Stanbic IBTC Half-Year Profit Down 15.87%, On Weak Earnings Growth Offers N1.00 Dividend

The board of Stanbic IBTC Holdings Plc published its 2019 half-year earnings report on Wednesday, with numbers just in line with those of its industry peers presented much earlier to the Nigerian Stock Exchange (NSE). Highlights of the report included weak earnings income and a struggle to keep operating costs at bay, following which profit before and after-tax slowed down. There was also a significant drop in net impairment reversal on financial instruments from N5.508bn in the corresponding period of 2018 to just N557m.
Nonetheless, the board, however, recommended a N10.241bn payout, compared to N10.114bn in 2018, translating to N1 dividend per share, just like last year. It is payable to shareholders whose names are on the register as at end of Wednesday, September 4, 2019, while closing date is September 5 to 11, 2019 and payment billed for October 3, 2019.
In line with the resolution at the Extra Ordinary General Meeting held on August 6, 2015, “shareholders will have the option of electing to receive their interim dividends by way of new ordinary shares scrip dividend. On the payment date, shareholders who do not wish to receive their interim dividend by way of scrip dividend will have their
cash interim dividend paid to their accounts electronically.
Gross earnings for the period limped to N117.374bn from N114.207bn; out of which interest income stood at N60.784bn from N59.924bn, the bulk of which was interest on customer loans and advances of N31.389bn, up from N30.604bn; followed by interest on investments of N27.56bn, as against the previous N27.543bn; while interest on loans and advances to banks stayed flat at N1.835bn from N1.777bn. Interest expense rose from N19.755bn to N21.474bn, the bulk of which was the N8.552bn paid on term deposits, down from N10.391bn; ahead of the N6.929bn paid on borrowed funds, double the N3.898bn reported in the prior half-year; while interest on savings accounts increased from N1.784bn to N2.586bn. This left net interest income at N39.31bn, as against the N40.169bn reported in the 2018 half-year.
Fee and commission revenue rose marginally to N37.707bn from N37.142bn, boosted by asset management fee of N20.177bn, a drop from the N21.151bn in 2018; while brokerage and financial advisory fees fo N4.98bn from N4.129bn, among others. Expense however jumped by 281.97% from N455m in the first half of 2018 to N1.738bn, resulting in net fee and commission revenue of N35.969bn, as against N36.687bn in the previous half-year. Trading revenue improved from N15.976bn to N17.603bn, helped by fixed-income revenue which rose from N11.205bn to N18.241bn; as foreign exchange revenue dropped to a mere N676m from N4.492bn; while interest rates loss amounted to N1.314bn from revenue of N280m.
Other revenue from N1.165bn to N1.28bn, the lion’s share of which was the N917m gains on disposal of financial investment, as well as the N247m dividend income. These resulted in non-interest revenue for the period under review rising from N53.838bn to N54.852bn.
Income before credit impairment charge, therefore, limped from N93.997bn to N94.162bn; just as income after credit impairment fell to N94.719bn from N99.505bn.
Staff costs dropped to N19.885bn from N21.333bn; even as other operating expenses increased to N30.184bn from N27.442bn, the bulk of which was the N8.729bn paid into the Asset Management Corporation of Nigeria (AMCON) sinking funds, from N7.431bn in 2018, representing 0.5% of total assets on and off-balance sheet items; followed by the N3.516bn information technology expenses, compared to N3.49bn in 2018; just as depreciation expenses climbed from N2.218bn to N3.177bn; and deposit insurance premium from N1.984bn to N2.135bn.
resulting in Operating expenses for the period of N50.069bn from N48.775bn.
Profit before tax, therefore, declined from N50.73bn to N44.65bn; even as income tax inched from N7.646bnto N8.405bn; resulting in net profit drop from N43.084bn in 2018 to N36.245bn, representing a N6.839bn or 15.87% slip. This translated to Earnings Per Share of N3.42, down from N4.16 in 2018, out of which the directors are paying N1 per share payout.
On the balance sheet, total assets dropped to N1.619tr from N1.663tr, with customer loans and advances accounting for N455.075bn, from N432.713bn; while cash and cash equivalents amounted to N445.491bn from N455.773bn. Total liabilities dropped also from N1.423tr in the 2018 half-year to N1.354tr, driven by deposit and current accounts valued at N822.49bn, compared to N967.964bn; following which shareholders’ funds rose from N239.667bn to N264.404bn.