4 August 2014

Nigeria: Cost Reduction Drives Stanbic IBTC's Earnings

Stanbic IBTC Holdings Plc's unaudited results for the six months ended June 30, 2014 showed a decline in operating cost which supported its cost to income ratio to 58 per cent.

However, the uptick in the group's non performing loan (NPL) ratio to 4.8 per cent in the period under review, compared to the 4.4 per cent it stood as at December 2013, remains a concern to industry watchers.

But its cost of risk improved to 0.9 per cent, as against the 1.5 per cent it was in the first quarter of 2014. Stanbic IBTC recorded gross earnings of N61.5 billion, an increase of 13 per cent over the N54.5 billion recorded in the comparable period of 2013.

Its net interest income was up by 28 per cent to N23 billion as at the end of June 2014, from N17.9 billion last year, while non‐interest revenue advanced by 13 per cent to N27.3 billion.

Similarly, just as the group's total operating income climbed by 20 per cent to N50.3 billion, from N42 billion as at June 2013, its profit before tax increased by 50 per cent to N19.6 billion.

Profit after tax also increased by 56 per cent to N15.9 billion, from N10.2 billion as at June 2013. Stanbic IBTC's total assets climbed by 19 per cent to N906.8 billion, from N763 billion as at last December, just as gross loans and advances to customers was up by 18 per cent to N356.9 billion.

Its customer deposits were also up by 23 per cent to N511.8 billion while deposit mix improved to 61 per cent.

"The beat was driven by a combination of balance sheet growth, efficiency on the back of lower than expected costs, and the break-even of personal banking business (PBB) in the second quarter of 2014.

"Considering the improved earnings run-rate in PBB year-to-date, we are therefore not surprised to see Stanbic's RoAE now at 29 per cent versus the 21 per cent recorded in full year 2013.

"Over the second half of the year, key for the bank will be to sustain CIR at current levels or better and keep asset quality in check," the Vice-President, Banking Analyst, Sub- Saharan Africa, Renaissance Capital, Mr. Adesoji Solanke noted.

Commenting on the results, the Chief Executive Officer, Stanbic IBTC Holdings, Sola David‐Borha said the results was a reflection of efforts made over the last two years in improving transactional service offering. She expressed confident that the performance would be sustained in the second half of the year.


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