November 6, 2022/FSDH Research

FSDH Initial Reaction: Stanbic IBTC 3Q22 results 
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Key Performance Highlights:

• Stanbic bank reported solid 3Q22 results, with the total income rising a sharp 36.6% YoY to N60.7 billion, primarily due to a 38.8% YoY rise in net interest income to N29.3 billion, coupled with a 34.7% YoY increase in non-interest revenue to N31.4 billion in 3Q22. Interest income jumped by 34.9% YoY to N38.8 billion, powered by an increase in the volume and the average yield of loans and investments, partially offset by a 24.1% YoY jump in interest expense to N9.5 billion, resulting in a 38.8% increase in net interest income to N29.3 billion in 3Q22 from N21.1 billion in 3Q21. The interest income increased primarily due to a 49.9% rise in income from loans and advances to customers to N30.8 billion, partially offset by a 5.7% YoY decline in interest from investments to N7.6 billion in 3Q22.
   
• The non-interest revenue soared in 3Q22 to N31.4 billion, a 34.7% YoY increase. The non-interest revenue increased primarily due to a 141.6% YoY spurt in trading revenue to N8.6 billion in 3Q22 versus N3.5 billion in 3Q21. The trading revenue is entirely comprised of fixed income and currencies that overperformed throughout the quarter. The net fee and commission revenue continued to perform well this quarter, growing 16.2% YoY to N22.9 billion in 3Q22. Moreover, Stanbic reported income from life insurance activities of N721 million in 3Q22 from a loss of N1 million in 3Q21. The company reported a net impairment loss on financial assets of N2.0 billion in 3Q22 versus a write-back in net impairments of N165 million in the prior period.
   
• The bank’s operating expenses grew 24.0% YoY to N29.8 billion due to increased inflationary impact and growth in regulatory-induced costs, as well as additional investments in information technology to position the group as a platform business. The other operating expenses jumped 33.8% YoY to N17.2 billion, and staff costs surged by 12.7% YoY to N12.6 billion in 3Q22 from N11.2 billion in 3Q21. The company reported a decrease in the effective tax rate to 21.4% in 3Q22 compared to 25.0% in 3Q21. Consequently, Stanbic recorded a 40.8% YoY jump in net profit to N24.5 billion owing to the solid revenue growth and a proportionately lower increase in operating expenses; the earnings per share stood at N2.46 in 3Q22 versus N1.29 in 3Q21.
   
• Looking at the financial performance by segments, in the Business & Commercial segment, total income grew by a healthy 38.7% YoY to N11.6 billion. At the same time, the segment net profit stood at N3.3 billion in 3Q22 versus a profit of N2.7 billion in 3Q21, a 25.1% YoY increase. The Corporate and Investment Banking segment was the best performer this quarter, with total income rising a massive 63.7% YoY to N27.3 billion and net profit soaring 69.5% YoY to N16.8 billion in 3Q22. The performance of the Consumer & High Net Worth segment also maintained its positive momentum from the last quarter with a 12.7% YoY growth in total income to N22.7 billion; however, the segment net profit slipped 6.8% YoY to N4.5 billion in 3Q22. The bank recorded solid growth in gross loans and advances to customers that stood at N1,165.9 billion in 9M22, a 36.4% surge, driven primarily by a 47.9% jump in the Corporate and Investment Banking segment to N757.3 billion from N512.2 billion in 9M21.

Market Reaction: The investor reaction to the blockbuster 3Q22 performance was subdued as the stock remained unchanged at N28.75 versus a 0.17% loss for the All-Share Index (31/10). However, the stock closed 0.75% lower at N28.00 versus a 0.21% loss for the All-Share Index (1/11)

Stanbic Earnings Highlight 3Q22

Source: Company Financials, FSDH