reports
- Vetiva Research
STANBIC IBTC HOLDINGS PLC H1'23 - Outsized growth driven by trading re...
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 improv...
Stanbic Ibtc Holdings Plc: 1 director
A director at Stanbic Ibtc Holdings Plc sold 615,812 shares at 63.210NGN and the significance rating of the trade was 53/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the last two ye...
- Joshua Odebisi
STANBIC IBTC HOLDINGS PLC FY'22 (Unaudited) Earnings Release - Recover...
STANBIC’s unaudited FY’22 results were impressive. The banking group posted a 39% y/y increase in Gross Earnings to ₦288 billion, above our estimate of ₦271 billion. This came as the result of a 46% y/y increase in Interest Income to ₦153 billion (Vetiva: ₦141 billion), as the bank’s yield on assets improved to 7.1% from 5.7% in FY’21, while its balance sheet grew 11% y/y. Meanwhile, Non-Interest Revenue (NIR) also supported growth, with the bank reporting a 33% y/y improvement to ₦127 bil...
- Joshua Odebisi
- Vetiva Research
STANBIC IBTC HOLDINGS PLC H1'22 Earnings Release - Profits soar 36% y/...
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: ...
- Busola Jeje
Nigeria Banks in 2022: Neither the best nor worst of times
In this report, we highlight four key trends that will shape Nigeria’s banking sector in 2022. We also roll our models forward to 2026 and make changes to our valuation inputs, by raising our cost of equity to better reflect higher interest rates compared to 2020 and the appropriate risk premium for Nigerian equities. Overall, we expect our coverage to deliver an average ROE of 14.5% in 2022, vs 14.8% previously. The marginal drop in our forecast is based on slower expected growth in margins,...
- Joshua Odebisi
- Vetiva Research
STANBIC ITBC HOLDINGS PLC FY'21 (Unaudited) Earnings Release - Profits...
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...
- Busola Jeje
Nigerian banks are pushing into fintech and digitalisation to survive
Nigeria's banks face three main headwinds in 2022: 1) continued regulatory hurdles; 2) declining profitability; and 3) the growing threat of fintechs and telcos. The banks that succeed will be those that can amend their strategy and adapt to the new environment. In this report, we highlight two banks – Stanbic IBTC and Standard Chartered – that have done just that, moving to embrace financial technology and digitalisation. STANBIC IBTC BUILDING ITS OWN FINTECH The diversified financial holdin...
- Joshua Odebisi
- Vetiva Research
STANBIC IBTC HOLDINGS PLC 9M'21 Earnings Release - Improvements In Q3 ...
Improvements in Q3 moderate y/y profit slide Improvements in Q3 moderate y/y profit slide STANBIC released its 9M’21 earnings last week, reporting a 40% y/y decline in Gross Earnings to ₦94 billion. However, Q3 performance was an improvement, with Gross Earnings growing 10% q/q to ₦53 billion thanks to a 24% q/q increase in Interest Income (II) to ₦29 billion, although this was matched by a similar increase in Interest Expense to ₦8 billion. This means that Net Interest Income (NII) came in 24% ...
- Busola Jeje
Stanbic IBTC: Q3 21 profit drop in line with expectation; trading reve...
Q3 21 earnings season for Nigeria Banks has kicked off, with Stanbic IBTC being the first in our coverage to report its results. The diversified holding company's Q3 21 profits were in line with our expectation, as net attributable profit fell 18% yoy to NGN16.7bn, close to our estimate of NGN16.5bn. The major driver of the earnings drop remained the same as the previous two quarters, as Stanbic IBTC’s trading revenue fell 65% yoy, which management attributed to lower fixed income and FX mark...
- Busola Jeje
Stanbic IBTC: Q2 21 – earnings continue to falter; we cut our target p...
Stanbic IBTC’s Q2 21 profit numbers were significantly weaker than expected, even after the weak Q1. Net attributable profit fell 56% yoy, compared with our expectation of an 11% yoy increase. A bulk of the drag in profits was the result of lower trading revenue (similar to Q1 21), which fell 89% yoy (down 30% qoq). In its call, management attributed the negative performance to the lower money market and fixed income trading activities during the quarter, limited FX flows (given the challenge...
- Joshua Odebisi
- Vetiva Research
STANBIC IBTC HOLDINGS PLC H1'21 Earnings Release - Profits down 50% y/...
STANBIC released its H1’21 earnings yesterday, reporting a 26% y/y decline in Gross Earnings to ₦94 billion. As in Q1, earnings remained depressed y/y, caused by weaker yield on assets. Although, Interest Income grew by 7% q/q to ₦17 billion, it was 12% lower for the H1 period in comparison to 2020. Once again, this was due to lower income from investment securities, which remained flat q/q and came in 55% lower y/y. On the other hand, Interest Expense went up 20% q/q to ₦6 billion but was still...
- Busola Jeje
Nigeria banks intensify search for new growth engines
We previously wrote on how Nigeria banks are pursuing holding company structures (holdcos), to access new markets where they have strong competitive advantages. There have also been push factors, such as the regulatory difficulties associated with traditional banking (especially the punitive cash reserve ratio (CRR) debits), compressed margins and the growing threat from fintechs. Additionally, the holdco structure has the advantage of keeping bank CEOs around for longer when their mandatory ...
- Busola Jeje
Nigeria banks' asset-quality risks recede
The Nigerian banking system was able to avoid widespread deterioration in asset quality – a key concern for investors apart from rising interest rates – due to the CBN’s forbearance measures. Although Covid-induced moratoriums have now expired, continued regulatory support, pick-up in economic activity and extended forbearance on intervention loans are likely to keep NPL ratios from rising substantially. Rising crude oil prices are also positive for oil and gas loans, which form a huge portio...
- Busola Jeje
How Nigeria banks will thrive in the face of rising rates
Nigeria’s macroeconomic picture remains bleak, with high inflation and unemployment, sub-par real GDP growth and a weakened local currency. These issues, alongside a difficult regulatory environment, have had negative implications on banks, as well as their heavily discounted valuation. In this report, we look at how the rising rate environment is a double-edged sword for Nigeria banks, as it provides the opportunity to expand NIMs, but minimises room to book large trading gains. This is part...
- Busola Jeje
Stanbic IBTC: Q1 21 results – A weak start to the year; reiterate Hold
Stanbic IBTC recently reported its Q1 21 results, showing a large decline in profitability, as a result of lower trading revenues and interest income. Asset quality trends were more positive, as cost of risk and NPL ratio reduced, while the bank expanded its loan book during the quarter. Despite the weak Q1 21 results, Stanbic IBTC remains one of the top tier banks in our coverage attracting a premium valuation, mainly because of its diversified revenue streams and relatively strong capital r...
- Busola Jeje
Stanbic IBTC: Management call takeaways – Larger risk asset growth exp...
Following the release of its FY 20 results, Stanbic IBTC recently held an investor call, where the group discussed the year and presented its guidance for FY 21. The group declared a milestone final dividend of NGN3.6/share (compared to NGN2.0/share in FY 19) and a stock dividend of one new share for every six shares held by shareholders. In this report we highlight key takeaways from the call as well as our views on management’s guidance. We maintain our 12M TP of NGN53.6 but downgrade the s...
- Busola Jeje
- Rahul Shah
Stanbic IBTC: FY 20 – Lower taxes and trading gains support profit gro...
Stanbic IBTC is one of the most diverse, profitable and strongly capitalised Nigeria banks, with solid long-term cross-selling prospects justifying its premium valuation. Its FY 20 results benefitted from lower taxes, higher trading revenue and flat operating costs, leading to an 11% yoy growth in net attributable profit and 9% above our estimate. We still have a Buy recommendation on Stanbic IBTC, but update our forecasts following these results. We raise our medium-term earnings estimates ...
- Busola Jeje
- Rahul Shah
Nigeria Banks: Q4 20 preview – top factors to shape performance
2020 was a challenging year for Nigeria banks, as a mixture of a harsher regulatory climate, weak economic prospects, and an ultra-low interest rate environment weighed on financial performance. As Q4 20 earnings season (as well as FY 20) draws closer, we highlight the top factors likely to shape the numbers: 1) THE LOW YIELD ENVIRONMENT A direct outcome of the Central Bank of Nigeria (CBN)'s expansionary policy actions has been the downward pressure in net interest margins, which will be ref...
- Busola Jeje
- Rahul Shah
Nigeria Banks: FY 20 preview – Navigating the lower yield environment
In this report, we present our general expectations for Nigeria banks in Q4 20, as well as key trends noted in the Q3 20 earnings season. KEY EXPECTATIONS FOR Q4 20 PERFORMANCE Net interest margins will remain pressured: In line with the low yield environment and the CBN’s expansionary policies, NIMs in Q4 20 will remain pressured like Q3 20, when only one bank in our coverage (Access) recorded an increase in NIM. Although, the effect of the reduction in rates on savings deposits in September...
- Busola Jeje
- Rahul Shah
Stanbic IBTC: Q3 20 net profit improves yoy, but devil is in the detai...
Stanbic IBTC is one of the most profitable and strongly-capitalised Nigeria banks, with solid long-term cross-selling and digital banking growth prospects justifying its premium valuation. The Q3 20 results benefitted from lower taxes, higher fees and lower risk costs, which offset lower margins and higher operating costs. We reiterate Buy with a target price at NGN48. Stanbic IBTC’s Q3 20 net attributable profit was up 9% yoy (down 15% qoq) at NGN20.4bn, supported by a large decrease in taxe...
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