August 24, 2022/CSL Research

Stanbic’s H1 2022 AUDITED numbers showed a 45.2% y/y increase in Gross Earnings to N134.9bn. The y/y increase in Gross Earnings was broad-based underpinned by a 54.3% y/y increase in Interest Income, 9.8% y/y rise in Fee and Commission Income, 442.3% y/y increase in Insurance Premium received, 198.2% y/y increase in Trading Revenue and Other Income of N938m compared to loss of N904m in the previous period. Net Loans and advances to Customers were up 39.9% y/y. The strong growth in Interest Income was driven by increase in both volume and average yield on loans and investments. On the other hand, Interest Expense was up 57.7% y/y reflecting the increase in average volume of customers fixed and current accounts deposits as well as possible repricing of some existing deposits. The group’s deposit mix continues to improve, with current and savings accounts making up 68.6% of total deposits compared with 66.0% as of December 2021. Overall, Net Interest Income grew strongly, up 53% y/y.  

Net Fee and Commission Income was up 10.4% y/y to N45.6bn. The 9.8% growth in Fees and Commission Income was  driven mainly by a 39.4% y/y increase in Brokerage and Financial Advisory fees, 4.1% growth in Asset management fees coupled with an increase in fees earned on letters of credit related transactions such as a 18.3% y/y increase in foreign currency service fees, 51.3% y/y increase in E-banking and 48.8% y/y growth in Documentation and Administration fees.

H1 2022 (N’m)

Source: Company’s Financials, CSL Research.

Income from Trading increased significantly by 198.2% y/y mainly on the back of a 198.0% increase in Fixed Income Instruments and Currencies. Other Income also increased to N938m from a loss of N904m in H1 2021.

The Group reported an impairment charge of N5.5bn in H1 2022, compared with a write back of N1.3bn in H1 2021, bringing annualised cost of risk to 1.1% in H1 2022 compared with a positive charge in H1 2021.

OPEX  increased by 22.6% y/y to N67.9bn compared with N55.4bn in H1 2021. Despite the increase in Opex, the robust total operating income growth led to a decrease in the bank’s cost to income ratio ex-provisions to 60.0% in H1 2022 compared with 70.3% in H1 2021.

The group’s Pre-tax Profit grew significantly,  up 61.8% y/y to N39.8bn. Net Profit also increased by 35.9% y/y to N30.5bn amidst a higher effective tax rate of 23.4% in H1 2022 compared with 8.8% in H1 2021,  bringing annualised ROE to 16.3%.

The bank’s management announced an interim dividend of N1.50/s. The bank still rates well based on capital adequacy (CAR of 19.7% above regulatory requirement of 11.0% for national banks).

Under segment reporting, Personal and Business Banking reported a 31.5% growth in  Profit after tax to N3.8bn in H1 2022 from post-tax profit of N2.9bn in H1 2021. Corporate and Investment Banking reported post-tax profit of N19.5bn compared with N8.96bn recorded in H1 2021. However, the Wealth business recorded a  31.8% decline in Profit after tax to N7.3bn compared with N10.7bn in H1 2021. 

Our estimates are under review. Current price; N28.00.