STANBIC ITBC HOLDINGS PLC FY'21 (Unaudited) Earnings Release - Profits dip 30% y/y amid weaker Non-Interest Revenues

Profits dip 30% y/y amid weaker Non-Interest Revenues                                              

STANBIC recently released its (Unaudited) FY’21 earnings, reporting a 12% y/y decline in Gross Earnings to ₦205.9 billion. Although Interest Income declined by only 1% y/y to ₦104.7 billion, the bank’s Non-Interest Revenue fell 21% y/y to ₦101 billion, dragged by a 74% drop in trading revenue. Interestingly, the bank’s Q4 performance was consistent with prior years; gross earnings for the period came in at ₦59.7 billion, 17% higher y/y. This was also a result of higher interest income, as the bank’s income from loans and advances grew 27%, thanks to a 48% expansion in the bank’s loan book. This supported the weak NIR growth reported by the bank due to reduced trading activity and unspectacular transaction volumes.  

On the other hand, the bank managed to report net writebacks of ₦1.2 billion for the year, although provisions for Q4 were negative at ₦190 million. Meanwhile, the group’s Opex grew 14% y/y to ₦111.8 billion amid a 31% y/y jump in AMCON charges. Ultimately, this led to a 30% y/y drop in PBT to ₦66.0 billion, while PAT came in at ₦56.9 billion 32% lower y/y. "                                   

FY’22 estimates revised

Stanbic’s FY’21 performance came in slightly ahead of our estimates, with Gross earnings 6% ahead of our forecast of ₦195.2 billion, thanks to Interest Income of ₦104 billion (Vetiva: ₦97.5 billion) and NIR of ₦101 billion (Vetiva: ₦97.8 billion).

Based on this, we have adjusted our FY’22 estimates, raising Interest Income to ₦116.1 billion (Previous: ₦102.9 billion), but also raising Interest Expense to ₦33.9 billion (Previous: ₦29.5 billion), giving us a new Net Interest Income figure of ₦82.2 billion (Previous: ₦73.4 billion). Conversely, we retain our NIR forecast of ₦104 billion, while raising our net writebacks estimate to ₦1.9 billion (Previous, ₦1.8 billion). Finally, we raised our FY Opex expense to ₦111.9 billion (Previous: ₦103.6 billion). This gives us a new PBT projection of ₦80.0 billion (Previous: ₦75.8 billion) and PAT of ₦69.0 billion (Previous: ₦66.6 billion).