Stanbic IBTC Holdings reports 113% increase in profit

Stanbic IBTC Holdings Plc has announced 113 per cent increase in profit after tax to N24 billion in half year (H1) ended June 30, 2017 compared with N11.3 billion recorded in half year ended June 30, 2016.
The Holding company profit before tax increased to N29.2 billion, an increase of 86 per cent from N15.68 billion in H1 2016.
The group’s gross earnings increased by 36.28 per cent to N97.2 billion in H1 2017 from N71.2 billion in H1 2016 , while board recommended the approval of an interim dividend of 60 kobo per share for the half year
Analysts at FBNQuest Research attributed to Holdings company increase performance to 43 per cent growth in pre-provision profits.
According to FBNQuest Research, “This growth was underpinned by an 80 per cent y/y (year on year) expansion in funding income and, to a lesser extent, a 17per cent y/y increase in non-interest income. The positives on these lines were strong enough to offset increases of 72per cent y/y and 18per cent y/y in loan loss provisions and operating expenses (opex) respectively.
“Further down the P&L, PAT grew by 169per cent y/y, thanks largely to a 43per cent y/y reduction on the minorities interest line. Compared with our forecasts, PBT and PAT missed by 29per cent and 44per cent respectively due to the negative surprises in loan loss provisions and operating expenses.
“Sequentially, the results showed a marked departure from the y/y trends. PBT and PAT both declined by -43 per cent q/q and -60per cent q/q respectively. Loan loss provisions and opex which increased markedly by 219per cent q/q and 24per cent q/q underpinned the sequential decline in earnings.
“These negatives offset the nine per cent q/q increase in pre-provision profits. In terms of contributions from the revenue lines, funding income which grew by 17per cent q/q was the major driver. Non-interest income came in flattish on a q/q basis. The bank has proposed an interim dividend of N0.60 ( which implies a yield and payout ratio of 1.5per cent and 26per cent respectively.
“When annualised, Stanbic’s H1 2017 PBT puts it on track to deliver an ROAE of around 29per cent in 2017. However, its H1 loan loss provisions translate to an annualised cost of risk of close to eight per cent which is ahead of management’s 2017 guidance of around five per cent. As such, we would expect the bank’s asset quality and opex to be the main focal points of investors.
“Stanbic’s H1 2017 PBT of N29 billion tracks slightly ahead of consensus 2017 PBT forecast of N54billion. As such, we expect to see slight upward revisions to consensus earnings forecasts. However, given the negatives from the results (opex and loan loss provisions), we expect to see a broadly subdued / neutral reaction from the market.”