Stanbic IBTC 2020Q3: All Good, But For Rising OPEX, LDR Deficit, Bad Loans Ratio

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 AnalystTunde Segun Jeariogbe


  • 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:
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)                                                       44.00
Earnings per Share                                                         5.96
Intrinsic Value(N)                                                       40.81
Share Outstanding11,105,997,568
Market Capitalization                                     488,663,892,992
Source: INVESTDATA Research, NSE, Company data

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.
Statement of Comprehensive Income
GROSS EARNINGS               183,286,000,000           176,157,000,0004.05
INTEREST INCOME                 81,953,000,000              91,038,000,0009.98
INTEREST EXPENSES                 25,696,000,000              32,366,000,00020.61
NET INTEREST INCOME                 56,257,000,000              58,672,000,0004.12
OPEX                 70,847,000,000              71,593,000,0001.04
DEPRECIATION                    5,297,000,000                4,820,000,0009.90
AMORTISATION                       501,000,000                      82,000,000510.98
PBT                 76,865,000,000              69,108,000,00011.22
TAX                 10,702,000,000              13,556,000,00021.05
PAT                 66,163,000,000              55,552,000,00019.10
TOTAL COMP INCOME                 74,804,000,000              57,597,000,00029.87
Statement of Financial Position
Total Assets           2,578,513,000,000        1,832,942,000,00040.68
Total Liabilities           2,212,753,000,000        1,540,732,000,00043.62
Net Assets               365,760,000,000           292,210,000,00025.17
Propertiy Plan & Equipments                 30,691,000,000              27,055,000,00013.44
Reserve               250,373,000,000           194,645,000,00028.63
Total Deposits           1,263,484,000,000        1,002,492,000,00026.03
Total Loans and Advances               596,718,000,000           556,383,000,0007.25
STAGE3 ECL                 30,784,000,000              21,594,000,00042.56
Source: INVESTDATA Research, NSE, Company data
  • 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
Debt Ratio85.82%84.06%2.09
Total Debt to Equity Ratio (MRQ)604.97%527.27%14.74
Equity Ratio14.18%15.94%11.02
Beta Value                                       1.09                                   1.111.80
Non-Performing Loan Ratio5.16%3.88%32.92
Source: INVESTDATA Research, NSE, Company data

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.
PRE-TAX MARGIN41.94%39.23%6.90
EFFECTIVE TAX RATE13.92%19.62%29.02
IE TO GE14.02%18.37%23.70

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.
OPEX TO GE38.65%40.64%4.89
GE TO TA7.11%9.61%26.04
Capex/Share                                       0.85                                   1.0115.66

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
Investment/Valuation Ratios
Earnings Yield13.54%14.34%5.55
Source: INVESTDATA Research, NSE, Company data


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.