Report
Joshua Odebisi ...
  • Vetiva Research

STANBIC IBTC HOLDINGS PLC H1'22 Earnings Release - Profits soar 36% y/y on impressive earnings growth

PBT grows 11% y/y amid increased impairments                                                

In its recently released H1’22 financials, ZENITHBANK saw Gross Earnings rise by 17% y/y to ₦404.8 billion, 2% above our estimate of ₦397.4 billion. The improved earnings came about after Interest Income grew 19% y/y to ₦241.7 billion (Vetiva: ₦252.7 billion), thanks to a 21% y/y increase in receipts from loans and advances. Meanwhile, Non-Interest Revenue (NIR) grew 18% y/y to ₦148.9 billion (Vetiva: ₦128.7 billion), after a 44% rise in trading income, specifically from T-bills.  

 

Conversely, the bank’s Interest Expense went up 30% y/y to ₦56.9 billion (Vetiva: ₦52.9 billion), as the bank reported higher payments on all account types as well as borrowings. Margin-wise, we estimate that Cost of Funds (CoF) advanced 10bps y/y to 1.4%, while Net Interest Margin (NIM) grew 70bps to 7.1%.

 

On the cost side, Impairment charges rose 27% y/y to ₦25.1 billion, while Opex grew by 19% y/y to ₦178.6 billion; this was driven by a 16% increase in AMCON charges. Overall, the bank posted an 11% increase in PBT to ₦130 billion, while bottom line grew by a more modest 5% y/y to ₦111.4 billion.

                                                           

Higher MPR, savings costs to dampen NIMs in H2

The hikes in MPR, the first of which came at the end of Q2, had a general impact on ZENITHBANK’s cost of funds. Net Interest Income was 8% below our initial expectation specifically because of higher fees paid out to customers for their deposits, which grew 11% YTD. Despite this, the consistent asset yield on an expanded loan book (+23% y/y) meant that NIMs grew during the period. However, with the implementation of a new minimum saving rate of 30% of MPR (4.2%) and the likelihood of further MPR hikes in coming months, we anticipate a decline in NIMs by the end of the year, albeit slightly offset by higher interest on loans and advances.                                                           

Underlying
Stanbic IBTC Holding Co

Provider
Vetiva Capital Management
Vetiva Capital Management

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Analysts
Joshua Odebisi

Vetiva Research

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