With a gradual reopening of the domestic economy and economic activities recovering amidst the COVID-19 pandemic, earnings of Stanbic IBTC Plc saw a modest rebound.
The Slow Motion Earning Machine That Keeps Growing
Stanbic IBTC's gross earnings grew marginally by +4.05%, from N176.16bn recorded in the previous year to N183.29bn in 2020. Growth in gross earnings was majorly driven by a +20.15% growth in non-interest income (see chart 1).
Adjusted for foreign currency translation, the Group recorded a decline in gross earnings by -16.18%, from $573.95mn in year-to-date (YTD) September 2019 to $481.07m recorded in YTD September 2020 using the official CBN exchange rates during the different periods. Foreign currency translation cost for the period was $116.11m as a result of the devaluation of the domestic currency.
Chart 1: Stanbic IBTC's Gross Earnings 2016 - 2020 (N'bn)
Keeping The Gravy Train Rolling
Profit before tax (PBT) for the the bank grew noticeably; the bank's PBT rose year-on-year (Y-o-Y) by +11.22%, from N69.11bn recorded in the same period of the previous year to N76.87bn recorded in YTD Sept 2020. The major driver of the growth in PBT was a +10.03% increase in its operating income and a marginal decline in operating expenses, which slid Y-o-Y by -1.04% (see chart 2).
In contrast to the growth of the Group's PBT in naira terms, the deposit money institution (DMB) recorded a decline of -10.40% in PBT when adjusted for dollar value, from $225.17m recorded in YTD September 2019 to $201.75m in YTD Sept ember 2020 (using the official CBN rate during the different periods). Foreign currency translation cost for the period was $48.69m as a result of the impact of the devaluation of the domestic currency.
Chart 2: Stanbic IBTC's Profit Before Tax 2016 - 2020 (N'bn)
The banking group's impairment charges worsened over the period, from a recovery gain of N90m in September 2019 to profit and loss charge of N6.99bn in September 2020 (see chart 3).
Chart 3: Stanbic IBTC's Impairment Charges 2016 - 2020 (N'm)
The banking group saw a steady growth of it total assets for YTD September 2020, total assets grew by +24.50% Y-o-Y from N1.83trn recorded in the same period of the previous year to N2.58trn. The major drivers of the growth in total assets were the bank's cash and cash equivalents and its financial assets, both increased Y-o-Y by +105.22% and +86.53% respectively. Trading assets, deferred tax, and loans and advances to banks and customers grew by +15.15%, +24.61%, and +5.54% respectively. The total liabilities to total assets ratio of the group for the period stood at 85.82% (see chart 4).
In foreign currency terms, Stanbic IBTC recorded a +13.32% growth in total assets for the period which was lower than the equivalent naira performance, the group's dollar asset growth was from $5.97bn recorded in 2019 to $6.77bn in 2020 using the official CBN exchange rate at the different periods.
Chart 4: Stanbic IBTC's Total Assets 2016 - 2020 (N'bn)
Total Shareholders Fund
Stanbic IBTC posted a +25.17% Y-o-Y growth in shareholders fund, from N292.21bn recorded in YTD September 2019 to N365.76bn YTD September 2020. This was spurred by growth in share premium and bank reserves, both grew by +18.05% and +28.63% respectively (see chart 5).
Translating to foreign currency terms, the group saw a +0.83% growth in shareholders holder fund for the period, from $952m in YTD 9 months 2019 to $960m in YTD 9 months 2020.
Chart 5: Stanbic IBTC's Total Shareholders Fund 2016 - 2020 (N'bn)
The cost-to-income ratio of Stanbic IBTC for the period was 47.96%, a decline from 50.92% recorded in the corresponding period of the previous year. Operating expense declined marginally by -1.04% Y-o-Y while operating income increased by +10.03% Y-o-Y (see chart 6).
Chart 6: Stanbic IBTC's Cost-to-Income Ratio 2016 - 2020 (N'bn)
Dimming Investors Smiles
Return on equity declined to 21.02% for the period from 23.65% recorded in the same period of the previous year (see chart 7).
Chart 7: Stanbic IBTC's Return on Equity 2016 - 2020 (N'bn)
Return on assets declined to 2.98% YTD 9 months 2020 from 3.77% in the corresponding period of 2019 (see chart 7).
Chart 8: Stanbic IBTC's Return on Assets 2016 - 2020 (N'bn)