FREE

STANBIC IBTC HOLDINGS PLC H1'18 - Another Earnings Beat Sees A Rating Revision To "HOLD"

Another earnings beat sees a rating revision to “HOLD”                                                                              

STANBIC released its H1’18 results, posting strong y/y performance following another impressive quarter. Although the run rate recorded in Q2’18 marginally lagged performance from the earlier quarter, H1’18 earnings still came in largely ahead of our estimate as PAT rose 79% y/y to ₦43.1 billion – better than our ₦36.9 billion estimate. Notably, Gross Earnings came in flat q/q at ₦57 billion as a modest 3% q/q rise in Interest Income offset a 6% moderation in Non-Interest Income. We highlight that this trend deviates from the trend we have observed across other banks in Q2’18. Amidst the sticky interest rate environment as well as negative loan growth in the industry, Interest Income has declined mildly across most banks whilst improving business activities have supported Non-Interest Income. However, STANBIC grew its loan book by 19% in Q2’18 standalone – taking ytd loan portfolio to 8% growth.                                                        

We have revised our estimates to reflect the miss across key line items. Particularly, we note that quarterly earnings run rate moderated marginally in Q2’18 following a much lower loan write back within the period vs. Q1’18. Following the strong growth observed in Q2’18, we revise our loan growth forecast for FY’18 to 10% (Previous: 0%). Hence, our Interest Income estimate is largely unchanged at ₦130 billion despite the H1’18 miss. Similarly, our Non-Interest Income is maintained at ₦108.4 billion – in line with H1’18 run rate. However, we cut our loan loss provision to a mild ₦1.3 billion – a relatively cautious stance given the ₦5.5 billion write back so far in H1’18.