Rating: Hold
Current Market Price: N44.00
Loan to Deposit Ratio: 45.31%
Non-Performing Loan Ratio: 5.16%
Year High: N44.25
Year Low: N23.50
Fair Value: N40.81
Equity Analyst: Tunde Segun Jeariogbe
Introduction
- This report observed the financial performance statistics of Stanbic IBTC Holdings Plc for the third quarter ended 30th September, 2020; compared same with the similar quarter in 2019 and establish growth accordingly.
- We also observed few valuation metrics, and achieved conservative projections using the full year performance indices, for five years prior, and projected future returns/expectations.
- We have observed that over the years, interim dividend is always higher than the final dividend. Consequently, we have followed same trend in our valuation projections. Note that we have maintained our half year valuation, giving the improvement posted in its income indices, despite the rough business period during there was lockdown across the country to curtail the spread of the novel coronavirus (COVID-19) pandemic.
- While putting this report together, we were unable to readily ascertain its exposure to sectors in the economy wherein loans may eventually go bad, occasioned by the vandalism, looting and arson suffered by various entrepreneurs in the aftermath of the shooting of EndSARS protesters at the Lekki Toll Plaza in Lagos on October 20, 2020. While we maintain our calm on this, we use the conservative nature of the group’s banking subsidiary in granting loans as our guide. That risk arising from the socio-political unrest will be factored in during its fourth quarter analysis.
- During the period under analysis, the management of Stanbic IBTC grew its key metrics considerably over the comparable period.
- See below for other financial indices comparison:
| STANBIC IBTC | |
| Bourse | Nigerian Stock Exchange |
| Code Name | STANBIC |
| Sector | FINANCIAL SERVICES |
| Market Classification | Main Board |
| Nature of Business | Financial Services |
| Date of Incorporation | March 14th 2012 |
| Date Listed | November 23rd 2012 |
| End of Accounting Year | 31st December |
| Website | www.stanbicibtcbank.com |
| Registrar | First Registrars Nigeria Limited |
| Auditor | KPMG Professional Services |
| Share Price@Relsd (N) | 44.00 |
| Earnings per Share | 5.96 |
| Intrinsic Value(N) | 40.81 |
| Share Outstanding | 11,105,997,568 |
| Market Capitalization | 488,663,892,992 |
Company figures
- Gross Earnings during the period stood at N183.28 billion, a marginal 4.05% growth ovr the N176.15 billion posted at the end of 2019 nine months.
- Of this amount, Interest Income stood at N81.95 billion, down from the N91.03 billion in 2019 third quarter.
- Interest Expenses was estimated at N25.69 billion, same as 20.61% below the reported N32.36 billion at the end of 2019 third quarter.
- Thus, Net Interest Income was estimated at N56.25 billion as against the N58.67 billion achieved last third quarter.
- Operating Expenses dropped by a marginal 1.04% below the comparable period, to N70.84 billion, as against the previous N71.59 billion.
- Profit before Tax stood at N76.85 billion same as 11.22% above the N69.10 billion posted last third quarter.
- Having considered the Tax Expense for the period, a total of N66.16 billion was reported as Profit for the period, which is 19.10% above the N55.55 billion earned at the end of the first nine months in 2019.
- Total Comprehensive Income for the period stood at N74.80 billion as against N57.59 billion in the comparable period of 2019.
| STANBIC IBTC | |||
| Statement of Comprehensive Income | |||
| 2020 | 2019 | %CHG | |
| GROSS EARNINGS | 183,286,000,000 | 176,157,000,000 | 4.05 |
| INTEREST INCOME | 81,953,000,000 | 91,038,000,000 | 9.98 |
| INTEREST EXPENSES | 25,696,000,000 | 32,366,000,000 | 20.61 |
| NET INTEREST INCOME | 56,257,000,000 | 58,672,000,000 | 4.12 |
| OPEX | 70,847,000,000 | 71,593,000,000 | 1.04 |
| DEPRECIATION | 5,297,000,000 | 4,820,000,000 | 9.90 |
| AMORTISATION | 501,000,000 | 82,000,000 | 510.98 |
| PBT | 76,865,000,000 | 69,108,000,000 | 11.22 |
| TAX | 10,702,000,000 | 13,556,000,000 | 21.05 |
| PAT | 66,163,000,000 | 55,552,000,000 | 19.10 |
| TOTAL COMP INCOME | 74,804,000,000 | 57,597,000,000 | 29.87 |
| Statement of Financial Position | |||
| Total Assets | 2,578,513,000,000 | 1,832,942,000,000 | 40.68 |
| Total Liabilities | 2,212,753,000,000 | 1,540,732,000,000 | 43.62 |
| Net Assets | 365,760,000,000 | 292,210,000,000 | 25.17 |
| Propertiy Plan & Equipments | 30,691,000,000 | 27,055,000,000 | 13.44 |
| Reserve | 250,373,000,000 | 194,645,000,000 | 28.63 |
| Total Deposits | 1,263,484,000,000 | 1,002,492,000,000 | 26.03 |
| Total Loans and Advances | 596,718,000,000 | 556,383,000,000 | 7.25 |
| STAGE3 ECL | 30,784,000,000 | 21,594,000,000 | 42.56 |
- Total Assets is currently valued at N2.57 trillion, same as 40.68% above the N1.83 trillion valuation in the preceding nine months.
- Similarly, due to improved deposit base, Total Liabilities was N2.21 trillion, up from N1.54 trillion in 2019 third quarter.
- Net Assets is therefore estimated at N365.76 billion, 25.17% above the N292.21 billion estimated in the corresponding period of 2019.
- The reserves level maintained positive growth of 28.63% at N250.37 billion, as against N194.64 billion in the comparable quarter.
- Total Deposit achieved at the end of the period is valued at N1.26 trillion, higher than the N1.00 trillion deposit reported in the corresponding quarter of 2019.
- Total Loans and Advances (Stage1-3 ESL Inclusive) stood at N596.71 billion, compared to the previous N556.38 billion reported in similar period of 2019.
Financial Strength/Solvency Ratios
- Debt Ratio is estimated at 85.82% as against 84.06% in the corresponding period of 2019. In other words, the Total Liability Value reported at the end of the period is currently 85.82% of Total Assets Valuation.
- Total Debt to Equity for the quarter stood at 604.97% that is Debt can Replicate Equity 6.05 times up from 5.27 times in the comparable period of last year.
- Equity Ratio which compares Equity to Total Assets stood at 14.18%, lower than the 15.94% in the corresponding period.
- Estimated Beta value for Stanbic IBTC Bank as at the time this report was compiled stood at 1.09, above market beta even if it came the below comparable period’s estimate of 1.11
- Non-Performing Loan ratio at the end of the quarter is estimated at 5.16%, which is a significant growth from the 3.88% estimate at the end of the comparable period.
| Financial Strength/Solvency Ratio | |||
| TICKERS | 2020 | 2019 | %CHG |
| Debt Ratio | 85.82% | 84.06% | 2.09 |
| Total Debt to Equity Ratio (MRQ) | 604.97% | 527.27% | 14.74 |
| Equity Ratio | 14.18% | 15.94% | 11.02 |
| Beta Value | 1.09 | 1.11 | 1.80 |
| Non-Performing Loan Ratio | 5.16% | 3.88% | 32.92 |
Profitability Ratios
- Pre-Tax Margin improved by 6.90% to 41.94% against the 39.23% estimated at the end of 2019 nine months business session
- Interest Expenses to Gross Earnings dropped by 23.70% to 14.02%, as against the previously estimated 18.37%.
- Return on Average Equity through the first nine months of 2020 is outstanding at 18.09%, though lower than the 19.01% in the corresponding quarter.
- See below table for detailed profitability ratios and comparison.
| PROFITABILITY RATIOS | |||
| TICKERS | 2020 | 2019 | %CHG |
| PRE-TAX MARGIN | 41.94% | 39.23% | 6.90 |
| EFFECTIVE TAX RATE | 13.92% | 19.62% | 29.02 |
| IE TO GE | 14.02% | 18.37% | 23.70 |
| ROAE | 18.09% | 19.01% | 4.85 |
| ROAA | 2.57% | 3.03% | 15.34 |
Efficiency Ratios
- Operating Expenses figure posted at the end of the period is estimated at 38.65% of the reported Gross Earning, this is below the 40.64% achieved in 2019 nine months financials.
- Gross Earnings estimated from the bank financials is same as 7.11% of the Total Assets value posted for the period under analysis.
- Total Loan and Advances posted for the quarter is 45.31% of Total Deposit, this is 16.26% downward adjustment over the 54.11% achieved in 2019. Note that this is below the regulatory standard for Nigerian banks.
| EFFICIENCY RATIOS | |||
| TICKERS | 2020 | 2019 | |
| OPEX TO GE | 38.65% | 40.64% | 4.89 |
| GE TO TA | 7.11% | 9.61% | 26.04 |
| LDR | 45.31% | 54.11% | 16.26 |
| Capex/Share | 0.85 | 1.01 | 15.66 |
Investment/Valuation Ratios
- The profit earned per each units of Stanbic IBTC Bank shares is estimated at N5.96, 12.32% above the N5.30 earned in similar quarter of 2019.
- Total Comprehensive Income per share is estimated at N6.74, this is 22.48% above the N5.50 achieved in 2019.
- Adjusted P/E-Ratio for nine months increased to 2.46x from 2.33x, this is an encouraging ratio and attractive for investments
- The said earnings per share is a yielded 13.54% of the price of each units of
Stanbic IBTC’s shares on the floor of the exchange on the day the result was unveiled. - Estimated value of each unit of Stanbic IBTC shares in its book is N32.93, this is 18.04% improvement over the previous estimate of N27.90
- 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 that stood above unity
| STANBIC IBTC | |||
| Investment/Valuation Ratios | |||
| Tickers | 2020 | 2019 | %Chg |
| EPS | 5.96 | 5.30 | 12.32 |
| TCIP/SHARE | 6.74 | 5.50 | 22.48 |
| P/E-Ratio | 2.46 | 2.33 | 5.88 |
| Earnings Yield | 13.54% | 14.34% | 5.55 |
| BV/Share | 32.93 | 27.90 | 18.04 |
| PBV | 1.34 | 1.33 | 0.74 |
Valuation
Exploring our blend of valuation tools, we conservatively valued each unit of Stanbic IBTC Holdings 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 rated Stanbic IBTC shares a Hold.
