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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
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)
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)
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)
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).
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)
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