.

Analysts are of the view that the Tier 2 lender’s assets quality could improve on the back of a gradual economy recovery as evidenced in the country existing its first recession in 25 years.

With the relative ease in the foreign exchange market and a rebound in crude oil production and price, customers are expected to start paying back interest on loans borrowed from banks

Stanbic IBTC Holdings’ interest on loans and advances to customers increased by 10 percent to N29.52 billion in December 2017 from N26.84 billion as at March 2018.

Gross loans & advances to customers decreased by 7 percent to N375.6 billion, due to net repayments and slowdown in demand for loans in line with the market.

Stanbic IBTC’s capital and liquidity positions remained solid as its capital is deemed adequate to drive business growth and support any contingencies.

The group’s liquidity ratio closed at 119.5 percent, while the bank’s liquidity ratio was at 107.3 percent at the end of first quarter (Q1) 2018. This ratio is significantly higher than the 30% regulatory minimum.

Total capital adequacy ratio of the lender improved to 25.4 percent in the period under review from 23.50 percent as at December 2017; which is above the minimum statutory requirement.

Stanbic IBTC Holdings shares closed at N49 as of 2:00 pm close of trading on April 20, valuing it at N492.42 billion.