STANBIC IBTC HOLDINGS PLC FY'19 (Unaudited) Earnings - Bank records modest y/y improvements
Net Interest Income remains flat y/y
STANBIC released its unaudited FY’19 earnings, posting a 6% y/y increase in Gross Earnings to ₦233.8 billion. Interest Income improved 2% y/y to ₦120.4 billion, mainly on the back of growth in average volume of loans and a favourable interest rate environment. However, Interest Expense increased 6% y/y to ₦42.6 billion, leading to Net Interest Income of ₦77.8 billion, flat y/y. Meanwhile, Non-Interest Income grew 11% y/y to ₦113.4 billion (Vetiva estimate: ₦108.2 billion), thanks to a 16% y/y growth in trading income. Conversely, the bank recorded a ₦1.6 billion loan-loss provision, a reversal from the from ₦2.9 billion in write-backs from FY’18. On a more positive note, the bank posted a 2% y/y decline in OPEX to ₦94.0 billion, in line with our estimate, thanks to a 6% decline in personnel expenses to ₦40.6 billion. Looking forward, we expect the bank to maintain its modest OPEX growth, with the largest effect likely to come as a result of inflation and regulatory charges. Overall, the bank’s PBT improved 3% y/y to ₦90.9 billion (Vetiva Estimate: ₦86.2 billion), while PAT was only 1% higher y/y at ₦75.0 billion (Vetiva Estimate: ₦72.7 billion).
Earnings remain flat q/q, Loan-book shrinks marginally
In the fourth quarter alone, the bank recorded a 2% q/q decline in Gross Earnings to ₦57.7 billion (Vetiva estimate: ₦57.1 billion). This was a result of the 3% decline in Interest Income to ₦29.4 billion (Vetiva Estimate: ₦29.9 billion), while Non-Interest Income remained flat q/q at ₦28.3 billon. As expected, OPEX came in higher q/q at ₦22.4 billion (albeit lower than Q1 and Q2 figures). This was as a result of a ₦1.9 billion increase in IT expenses during the period. Meanwhile, the bank’s loan-book shrank 1% q/q to ₦535.2 billion, but the bank still recorded a 21.3% y/y growth in total loans, a result of the CBN’s minimum LDR requirement. Overall, total deposits declined 12% q/q to ₦886.7 billion, giving the bank an estimated LDR of 62.7% as of FY’19, slightly lower than the 9M
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