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Stanbic IBTC YTD Sept 2020: A Rebound in Earnings

Stock & Analyst Updates	1063 VIEWS
Stock & Analyst Updates
1063 VIEWS

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Friday, November 06, 2020, / 04:00 PM / by Adaeze Nwachukwu, Proshare Research / Header Image Credit: Stanbic IBTC Plc

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.

Key Highlights

Gross Earnings grew by +4.05% to N183.29bn from N176.16bn recorded in the corresponding period of the previous year.
Profit before tax grew by +11.22% to N76.9bn from N69.11bn recorded in the same period of the previous year.
Profit after tax grew by +19.10% to N66.2bn from N55.55bn recorded in the corresponding quarter of the previous year.
Total Assets grew by +24.50% from N1.83trn YTD Sept 2019 to N2.58trn recorded in YTD Sept 2020.
ROE for the period was 23.65%
The Group recorded 2.98% in ROA for the period.

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)

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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)

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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)

Total Assets

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)

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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)

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Cost-to-Income Ratio

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).