FSDH Initial Reaction: Stanbic IBTC 1Q23 results 
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April 26, 2023/FSDH Report

Key Performance Highlights:

• Stanbic bank reported a solid set of 1Q23 numbers, with the total income rising a sharp 45.2% YoY to N81.0 billion, primarily due to a 55.3% YoY spurt in net interest income to N36.4 billion, along with a 38.9% YoY increase in non-interest revenue to N44.6 billion and an 89.4% YoY jump in trading revenues to N19.9 billion in 1Q23. Interest income surged 52.7% YoY to N50.4 billion due to a rise in the volume and the average yield of loans and investments, partially offset by a 46.8% YoY jump in interest expense to N14.0 billion, resulting in a 55.3% YoY increase in net interest income to N36.4 billion in 1Q23 from N23.4 billion in 1Q22. The interest income increased primarily due to a 69.8% rise in income from loans and advances to customers to N41.9 billion in 1Q23. Furthermore, the bank reported solid performance sequentially and reported a 22.0% QoQ spurt in the total income compared to N66.4 billion in 4Q22, while net profit grew 11.5% QoQ to N28.9 billion in 1Q23 versus N25.9 billion in 4Q22.
   
• In 1Q23, the non-interest revenue soared to N44.6 billion, a 37.9% YoY increase. The non-interest revenue increased primarily due to an 89.4% YoY jump in trading revenue to N19.9 billion in 1Q23 versus N10.5 billion in 1Q22. The net fee and commission revenue grew 14.8% YoY to N24.9 billion in 1Q23. Moreover, Stanbic reported a loss of N409 million in 1Q23 from the insurance operations compared to a loss of N284 million in 1Q22. The company’s net impairment loss on financial assets increased 3.8x to N3.3 billion in 1Q23 versus a net impairment loss on financial assets of N0.9 billion in the prior period.
   
• The bank’s operating expenses soared 17.3% YoY to N41.4 billion in 1Q23 due to increased inflationary impact and growth in regulatory-induced costs, and additional investments in information technology to position the group as a platform business. The other operating expenses jumped 19.6% YoY to N27.5 billion, and staff costs increased 12.9% YoY to N14.0 billion in 1Q23 from N12.4 billion in 1Q22. Although the company’s tax expenses grew to N7.4 billion in 1Q23 (effective tax rate of 20.4% in 1Q23 compared to 23.1% in 1Q22), Stanbic recorded a 91.5% YoY jump in net profit to N28.9 billion owing to the solid revenue growth and a proportionately lower increase in operating expenses; the earnings per share stood at N2.16 in 1Q23 versus N1.11 in 1Q22.
   
• Looking at the financial performance by segments, total income in the Business & Commercial segment expanded by 31.9% YoY to N14.0 billion. At the same time, the segment’s net profit stood at N4.2 billion in 1Q23 versus a profit of N3.0 billion in 1Q22, a 41.1% YoY increase. The Corporate and Investment Banking segment was the best performer in the quarter, with total income rising a massive 66.1% YoY to N42.5 billion and net profit soaring 77.7% YoY to N17.6 billion in 1Q23. Notably, the performance of the Consumer & High Net Worth segment was boosted in 1Q23 with a 42.9% YoY growth in total income to N29.7 billion and a massive net profit surge of 226.1% YoY to N7.0 billion in 1Q23. The bank recorded solid growth in gross loans and advances to customers that stood at N1,236.7 billion in 1Q23, a 22.8% YoY jump, driven primarily by a 33.7% YoY growth in the Corporate and Investment Banking segment to N838.5 billion from N629.0 billion in 1Q23.
   
• On 24 March 2023, the company announced the retirement of Ms. Ngozi Edozien as an Independent Non-Executive Director following the completion of her prescribed tenure. Moreover, the Board of Directors also announced the appointment of Mrs. Ndidi Nwuneli (MFR) as an Independent Non-Executive Director after receiving all required regulatory approvals.

Market Reaction: The investor reaction to the blockbuster 1Q23 performance was positive as the stock climbed 3.93% to close at N37.00 versus a 0.49% gain for the All-Share Index (25/4).

Stanbic Earnings Highlight 1Q23

Source: Company Financials, FSDH