FSDH Initial Reaction: Stanbic IBTC FY21 results
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February 2, 2022/FSDH Research
Key Performance Highlights:
- On 29 January, 2022, Stanbic bank reported solid 4Q21 results, although the annual results were down year on year. In FY21, total income declined 14.0% YoY to N171.2 billion, primarily due to a 23.2% YoY fall in non-interest revenue to N95.8 billion in FY21. Interest income also fell by 1.0% YoY to N104.8 billion. In comparison, interest expense declined by 6.9% YoY to N29.4 billion, resulting in a 1.6% increase in net interest income to N75.4 billion, as the decreased interest expenses offset the decline in the interest income. The interest income fell despite a 27.2% jump in Interest income from loans and advances to customers to N77.7 billion, partially offset by a 38.7% fall in Interest income from investments to N26.3 billion in FY21.
- The non-interest revenue fell sharply in FY21 to N95.8 billion, an 23.2% YoY drag. The non-interest revenue was primarily subdued due to a 74.5% YoY drop in trading revenue to N13.3 billion in FY21. The trading revenue is almost entirely made up of fixed income and currencies that underperformed throughout the year. The net fee and commission revenue performed well, growing 16.4% YoY to N82.9 billion in FY21. Stanbic reported an income of N176 million in FY21 from the Insurance operations. The company previously used to report insurance operations in Other Revenues. Stanbic reported a write-back in net impairments on financial assets of N1.2 billion in FY21 versus impairment loss of N10.0 billion in the prior year.
- The bank’s operating expenses grew 12.8% YoY to N106.4 billion, as other operating expenses jumped 23.4% YoY to N64.3 billion, while staff cost marginally declined by 0.2% YoY to N42.0 billion in FY21. The bank reported an increase in the effective tax rate to 13.7% in FY21 from 12.1% in the previous year. Stanbic reported a 31.5% YoY decline in net profit to N57.0 billion owing to the weak revenues and rise in operating expenses; the earnings per share stood at N4.20 in FY21 versus N7.29 in FY20.
- Looking at the quarterly performance, Stanbic’s total income jumped 11.3% YoY to N49.2 billion 4Q21, powered by a 19.0% YoY growth in net interest income to N21.4 billion, supported by 6.0% growth in non-interest revenue. The bank reported robust performance on a sequential basis as well as it reported a 14.0% spurt in gross earnings in 4Q21 while net profit grew 6.1% QoQ.
- Stanbic reorganized its business segments to streamline its operations. It has changed its operating segments to Business & Commercial, Wholesale, Consumer & High Net Worth from the third quarter in FY21. The Business & Commercial segment provides broad base client solutions for a wide spectrum of small and medium-sized businesses as well as large commercial enterprises. The Wholesale segment serves large companies, governments, parastatals, and Institutional clients across Africa and Internationally. The Consumer & High Net Worth segment is responsible for the end-to-end lifecycle of clients. Looking at the financial performance of these segments, in the Business & Commercial segment, total income grew by 39.0% YoY to N33.0 billion, while its net profit came in at N7.0 billion in FY21 versus a loss of N2.3 billion in FY20. The Wholesale segment was the worst hit, with net income dropping by 43.4% YoY to N63.2 billion and net profit declining 56.1% YoY to N30.0 billion in FY21. The performance of the Consumer & High Net Worth segment was positive, reporting a 16.3% YoY growth in total income to N78.1 billion and a 16.4% jump in net profit to N20.1 billion in FY21. Nonetheless, the group continues to record an all-around growth in gross loans and advances to customers that stood at N946.3 billion at the end of FY21.
Market Reaction: The Stanbic stock closed unchanged at N35.75, versus a 0.91% gain for the All Share Index (31/1).
Stanbic Earnings Highlight FY21
Source: Company Financials, FSDH