FSDH Initial Reaction: Stanbic IBTC 3Q23 results 

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November 2, 2023/FSDH Research

Key Performance Highlights:

• Stanbic bank reported a solid set of 3Q23 numbers, with the total income rising a sharp 50.1% YoY to N91.2 billion, primarily due to a 75.3% YoY jump in trading revenue to N15.0 billion in 3Q23 and supported by a 63.2% YoY spurt in net interest income to N47.8 billion. Interest income surged 91.5% YoY to N74.3 billion due to a rise in the volume and the average yield of loans and investments, offset by a 179.0% YoY jump in interest expense to N26.5 billion, resulting in a 63.2% YoY rise in net interest income to N47.9 billion in 3Q23 from N29.3 billion in 3Q22. Furthermore, Stanbic reported decent performance sequentially and reported a 0.9% QoQ spurt in the total income compared to N90.3 billion in 2Q23, while net profit grew 5.8% QoQ to N41.3 billion in 3Q23 versus N39.1 billion in 2Q23.
   
• In 3Q23, the non-interest revenue soared to N43.3 billion, a 37.9% YoY increase. The non-interest revenue increased primarily due to a 75.3% YoY jump in trading revenue to N15.0 billion in 3Q23 versus N8.6 billion in 3Q22. The net fee and commission revenue grew 23.9% YoY to N28.4 billion in 3Q23. Moreover, Stanbic reported a loss of N718 million in 3Q23 from the insurance operations compared to a profit of N721 million in 3Q22. The company’s net impairment loss on financial assets increased by 99.5% to N4.0 billion in 3Q23 versus a net impairment loss on financial assets of N2.0 billion in the prior year period.
   
• The bank’s operating expenses soared 36.7% YoY to N40.7 billion in 3Q23 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 41.0% YoY to N24.2 billion, and staff costs increased 30.8% YoY to N16.5 billion in 3Q23 from N12.6 billion in 3Q22. Although the company’s tax expenses grew to N5.2 billion in 3Q23 (effective tax rate of 11.1% in 3Q23 compared to 15.4% in 3Q22), Stanbic recorded a 68.5% YoY jump in net profit to N41.3 billion. This was driven by solid revenue growth and a proportionately lower increase in operating expenses. Earnings per share stood at N3.13 in 3Q23 versus N2.46 in 3Q22.
   
• Looking at the financial performance by segments, total income in the Business & Commercial segment expanded by 20.3% YoY to N14.0 billion. At the same time, the segment’s net profit stood at N3.6 billion in 3Q23 versus a profit of N3.3 billion in 3Q22, an 8.7% YoY increase. The Corporate and Investment Banking segment was the best performer in the quarter, with total income rising a massive 70.2% YoY to N46.5 billion and net profit soaring 77.4% YoY to N29.9 billion in 3Q23. Notably, the performance of the Consumer & High Net Worth segment was boosted in 3Q23 with a 48.1% YoY growth in total income to N33.6 billion and a net profit surge of 74.7% YoY to N7.8 billion in 3Q23. The bank recorded solid growth in gross loans and advances to customers that stood at N1813.7 billion in 9M23, a 55.6% YoY jump, driven primarily by a 70.5% YoY growth in the Corporate and Investment Banking segment to N1,291.0 billion from N757.3 billion in 9M22.
   
• Stanbic IBTC Holdings PLC has announced that Mr. Yinka Sanni, a Non-Executive Director, has resigned from the Board of Stanbic IBTC Holdings PLC effective October 31, 2023.

Market Reaction: The investor reaction to the 3Q23 performance was positive as Stanbic IBTC stock jumped 1.35% higher at N75.00, versus a 1.65% gain for the All-Share Index on 10/31.

Stanbic Earnings Highlight 3Q23

Source: Company Financials, FSDH