Stanbic IBTC Q1 2020 Unaudited Results - Trading Gains and Provision Reversals Bolster Earnings

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Monday, April 27, 2020 / 03:22 PM / by CardinalStone Research / Header Image Credit: Stanbic IBTC  


Stanbic IBTC Holdings Plc (STANBIC) recorded a 7.6% YoY increase in earnings to N20.6 billion in its unaudited Q1'20 result. The growth in earnings largely reflected a 47.1% YoY improvement in trading revenue during the review period.


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Highlights:

  • Net interest income weakened 8.3% YoY, weighed by a fall in interest income (-11.8% YoY). The decline in interest income was due to the 30.9% YoY slump in interest on investment securities

  • Non-interest income jumped 20.9% YoY, supported by the 47.1% YoY growth in trading gains. The increase in trading revenue was due to the sale of some of the bank's fixed income positions to book capital gains amidst the decline in the yield environment. Likewise, net fee and commission income rose 6.7%, driven by higher asset management fees (+17.9% YoY) and brokerage & financial advisory fees (+40.7% YoY)

  • Operating expenses declined by 1.2% YoY in Q1'20. The decline in operating expenses likely relates to the reversal in provisions for legal costs, levies and fines amounting to N3.1 billion. As a result, cost to income ratio improved to 48.4% from 53.1% in Q1'19. The reversal of provisions largely masked the 40.7% jump in AMCON charges. Hence, absent the reversals, operating expenses could have risen by 11.0% with cost to income ratio at 54.4%, while earnings could have slumped by 8.4% YoY

  • Gross loans and advances to customers increased 15.1% during the quarter. NPL ratio also rose to 4.2% from 3.9% in December 2019. Also, deposits rose 13.2%, with low cost deposits accounting for 80.6% compared to 71.1% in December 2019

  • Annualised ROE came was 26.4% (December 27.7%), while capital adequacy was 17.4% (Regulatory requirement: 10.0%).

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