April 25, 2023/CSL Research

Stanbic Q1 2023 unaudited numbers showed a 53%y/y increase in Interest Income to N50.4bn driven by improved yields on risk assets. Net Loans to customers declined marginally, down 0.6% in Q1 2023 from December 2022. Interest Expense also grew strongly, up 47% y/y to N14.0bn. Customers Deposits were up 6.4% in Q1 2023 compared with December 2022. CASA ratio improved to 74.9% in Q1 2023 compared with 71.7% in FY 2022. Overall, Net Interest Income grew 55% y/y to N36.4bn in Q1 2023.

Stanbic IBTC Q1 2023, Nm

Source: Company, CSL Research 

Net Fee and Commission was up 15% y/y. The Fees and Commission Income line was supported by growth in asset management fees (Up 15.6%y/y).  

Other Income (Income from life insurance activities, trading Revenue and Other Revenue) grew significantly, up 85% y/y. The growth in Other Income was due to an 89% y/y growth in revenue on fixed income and currencies to N19.9bn. 

The group reported Impairment Charge of N3.3bn in Q1 2023, 283% higher than N856m reported in Q1 2022 bringing Q1 2023 annualised Cost of Risk (COR) to 1.1%. Non-performing loan ratio was 2.5% compared with 2.4% in December 2022).

Operating Expenses grew moderately, up 17% y/y. The moderate y/y growth in OPEX compared with the strong growth in Operating Income (+45% y/y) led to an improvement in Cost to Income Ratio (CIR ex provisions) to 51.2% in Q1 2023 from 63.3% in Q1 2022.

The group’s Pre-tax Profit was up 85% y/y to N36.3bn in Q1 2023. Supported by a lower effective tax rate of 20.4% in Q1 2023 compared with 23.1% in Q1 2022, Net Profit grew higher by 92% y/y to N28.9bn, bringing FY 2023 annualised ROAE to 27.3%.  

Under segment reporting, Business and Commercial banking reported a Pre-tax profit of N5.1bn in Q1 2023 compared with Pre-tax profit of N3.1bn in Q1 2022 while Corporate and Investment Banking reported Pre-tax profit of N19.5bn in Q1 2023 compared with N10.7bn in Q1 2022. The Consumer & High Net Worth business reported Pre-tax profit of N11.7bn compared with N5.8bn in Q1 2022. 

The Group’s total capital adequacy ratio closed at 20.0% in Q1 2023 (Bank: 15.4%) which is significantly higher than the 11% minimum regulatory requirement. 

We have a BUY recommendation on Stanbic. Our estimates are under review.