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April 26, 2022/FSDH Report

Key Performance Highlights:

• On 22/4, Stanbic bank reported solid 1Q22 results, with the total income rising a sharp 43.3% YoY to N55.8 billion, primarily due to a 47.7% YoY rise in net interest income to N23.4 billion, coupled with a 40.2% YoY increase in non-interest revenue to N32.4 billion in 1Q22. Interest income increased by 57.0% YoY to N33.0 billion, partially offset by an 85.5% YoY jump in interest expense to N9.6 billion, resulting in a 47.7% increase in net interest income to N23.4 billion. The interest income increased primarily due to a 54.3% jump in Interest income from loans and advances to customers to N24.6 billion, coupled with a 70.8% YoY increase in interest from investments to N8.2 billion.
   
• The non-interest revenue soared in 1Q22 to N32.4 billion, a 40.2% YoY increase. The non-interest revenue increased primarily due to a 225.9% YoY spurt in trading revenue to N10.5 billion in 1Q22. The trading revenue is almost entirely made up of fixed income and currencies. The net fee and commission revenue performed well, growing 4.3% YoY to N21.7 billion in 1Q22. Stanbic reported a loss of N284 million in 1Q22 from the Insurance operations. Stanbic also reported a net impairment loss on financial assets of N586 million in 1Q22 versus a write-back in net impairments of N148 million in the prior period.
   
• The bank’s operating expenses grew 32.1% YoY to N35.6 billion, as other operating expenses jumped 33.0% YoY to N23.2 billion, and staff cost surged by 30.6% YoY to N12.4 billion in 1Q22. The company reported an increase in the effective tax rate to 23.1% in 1Q22 from 7.3% in 1Q21. Stanbic reported a 33.9% YoY jump in net profit to N15.1 billion owing to the solid revenue growth and a relatively lower increase in operating expenses; the earnings per share stood at N1.11 in 1Q22 versus N0.82 in 1Q21.
   
• Looking at the financial performance by segments, in the Business & Commercial segment, total income grew by a healthy 38.1% YoY to N10.6 billion, while its net profit stood at N3.0 billion in 1Q22 versus a profit of N1.4 billion in 1Q21. The Wholesale segment was the best performer in this quarter, with total income rising a massive 79.4% YoY to N25.6 billion and net profit soaring 148.2% YoY to N9.9 billion in 1Q22. The performance of the wealth segment was the only weak spot this quarter, reporting a 15.7% YoY growth in total income to N20.8 billion and a 63.2% YoY drop in net profit to N2.1 billion in 1Q22. Nonetheless, the bank recorded an all-round growth in gross loans and advances to customers that stood at N1006.7 billion in 1Q22, a 6.4% surge, driven primarily by a 7.8% jump in the wholesale banking segment to N629.0 billion, supported by a 7.5% YoY growth in business & commercial banking segment to N305.5 billion, and partially offset by an 8.0% YoY drop in Consumer & High Net Worth banking segment to N72.3 billion in 1Q22.
   
• On 11 January 2022, Stanbic IBTC Holdings PLC announced that it had commenced the process of seeking regulatory approvals to establish a wholly-owned Financial Technology subsidiary to be known and referred to as Stanbic IBTC Financial Services Limited. Subject to receiving all required regulatory approvals, including licensing by the Central Bank of Nigeria, the new subsidiary will function primarily as a Payment Solution Service Provider (PSSP).

Market Reaction: The investor reaction to the solid quarterly result was overwhelmingly positive as the stock popped 6.32% (25/4) versus a 0.17% gain for the All-Share Index (25/4).

Stanbic Earnings Highlight 1Q22