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Thursday, 24 April 2014 12:06

Stanbic IBTC’s 1Q14 profits surge 89.24 percent

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Background

Stanbic IBTC Holding Plc is a full service financial services group with a clear focus on three main business pillars-corporate and investment banking, personal and business banking and business banking and wealth management.

Stanbic IBTC was formed following the 2007 merger of Standard Bank’s Nigeria operations and IBTC Chartered Bank Plc.

The bank holds a universal banking license and was one of the banks to adopt the holding company structure in 2012 following the recent CBN regulation non- core subsidiaries.

The bank has174 branches and 10 billion shares outstanding with shareholders fund of N104.3 billion as at March 31, 2014.

Financial performance for 1Q14

Stanbic IBTC Holding has been able to record double digit earnings growth in its top and bottom line.

The bank has been able meander the regulatory headwinds coupled with huge operating expenses that has been thwarting the profits of other banks as its stellar performance in the period under review reveals.

For the three months period through March 2014, Stanbic IBTC grew gross earnings by 13.7 percent to N30.22 billion from N26.58 billion in the same period of the prior year (1Q13).

Profit before tax (PBT) in the review period surged by 89.24 percent to N8.97 billion compared with N4.74 billion in 1Q13.

Profit after tax followed the same positive trajectory as it spiked by 93 percent to N6.89 billion in 2014 from N3.57 billion in 2013.

Based on the analysis by BusinessDay of the Q1 2014 financial results of tier one banks, the above figure is the most impressive.

Earnings per share EPS increased by 93.75 percent in the review period to 62k from 32k in same period of the prior year 2013.

The bank’s Interest income for the three months through March 2014 grew by 16.1 percent y/y to N17.02 billion in 1Q14 as against N14.66 billion in 1Q13, while net interest margin ratio climbed to 38.78 percent in 2014 from 31.03 billion in 2013.

Interest income which has been expanding for most banks declined by 17.31 percent to N5.30 billion in Q12014 compared to N6.41 billion in Q1 2013.

Net margin the gauge for profitability and efficiency impressively moved or expanded to 22.80 percent in 3M14 as against 13.43 percent in 3M13.

The owners of the business have had their investments utilized to generate more profits as Return on Equity (ROAe) climbed to 6.60 percent in 3M14 from 3.65 percent in 3M13.

In addition, return on assets (ROAa), based on BusinessDay analysis climbed to 0.85 in 2014 percent as against 0.46 percent in 2013.

Operating expenses increased by 8.4 percent y/y to N14.64 billion in 1Q14 compared to N13.50 billion in Q13, while Opex margin ratio declined to 48.44 percent in the review period as against 50.1 percent in 2013.

Stanbic’s total assets grew slightly by 6.07 percent y/y to N809.87 billion in 3M14 compared to N763.04 billion in 3M13.

Total Loans and Advances to customers rose marginally by 2.02 percent y/y to N374.81 billion in 1Q14 compared to N383.92 billion in 1Q13.

Total deposits to customers also increased by 9.16 percent y/y to N510.90 billion in 3M14 as against N468.03 billion in 3M13.

Based on further analysis by BusinessDay, the bank’s loans to deposit ratio slid to 73.36 percent in 2014 as against 82.03 percent in 2013.

Share performance and Outlook

The shareholders of the bank have had their value maximized as share price has increased in the past year by 91.53 percent to close at N21.36 on the 22rd of April 2014 on the floor of the Nigeria Stock Exchange (NSE).

Total market capitalization was N213.60 billion on the same day.

The bank also has a Price to book ratio of 2.37x and a price to sales ratio of 2.76x respectively.

Based on BusinessDay analysis, earnings yield was 2.76 percent.

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