Thursday, January 30,
2020 / 6:55 AM / CardinalStone
Research / Header Image Credit: Stanbic IBTC Holdings
Stanbic IBTC Holdings Plc
(STANBIC: TP 47.14 - HOLD) released an unaudited FY'19 results, which revealed
relatively flat earnings of N75.0 billion (FY'18: N74.4 billion). At the
pre-tax level, a more noticeable growth in earnings (+3.1% YoY) was supported by
improved non-interest income (6.0% YoY) and better cost to income ratio of
50.4% (vs 52.9% in FY'18). Earnings per share was, however, lower by 1.7% YoY
at N6.92, reflecting the impact of the additional shares issued on account of
scrip dividend distribution.
- Non-interest income was stronger
(+6.0% YoY) in FY'19, supported by a 16.0% YoY improvement in trading
income. In contrast, net fee income was relatively flat (+0.8% YoY) in the
fee income was likely weighed by higher than expected growth in fee-related
expenses (+237.8% YoY) which management attributed to the impact of an
- Net interest income was slightly
weaker (-0.5% YoY), dragged by higher interest expenses (+6.0% YoY). The
growth in interest expenses is likely related to increase in interest
bearing liabilities. Notably, the bank issued N30.0 billion in senior
unsecured debt in December 2018 and N45.8 billion in commercial papers in
2019. We also note the 31.8% growth in other borrowings during the year.
- Cost to income ratio declined
during the period to 50.4% (FY'18: 52.9%), owing to lower operating
expenses (-1.6% YoY) and a 3.2% growth in operating income. Impairment
charges were N1.6 billion in the review period compared to writebacks of
N2.9 billion in the prior year. Consequently, cost of risk printed at
- Customer deposits fell during the
year (-21.0%) to N637.8 billion due to the reduction of more expensive
term deposits. This, consequently, improved the contribution of low-cost
deposits to 75.9% from 65.9% in FY'18.
- Gross loans and advances improved
by 21.2% to N556.4 billion as at FY'19. We largely attribute this to CBN's
LDR measure, given that as at H1'19 gross loans was only 4.5% up at N479.7
billion. By our estimates, STANBIC's LDR was 66.5% as at December 2019.
NPL ratio was 3.9%, still within the regulatory limit.