Stanbic Holdings Plc FY18 Earnings Update
Stanbic Holdings Plc (NSE: CFC) released FY18 financial results reporting a 45.7% increase in EPS to KES 15.88 in line with expectations. The performance was buoyed by Non-interest Revenue (NIR) that grew 18.3% y/y to KES 9.96Bn, coupled with Net Interest Income (NII) that grew 14.0% y/y to KES 12.13Bn. Operating expenses were kept in check (1.7% y/y) while credit impairment charges declined 25.2 y/y to KES 2.06Bn. The balance sheet grew 16.8% y/y driven primarily by the loan book which rose 8.7% y/y as the bank continued to lend, amidst the tightening of price controls. A total dividend of KES 5.80 was declared, representing a 10.5% increase from FY17, against our expectations of a 19.0% growth, with management citing a prudent approach on account of the IFRS 9 transition. We are currently reviewing our banking sector coverage and valuation.
Our View: We highlight the bank’s diversified business strategy, with a 45.1% NIR contribution - the highest in the sector (Management cited accelerated growth in local currency accounts in PBB segment, hence diversification from the corporate book is expected to complement NIR diversification). Further, the emphasis on operational efficiency, coupled with strong balance sheet growth, should serve as key growth drivers for the bank going forward. We are currently reviewing our banking sector coverage and valuation.
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