Tuesday, August 29, 2017 12:32 PM / FBNQuest Research
Event: Stanbic IBTC Holdings reports Q2 2017 results
Implications: Upward revsions to consensus earnings forecasts likely
Positives: PBT and PAT up 94% y/y and 169% y/y respectively
Negatives: Significant spike in loan loss provisions; opex also up by double-digits
This morning, Stanbic IBTC (Stanbic) published its Q2 2017 results which showed that PBT and PAT grew strongly, by 94% y/y and 169% y/y respectively. The results were driven by a 43% y/y growth in pre-provision profits. This growth was underpinned by an 80% y/y expansion in funding income and, to a lesser extent, a 17% y/y increase in non-interest income. The positives on these lines were strong enough to offset increases of 72% y/y and 18% y/y in loan loss provisions and opex respectively. Further down the P&L, PAT grew by 169% y/y, thanks largely to a 43% y/y reduction on the minorities interest line. Compared with our forecasts, PBT and PAT missed by 29% and 44% respectively due to the negative surprises in loan loss provisions and opex.
Sequentially, the results showed a marked departure from the y/y trends. PBT and PAT both declined by -43% q/q and -60% q/q respectively. Loan loss provisions and opex which increased markedly by 219% q/q and 24% q/q underpinned the sequential decline in earnings. These negatives offset the 9% q/q increase in pre-provision profits. In terms of contributions from the revenue lines, funding income which grew by 17% q/q was the major driver. Non-interest income came in flattish on a q/q basis. The bank has proposed an interim dividend of N0.60 ( which implies a yield and payout ratio of 1.5% and 26% respectively.
When annualised, Stanbic’s H1 2017 PBT puts it on track to deliver an ROAE of around 29% in 2017. However, its H1 loan loss provisions translate to an annualised cost of risk of close to 8% which is ahead of management’s 2017 guidance of around 5%. As such, we would expect the bank’s asset quality and opex to be the main focal points of analysts and investors on the bank’s conference call (date yet to be announced).
Stanbic’s H1 2017 PBT of N29bn tracks slightly ahead of consensus 2017 PBT forecast of N54bn. As such, we expect to see slight upward revisions to consensus earnings forecasts. However, given the negatives from the results (opex and loan loss provisions), we expect to see a broadly subdued / neutral reaction from the market.
Year-to-date Stanbic’s shares have outperformed the index. They are up by 167% vs. a 35% return on the NSE ASI.
Our estimates are under review. We rate Stanbic shares Neutral.
1. STANBIC Declares N24.11bn PAT in Q2 '17 Results; Proposes 60k Interim Dividend,(SP:N40.00k)
2. Stanbic IBTC Announces Delay in the Release of Audited 2017 Half Year Results
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5. Stanbic IBTC Money market fund suffers highest weekly outflow since 2009
6. Stanbic IBTC Holdings PLC Appoints Mr. Basil Omiyi as New Chairman
7. Stanbic IBTC Launches ₦20.00bn Commercial Paper Programme on FMDQ
8. Stanbic IBTC Asset Management Consolidates Leadership Position
9. Stanbic IBTC Holdings Q1 2017 Results Review - Earnings Running Well Ahead of Guidance
10. Stanbic IBTC Holdings Reports Q1 2017 Results – NPL Ratio Doubled Between Dec ’16 and Mar ’17
11. STANBIC Releases Q1'17 Results; Declares N16.07bn PAT in Q1,(SP:N20.47k)
12. Stanbic IBTC Holdings Q4 2016 Results Review- Upgrading from Underperform to Neutral Rating