STANBIC IBTC HOLDINGS PLC H1'23 - Outsized growth driven by trading revenue
| STANBIC recorded an impressive growth in Q2’23. The banking group posted a 68% y/y increase in Gross Earnings to ₦113.8 billion, above our estimate of ₦86 billion. This came as the result of a 70% y/y increase in Interest Income to ₦60 billion (Vetiva: ₦53 billion), as the bank’s yield on assets improved to 8.3% from 6.5% in H1’22, while its balance sheet has grown 47% since December 2022. Meanwhile, Non-Interest Revenue (NIR) also supported growth, with the bank reporting a 77% y/y improvement to ₦54 billion in Q2’23; this was driven by significant improvements in trading revenue, specifically fixed income, and FX revaluation gains, which more than tripled y/y to ₦26 billion in Q2’23 amid higher Fixed Income yields and Naira devaluation, and a 13% y/y growth in Net fees and commissions revenue to ₦27 billion. | |||||
| 2023 performance strengthened. In the second half of 2023, STANBIC is poised to outperform the same period in the previous year. Due to the growth in its loan book and deposits, which are expected to grow by 58% and 70% y/y in FY’23, we project that interest income and expense will grow by 58% and 65% to ₦240 billion and ₦65 billion respectively, resulting in a net interest income of ₦175 billion (FY’22: ₦113 billion). |
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| Notably, with the bank’s NIR coming in higher than expected, we project that this line item would grow by 49% y/y to ₦190 billion, driven by trading revenue from fixed income and FX revaluation gains. On the other hand, we expect operating costs to rise by 33% y/y to ₦172 billion in FY’23. Finally, we increased our FY’23 PBT and PAT projections to ₦178 billion and ₦141 billion respectively. |
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