Stanbic IBTC Maintains Positive Performance Despite Challenges

Kayode Tokede

Despite challenges in the financial sector, Stanbic IBTC Holdings Plc in 2022 audited financial statements for period ended December 31, 2022 reported significant improvement in key financial parameters to maintain its position as one of the leading Tier-2 banks in the country.

The group in the period under review announced a significant increase in balance sheet position that impacted on its bottom-line and dividend payout to investors who invested in the company’s stock.

For example, its total assets hits N3.03trillion in 2022, an increase of 10 per cent from N2.74trillion in 2021, driven by growth in gross loans & advances and customer deposits.

The group’s gross loans & advances was up by 31per cent to N1.24 trillion in 2022 from N946.26 billion in 2021, while customer deposits increased by 11per cent to N1.25 trillion in 2022 from N1.13billion reported in 2021.

Stanbic IBTC Holdings’s total liabilities increased to N2.62trillion in 2022 from N2.37trillion in 2021, while total equity improved to N407.67billion in 2022 from N376.87billion in 2021.

The deposit mix moderated to 71.7per cent in 2022 from 66 per cent of current-and-savings accounts deposits to total deposits.

Mix gross earnings, operating expenses performance mark N80.81bn PBT

The Holdings performance in 2022 was marked by significant growth in gross earnings and total operating expenses to post N80.81billion profit before tax.

In 2022, the Group reported N287.533billion gross earnings, an increase of 39 per cent from N206.64billion in 2021.

Internet income stood at N152.67billion in 2022, an increase of 46 per cent from N104.75billion in 2021, while interest expenses grew by 34.6per cent to N39.55billion in the year underreview from N29.38billion reported in the corresponding year.

The increase in interest income was driven by Central Bank of Nigeria (CBN) hike in its monetary policy rate to 16.5 per cent in 2022 as the Group reported N119.96billion interest on loans and advances to customers in 2022 from N77.72billion in 2021.

This brings the group net interest income to N113.11 billion in 2022, up by 50per cent from N75.37billion in 2021.

The group’s non-interest revenue stood at N127.00 billion in 2022, representing an increase of 3333 per cent from N95.77 billion reported in 2021.

With double-digit inflation rate, the group reported N129.47billion total operating expenses in 2022 from N106.65billion in 2021, driven by N51billion staff costs in 2022 from N42.04billion in 2021 as other operating expenses hits N78.5billion in 2022 from N64.61billion in 2021.

In all, the group declared N100.35billion profit before tax in 2022, an increase of 52 per cent from N66billion in 2021 as profit after tax stood at N80.81 billion in 2022, up by 42per cent from N56.97 billion reported in 2021.

The board and management of Stanbic IBTC Holdings a final dividend of N2.00 kobo per share.

Improvement in key financial ratios

The Group’s total Capital Adequacy Ratio closed at 21.2per cent in 2022 (Bank: 16.9per cent), which is significantly higher than the 11per cent minimum regulatory requirement.

The Group maintained a strong and diversified funding base throughout 2022. The Group’s liquidity ratio closed at 85.04per cent, which is above the regulatory minimum requirement of 30per cent and indicates the Group’s sound position to continue meeting its liquidity obligations in a timely manner.

In 2022 financial year, the group closed with 2.4 per cent Non-performing loan (NPL) to total loan ratio as against 2.1per cent reported in 2021.

Despite a hike in operating expenses, Cost to income ratio dropped to 53.9per cent in 2022 from 62.3 per cent in 2021.

The group’s return on average equity stood at 20.4per cent in 2022 from 14.7 per cent in 2021, while return on average assets increased to 2.7per cent from 2.1 per cent reported in 2021. 

Remarks  

The Chief Executive Stanbic IBTC Holdings, Dr Demola Sogunle in a statement said, ““2022 was a peculiar year for us as a financial services provider within the Nigerian operating environment. Despite the volatile macro-economic indicators, coupled with   varying regulatory burdens, we made substantial progress towards achieving our set financial goals based on our guidance for the year.

“We recorded growth in our profit metrics, loans and advances, and deposits during the year. The Group’s profit after tax increased by 42per cent to N80.81billion, being the second highest PAT in the history of the organisation.

This was largely attributable to significant increase in net interest income and growth in non-interest revenue. The 50per cent YoY increase in net interest income resulted from growth in the volume and average yield on cumulative risk assets while growing our loan book.

“In addition, non-interest revenue was driven by growth in trading revenue following an improvement in trading activities as well as 9% growth in fees and commissions compared to the prior year.

“The improvement in our earnings led to an increase in our return on equity to 20.4 per cent from 14.7 per cent in 2021, well above our target range. Increased focus on our cost savings initiatives led to a moderation in our cost-to-income ratio to 53.9per cent from 62.3 per cent in 2021, which is in line with our target of at most 55per cent for the year.

“We particularly exceeded our guidance for loan growth as gross customer loans increased by 31per cent to N1.24 trillion, attaining the one-trillion-mark as we continue to support our clients in achieving their financial goals.

“The non-performing loan ratio moved up to 2.4per cent, still within the acceptable limit of five per cent, as the total non-performing loans increased YoY due to proactive recognition of increased credit risks in specific clients. We will continue to extend loans in a responsible manner and in line with our established credit risk management practices.

The increase in our loan book was funded by a 11per cent YoY growth in customer deposits. The current account to savings account ratio increased to 71.7per cent, exceeding our target of at least 70per cent due to accelerated growth in low-cost deposits.”

He added that, “We demonstrated our commitment towards promoting sustainable finance and climate action during the year as 32 bank branches and seven pension locations now run on solar powered energy solutions. We have also recycled 14 tonnes of waste papers in return for tissue papers during the year,

“We are sincerely grateful to our valuable customers, employees, investors, regulators, and other stakeholders for contributing to these achievements in 2022.”

On prediction for this year, he said, “In 2023, we will focus on our theme for the year- ‘Accelerating Growth’. We aim to accelerate growth in the areas such as digitisation, customer focused initiatives, ecosystems, and partnerships as well as value chain banking, all in a bid to deliver value to our esteemed stakeholders.”