| Corporate Results |     3819 VIEWS  |
| Corporate Results | |
| 3819 VIEWS | |
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Thursday March 07, 2019 / 10:40 AM / NSE With Additional Notes From CSL Stockbrokers
Initial Reaction – CSL Stockbrokers
Stanbic FY 2018 results showed a 5% y/y growth in Gross Earnings to
N222.4bn, albeit it came below our 2018 estimate of N234.5bn. Buoyed largely by
the growth of 15% y/y in Non-interest income and write-backs from loans
previously written off, Pre-tax Profit grew 44% y/y to N88.2bn. However on a
q/q basis, gross earnings fell marginally by 2% to N53.5bn on the back of a 13%
q/q decline in Non-interest Revenue which offset the growth of 8% q/q in
Net-Interest Income.
Interest Income declined slightly by 4%
y/y to N118.4bn in FY 2018, on the back of a 14% y/y decline in Interest on
investments during FY 2018 which offset the growth of 5% y/y in Interest on
Loans and Advances (the firm grew its loan book by 14% y/y during FY 2018).
Interest expense rose marginally by 2% y/y
to N40.1bn in FY2018, driven by increase in deposits from customers (+7% y/y).
This coupled with the marginal decline in Interest Income led to a 6% y/y
decline in Net Interest Income to N78.2bn, coming in below our 2018 estimate of
N86.2bn.
The firm sustained growth in Non-Interest Income, up 15% y/y to
N120.6bn on the back of higher Net Fee and Commission Income which grew 18% y/y
to N69.8bn and a growth of 7% y/y to N31.3bn in Trading Income. Similarly,
higher fees from asset management (+21% y/y), brokerage and financial advisory
(+22% y/y) and custody transactions (+30% y/y) buoyed Fee and Commission
Income.
The
bank Capital Adequacy Ratio (CAR) of 21.0% (FY 2017: 20.5%) remains strong
and well above the regulatory requirement of 10%.
The bank
reported positive Impairment charge of N2.9bn compared to negative N25.6bn in
FY 2017 owing to write-backs.
Operating Income grew 5% y/y to N180.8bn, supported largely by the
growth of 15% y/y in Non-Interest Income which partly offset the decline in Net
Interest Income (-6% y/y) and the mild growth of 2% y/y in Interest Expense.
Operating Expenses however grew by 11% y/y to N95.6bn. This, coupled
with a single digit growth of 5% y/y in Operating Income led to a 308bps
expansion in Cost to Income Ratio (CIR ex provisions) to 52.9%, underperforming
our 2018 estimate of 50.5%.
Despite the rise in Operating Expenses, Pre-tax Profit grew remarkably
by 44% y/y to N88.2bn while Profit after tax grew faster by 54% y/y to N74.4bn,
owing to lower effective tax rate of 15.6% compared to 20.9% in FY
2017. Consequently, EPS also grew by 53% y/y to
N7.04 in FY 2018 from N4.60 in FY 2017.
The
company has proposed a final dividend of N1.50/s in 2018 subject to approval at
the AGM. The final dividend represents an increase of 200% from the N0.50/s
declared in 2017. The company had earlier declared an interim dividend of
N1.0/s, bringing the total dividend for 2018 to N2.50/s. Based on its last
closing price of N46.6 on 6 March 2019, the final dividend translates to a
dividend yield of 3.2%.
We have a target price
of N65.7/s for Stanbic (current price: N46.0) with a Buy recommendation.
Related News
1.
STANBIC Declares
N59.76bn PAT in Q3 2018 Results,(SP:N46.00k)
2.
Stanbic IBTC
Announces Board Meeting
3.
Stanbic IBTC
Issues Update on Regulatory Fine by the Central Bank of Nigeria
4.
Surrender of
Venture Capital Licence by Stanbic IBTC Ventures Limited
5.
Stanbic IBTC
Holdings Plc Issues An Update on Scrip Dividend Option
6.
CBN Debits the
Account of Stanbic IBTC Bank In Respect of N1.886bn Regulatory Fine
7.
One Week After
CBN Fines –MTN Share Price Drops by 31.06%; DIAMONDBNK and STANBIC Also Drop
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