Stanbic IBTC MD Links Q3 Profit Surge To Earnings Growth, Restrained Loan Loss Charge

Dr. Demola Sogunle, Chief Executive of Stanbic IBTC Holdings Plc says the group’s impressive performance in recent times and especially for the nine months ended September 30, 2022, when it recorded a 57% growth in profitability was due largely to the impressive growth in net interest income and other revenue sources.

A statement by the group, following the presentation of its unaudited financials for the third quarter quoted Sogunle as saying the performance “was supported by lower credit impairment charges and operating expenses when compared with the second quarter. The uplift in net interest income resulted from increase in the volume and yield on risk assets as we sustained our loan growth performance.

The CEO also expressed commitment to growing its “key metrics over the rest of the year and achieving our FY 2022 guidance.”

According to details of the report, gross earnings for the period rose 41% to ₦207.4bn, from ₦146.6bn in the corresponding period of last year, of which net interest income amounted to ₦79.66bn, compared to the previous ₦54bn, while non-interest revenue amounted to ₦94.4bn, up 36% from ₦69.25bn.

Total operating income amounted to ₦174.06bn, a 41% growth over the ₦123.25bn of the preceding nine months, while Profit before tax of ₦68.95bn represented a 52% growth over the ₦45.31bn reported in the prior nine months, while Profit after tax at ₦55.19bn was a 38% improvement over the previous ₦39.95bn.

Key metrics included the Cost to income ratio of 56.1%, a drop from the previous 64.3%; Return on average equity (annualised) was 19.2%; while Return on average assets (annualised) stood at 2.5%.

Highlights of the balance sheet included the 8% growth in total assets to ₦2.95tr, when compared to the ₦2.74tr reported at the end of December 2021; Gross loans and advances was up 23% to ₦1.17tr, from ₦946.25bn; while Non-performing loan to total loan ratio stood at 2.6% from 2.1%.

Customer deposits for the period increased by 1% to ₦1.14tr from ₦1.13tr; deposit mix of current-and savings-accounts deposits to total deposits improved to 73.1% from 66% in December 2021.

According Sogunle, “in addition, trading revenue grew by 47% QoQ following the increase in trading activities during the third quarter. Sustained focus on cost optimisation led to 8% QoQ decline in our operating expenses. As such, our cost-to income ratio improved to 56.1% from 59.9% in the first half of the year, and 64.3% in the prior year,” he added.

He said the group “kicked-off the third quarter with the implementation of initiatives to deliver top notch services to our customers by leveraging digital technology. We entered into a partnership to enhance the Stanbic IBTC SME Banking platform by providing seamless payroll and salary management services to SME Banking customers.”

The digital module of the solution, the statement assured, is now embedded on Stanbic IBTC’s SME online platform and offers value added services such as free HR services to SME customers for the first three months, salary payment of remote employees while staying compliant to local laws, provision of financial data with detailed analytics, amongst others.

“We have also seen an increase in the uptake of our customer loyalty programme, PlusRewards which provides exclusive discount offers to Stanbic IBTC card holders at select merchant stores. Our Business clients can also sign up for the scheme as merchants and enjoy benefits such as free Stanbic IBTC point of sale (POS) devices, free marketing opportunities as well as access to Stanbic IBTC’s client base. Being a client-focused organisation, this will enable us to strengthen the relationship with our customers.

“As an Environmental Social and Governance (ESG) driven organisation, we do not relent in achieving our sustainability goals. 37 of our office locations currently run on solar powered energy solutions and we have recycled 6.6 tonnes of waste papers in return for tissue papers year-to-date as we continue to support the global reduction of carbon emissions.”

In the just ended quarter, the group said it disbursed credit facilities of over N504m to support educational service providers in Nigeria, and about N4.73bn credit facilities to 861 SME clients, just as it also modified three additional office locations and 10 offsite ATM locations for accessibility to the physically challenged. This brings to a total of 134 office locations and 97 offsite ATM locations that have been modified so far.

The group says it continued to maintain an adequate level of capital during the period with total capital adequacy ratio closing at 19.2%, significantly higher than the 11% minimum regulatory requirement. It also maintained a strong and diversified funding base during the first nine months of 2022 when liquidity ratio was above the 30% regulatory minimum requirement, indicating its commitment to meeting its liquidity obligations in a timely manner. The Group also maintained its Fitch AAA (nga) rating, reflecting its stable financial position,