Stanbic IBTC 2020H1: When Keeping Tab On Loan-Deposit Ratio Is Key

Rating: Hold

Current Market Price: N39.10
Loan to Deposit Ratio: 47.54%
Year High: N42.50
Year Low: N23.50
Fair Value: N40.81
Equity AnalystTunde Segun Jeariogbe


  • This report observed the performance statistics of Stanbic IBTC Holdings Plc for the half-year ended 30th June 2020, compared the same with a similar quarter in 2019, and established growth trends accordingly.
  • We also observed a few valuation metrics and achieved conservative projections using the full-year performance indices over the past few years.
  • We have observed that over the years, the interim dividend payment is always higher than the final payout, and so, we have followed the same trend in our valuation projections.
  • During the period under review, the management of Stanbic IBTC grew its key metrics averagely.
  • See below for other comparisons:
BourseNigerian Stock Exchange
Market ClassificationMain Board
Nature of BusinessFinancial Services
Date of IncorporationMarch 14th 2012
Date ListedNovember 23rd 2012
End of Accounting Year31st December
RegistrarFirst Registrars Nigeria Limited
AuditorKPMG Professional Services
Share Price@Relsd (N)                                                       37.50
Earnings per Share                                                         4.30
Intrinsic Value(N)                                                       40.81
Share Outstanding10,504,967,358
Market Capitalisation                                     393,936,275,925

Source: NSE, Company Report and Investdata Research

Company figures

  • Gross Earnings for the period stood at N126.57 billion, a marginal 7.83% growth above the N117.37 billion posted at the end of the 2019 half-year.
  • Interest Income stood at N55.13 billion, as against the N60.84 billion reported in 2019.
  • Interest Expenses was estimated at N17.58 billion, same as 18.13% below the reported N21.47 billion at the end of the 2019 second quarter.
  • Net Interest Income was estimated at N37.54 billion, as against the N39.31 billion achieved in the previous half-year.
  • Operating Expenses dropped by a marginal 3.06% below that of the comparable period, to N48.53 billion from N50.06 billion.
  • Profit before Tax stood at N52.40 billion same as 17.37% above the N44.65 billion posted prior half-year.
  • Having considered the Tax Expense for the period, a total of N45.20 billion was reported as Profit for the period, which is 24.72% above the N36.24 billion earned at the end of the first six months in 2019.
  • Total Comprehensive Income for the period stood at N56.02 billion, as against N40.91 billion in the comparable period of 2019.
Statement of Comprehensive Income
GROSS EARNINGS               126,570,000,000           117,374,000,0007.83
INTEREST INCOME                 55,130,000,000              60,784,000,0009.30
INTEREST EXPENSES                 17,581,000,000              21,474,000,00018.13
NET INTEREST INCOME                 37,549,000,000              39,310,000,0004.48
OPEX                 48,535,000,000              50,069,000,0003.06
DEPRECIATION                    2,808,000,000                2,278,000,00023.27
PBT                 52,406,000,000              44,650,000,00017.37
TAX                    7,202,000,000                8,405,000,00014.31
PAT                 45,204,000,000              36,245,000,00024.72
TOTAL COMP INCOME                 56,025,000,000              40,910,000,00036.95
Statement of Financial Position
Total Assets           3,022,277,000,000        1,619,278,000,00086.64
Total Liabilities           2,685,754,000,000        1,354,874,000,00098.23
Net Assets               336,523,000,000           264,404,000,00027.28
Property Plan &Equipment                 29,434,000,000              25,608,000,00014.94
Reserve               236,621,000,000           178,519,000,00032.55
Total Deposits           1,218,938,000,000           822,480,000,00048.20
Total Loans and Advances               579,481,000,000           470,898,000,00023.06
Source: NSE, Company Report and Investdata Research
  • Total Assets is valued at N3.02 trillion, 86.64% above the N1.61 trillion valuation in the corresponding period.
  • Similarly, due to the improvement in deposit base, Total Liabilities posted for the period was N2.68 trillion, as against N1.35 trillion in the 2019 second quarter.
  • Net Assets is therefore estimated at N336.52 billion, 27.28% above the N264.40 billion estimated in the corresponding period of 2019.
  • Reserves recorded 32% growth to N236.62 billion, from N178.51 billion in the comparable quarter.
  • Total Deposit achieved at the end of the period stood at N1.21 trillion, higher than the N822.48 billion reported in the corresponding quarter of 2019.
  • Total Loans and Advances stood at N579.48 billion, as against the N470.89 billion reported in similar period of 2019.

Financial Strength/Solvency Ratios

  • Debt Ratio is estimated at 88.87%, as against 83.67% in the corresponding period of 2019. In other words, Total Liability Value is 88.87% of Total Assets.
  • Total Debt to Equity for the quarter stood at 798.09%. This means Debt can Replicate Equity 7.98 times, as against 5.12 times in the comparable period.
  • Equity Ratio which compared Equity to Total Assets stood at 11.13%, lower than the 16.33% in the corresponding period.
  • Estimated Beta value for Stanbic IBTC Bank as of the time this report was compiled stood at 1.11, which is above market beta, but below the industry average of 1.15.
Financial Strength/Solvency Ratio
Debt Ratio88.87%83.67%6.21
Total Debt to Equity Ratio (MRQ)798.09%512.43%55.75
Equity Ratio11.13%16.33%31.81
Beta Value                                       1.11                                   1.153.48
Source: NSE, Company Report and Investdata Research

Profitability Ratios

  • Pre-Tax Margin improved by 8.84% to 41.40%, compared to the 38.04% estimated for the end of the 2019 six-month period.
  • Interest Expenses to Gross Earnings dropped by 24.08% to 13.89%, as against the previously estimated 18.30%.
  • Return on Average Equity through the first six months of 2020 is 13.43%, from 13.71% estimated from the 2019 numbers.
  • See the table below for detailed profitability ratios and comparison:
PRE-TAX MARGIN41.40%38.04%8.84
EFFECTIVE TAX RATE13.74%18.82%26.99
IE TO GE13.89%18.30%24.08
Source: NSE, Company Report and Investdata Research

Efficiency Ratios

  • Operating Expenses posted at the end of the period is estimated at 38.35% of the estimated Gross Earning, below the 42.66% achieved in the first six months of 2019.
  • Gross Earnings estimated from the group’s financials is same as 4.19%of the Total Assets value posted for the period under analysis.
  • Total Loan and Advances posted for the quarter is 47.54% of Total Deposit, which is a 16.97% downward adjustment over the 57.25% achieved in 2019. Please note that this is below the 65% regulatory standard set for Nigerian banks.
OPEX TO GE38.35%42.66%10.11
GE TO TA4.19%7.25%42.22
Capex/Share                                       0.63                                   0.605.93
Source: NSE, Company Report and Investdata Research

Investment/Valuation Ratios

  • The profit earned per unit of Stanbic IBTC Holding is estimated at N4.30, 21.58% above the N3.54 earned in similar quarter of 2019.
  • Total Comprehensive Income per share is estimated at N5.33, 33.50% above the N3.99 achieved last year.
  • Adjusted P/E-Ratio for six months dropped to 2.18x from 2.47x, an encouraging ratio which makes it an attractive investment.
  • The said earnings per share yielded 11.47% of the price of each units of
    Stanbic IBTC shares on the exchange on the day the result was unveiled to investors.
  • Estimated value of each unit of Stanbic IBTC shares in its book is N32.03, representing a 24.07% improvement over the previous estimate of N25.82 per share.
  • Confirming the academic over-priced stand of Stanbic IBTC Bank’s shares on the floor of the exchange is the Price to Book Value estimate at above unity.
Investment/Valuation Ratios
Earnings Yield11.47%10.11%13.47
Source: NSE, Company Report and Investdata Research


Exploring our blend of valuation tools, we have conservatively valued each unit of Stanbic IBTC Bank at N40.81. Thus, considering the mild difference between our intrinsic value and the current market price as at the time this analysis was compiled, we have rated Stanbic IBTC shares a Hold.