FSDH Initial Reaction: Stanbic IBTC 2Q22 results 
Kindly click here to download the report.

August 25, 2022/FSDH Research

Key Performance Highlights:

• Stanbic bank reported solid 2Q22 results, with the total income rising a sharp 44.4% YoY to N57.5 billion, primarily due to a 51.9% YoY rise in net interest income to N35.3 billion, coupled with a 34.1% YoY increase in non-interest revenue to N30.6 billion in 2Q22. Interest income increased by 51.9% YoY to N35.3 billion, driven by an increase in the volume and the average yield of loans and investments, partially offset by a 34.5% YoY jump in interest expense to N8.3 billion, resulting in a 58.2% increase in net interest income to N26.9 billion in 2Q22 from N17.0 billion in 2Q21. The interest income increased primarily due to a 48.2% jump in income from loans and advances to customers to N27.0 billion, coupled with a 65.3% YoY increase in interest from investments to N7.9 billion in 2Q22.
• The non-interest revenue soared in 2Q22 to N30.6 billion, a 34.1% YoY increase. The non-interest revenue increased primarily due to a 158.5% YoY spurt in trading revenue to N5.8 billion in 2Q22 versus N2.3 billion in 2Q21. The trading revenue is almost entirely made up of fixed income and currencies that overperformed throughout the quarter as it soared 158.6% YoY in 2Q22. The net fee and commission revenue continued to perform well this quarter, growing 16.7% YoY to N23.8 billion in 2Q22. Stanbic reported a 382.8% YoY jump in income from life insurance activities to N420 million in 2Q22 from N87 million in 2Q21. The company reported a net impairment loss on financial assets of N4.9 billion in 2Q22 versus a write-back in net impairments of N1.1 billion in the prior period.
• The bank’s operating expenses grew 13.5% YoY to N32.3 billion due to increased inflationary impact and growth in regulatory induced costs such as AMCON levy, as well as additional investments in information technology to position the group as a platform business. The other operating expenses jumped 12.8% YoY to N20.0 billion, and staff costs surged by 14.7% YoY to N12.3 billion in 2Q22 from N10.7 billion in 2Q21. The company reported a decrease in the effective tax rate to 23.4% in 2Q22 compared to 26.2% in 2Q21. Consequently, Stanbic recorded a 38.2% YoY jump in net profit to N15.6 billion owing to the solid revenue growth and a relatively lower increase in operating expenses; the earnings per share stood at N1.15 in 2Q22 versus N0.82 in 2Q21.
• Stanbic IBTC Holdings PLC announced an interim dividend of N1.50 per share (1H21: N1.00 per share), subject to appropriate withholding tax and regulatory approval, payable on September 21, 2022, to all shareholders registered in the company’s books at the close of business on September 6, 2022.
• Looking at the financial performance by segments, in the Business & Commercial segment, total income grew by a healthy 51.9% YoY to N11.2 billion. At the same time, the segment net profit stood at N755 million in 2Q22 versus a profit of N1.4 billion in 2Q21, a 47.6% YoY drop. The Corporate and Investment Banking segment was the best performer this quarter, with total income rising a massive 73.6% YoY to N24.5 billion and net profit soaring 92.3% YoY to N9.6 billion in 2Q22. The performance of the Consumer & High Net Worth segment also increased this quarter, reporting a 17.4% YoY growth in total income to N22.4 billion, and the segment net profit edged 5.7% higher to N5.2 billion in 2Q22. The bank recorded solid growth in gross loans and advances to customers that stood at N1093.0 billion in 2Q22, a 38.2% surge, driven primarily by a 49.1% jump in the Corporate and Investment Banking segment to N689.5 billion from N462.3 billion in 1H21.
• On July 14, 2022, Stanbic IBTC Holdings PLC announced the appointment of Helmut Engelbrecht as Non-Executive Director, Stanbic IBTC Bank PLC, and Hassan Khan as Non-Executive Director, Stanbic IBTC Capital Limited. At Stanbic IBTC Stockbrokers Limited, Bunmi Olarinoye and Idris Toriola took up the positions of Chief Executive and Executive Director, respectively. Adelanwa Adesanya and Selvan Kistnasamy were appointed Independent Non-Executive Director and Non-Executive Director, respectively, at the stockbroking subsidiary of Stanbic IBTC. Titi Ogungbesan, erstwhile Chief Executive of Stanbic IBTC Stockbrokers, became Executive Director – Business Development at Stanbic IBTC Insurance Limited; Jesuseun Fatoyinbo was appointed as a Non-Executive Director on the Board of Stanbic IBTC Nominees Limited, and Ese Nkadi took up the role of Executive Director at Stanbic IBTC Trustees Limited.

Market Reaction: The investor reaction to the blockbuster 2Q22 performance was extremely positive as the stock popped 8.93% (24/8) versus a 0.25% gain for the All-Share Index (24/8).

Stanbic Earnings Highlight 2Q22

Source: Company Financials, FSDH
Note – 1 Gross earnings for prior period were restated since 1Q22. 
2 Gross loans and advances to customers – segmental data was restated from 1Q22 into three segments – Business & Commercial, Corporate and Investment Banking, and Consumer & High Net Worth from two segments earlier – Personal and business banking and Corporate and Investment banking in 1H21. The 1H21 Business & Commercial gross loan figure is the sum of the Business & Commercial and Consumer & High Net Worth segments