Goddy Egene writes that after recording a decline of 45.7 per cent in 2015, Stanbic IBTC Holdings grew its nine months profit by 65 per cent in 2016
For most part of last year shareholders of Stanbic IBTC Holdings Plc lived in high anxiety over the non-release of its financial results for the year ended December 31, 2015. While other banks were declaring their results, announcing mixed performances due to economic headwinds, Stanbic IBTC did not release its 2015 results following a dispute with the Financial Reporting Council of Nigeria (FRC).
However, the long wait by the shareholders came to an end last month following the resolution of the dispute. Consequently, the 2015 full year and nine months to September 30, 2016 results were released.
Speaking on the resolution of the dispute, one of the shareholder of the bank, Mr. Moses Igbrude of Independent Shareholders Association of Nigeria (ISAN), said it was a big relief to shareholders and commended the amicable resolution of the dispute.
“This is a good development because shareholders have been disturbed while the dispute lasted. We are happy that it has been resolved,” Igbrude told THISDAY.
According to Stanbic IBTC, following the resolution of the dispute, the FRC has lifted the suspension of the its numbers of the Chairman of Stanbic IBTC, Mr. Atedo Peterside and Chief Executive, Mrs. Sola David-Borha, enabling them to sign, where applicable, audited financial statements.
In a statement to the Nigerian Stock Exchange (NSE) and signed by the Company Secretary, Chidi Okezie, Stanbic IBTC said following the resolution of the issue, FRC has authorised its external auditors, Messrs. KPMG Professional Services to sign the 2015 audited financial statements.
The statement said: “We are pleased to announce the release of the Audited Financial Statements of Stanbic IBTC Holdings Plc for the year ended 31 December 2015. This release follows our reaching an acceptable settlement with the FRC, pursuant to which the FRC has authorised our external auditors, Messrs. KPMG Professional Services to sign our 2015 Audited Financial Statements.
In the light of the foregoing and having received all required regulatory approvals, we would be presenting the 2015 audited financial statements to the NSE through the issuer portal for onward transmission to the market, as well as subsequent publication as required by law.
In addition to the above, we also confirm that the FRC has lifted the suspension of the FRC numbers of the following individuals and further authorises them where applicable, to sign our audited financial statements: Mr. Atedo Peterside (chairman); Mrs. Sola David Borha (chief executive);Dr. Daru Owei (chairman, Audit Committee); Mr. Arthur Oginga (our erstwhile Chief Financial Officer) We thank The NSE and other stakeholders for their support and Stanbic IBTC will continue to abide by all extant statutes; rules and regulations.”
Financial results
Details of the results showed that Stanbic IBTC Holdings ended 2015 financial year with gross earnings of N140.027 billion, up by 7.2 per cent from N130.654 billion in 2014.
Net interest income fell by 6.0 per cent from N46.658 billion in 2015 to N43.86 billion in 2015, while non-interest income stood at N56.788 billion in 2015, compared with N57.987 billion in 2014. Credit impairment charges soared by 364 per cent to N14.931 billion in 2015 from N3.217 billion in 2014. Operating expenses rose by 7.2 per cent to N62 billion to N57.9 billion in 2014.
Consequently, profit before tax (PBT) fell by 45.7 per cent to N23.65 billion, from N43.52 billion, while profit after tax (PAT) declined by 45.2 per cent to N18.891 billion, from N34.46 billion in 2014. Despite the decline in profit, the directors have recommended a dividend of five kobo per share.
However, shareholders should expect a better deal at the end of 2016 going by the nine months performance. Stanbic IBTC Holdings Plc reported an increase in top and bottom lines.
The financial institution posted gross earnings of N114.622 billion in 2016, up from N104.418 billion in the corresponding period of 2015. Net interest income improved from N32.92 billion in 2015 to N39 billion in 2016, while non-interest income grew 28 per cent from N41.3 billion to N52.9 billion. Total interest income recorded a higher growth of 24 per cent grew from N74.2 billion to N91 billion. Credit impairment charges increased from N12.48 billion to N15.3 billion, while operating expenses rose by 10 per cent from N 46.4 billion to N51.0 billion.
Profit before tax appreciated by 67 per cent to N25.7 billion, in 2016, from N15.4 billion in 2015. Profit after tax stood at N20.2 billion, indicating a growth of 49 per cent from N13.6 billion.
Despite the high rate of inflation, Stanbic IBTC reduced its cost of operations as cost-to-income ratio stood at 55.5 per cent in 2016, down from 62.5 per cent. Return on average equity improved to 17.8 per cent, from 13.2 per cent in 2015. Similarly, return on average assets improved from 1.9 per cent to 2.6 per cent.
Total assets grew by 22 per cent to N1.146 trillion as at September 30, from N937.6 billion as at December 2015.
In terms of loans, gross loans and advances to customers rose by three per cent to N392.5 billion, from N379.4 billion, while customer deposits, grew by 23 per cent to N606.1 billion, from N493.5 billion. However, non-performing loans to total loans ratio worsened from 8.5 per cent to 10.2 per cent calculated based on CBN prudential guidelines.
The group maintained adequate capital which was well above regulatory requirements in 2016. The group’s total capital adequacy ratio closed the period at 21 per cent, while the tier 1 capital adequacy ratio stood at 16.7 per cent, which are well above the 10 per cent minimum statutory requirement.
The group’s liquidity ratio stood at 78 per cent, which is significantly higher than the 30 per cent regulatory minimum.
CEO explains performance
Commenting on the results, the Chief Executive Officer of Stanbic IBTC Holdings, Mrs. Sola David-Borha said: “Our business has shown resilience in 2016 despite the challenging operating environment. Our performance shows increased revenue from fees and commission, improved funding cost as evidenced by 26 per cent reduction in interest expense and continued drive on cost containment measures which ensured that cost growth remained below inflation rate.”
She added that operating income and profit after tax grew by 24 per cent and 49 per cent respectively, while loans and advances to customers grew marginally by one per cent due to economic conditions and their focused approach to maintain good quality loan book.
“Customer deposits grew by 23 per cent during the period, with a larger portion of the growth in current and savings deposits, as we maintain the focus of reducing cost of funds. Despite the economic condition, we will continue to deliver exceptional service and value to our customers, whilst remaining profitable and improving margins,” she assured.
Analysts’ comments
Reacting to the results, analysts at FBN Quest Stanbic IBTC Holdings finally published its Q4 2015 results today. According to the analysts, the results in themselves showed that the underlying results were in line with expectations.
“Although PBT and PAT of N8.3 billion and N4.4 billion were ahead of our forecasts by 54 per cent and 22 per cent respectively, the results were boosted by lower-than-expected loan loss provisions. PBT provisions of N26.4 billion was in line with our forecast. Along with the resolution reached with the FRC, Stanbic also restated its 2014 financials. The restated PBT and PAT are 6-8 per cent higher than the previous numbers. The full year PBT figure shows a decline of 46 per cent while the PAT is down 39 per cent. The driver behind these declines is the loan loss provisions line which shows a marked 364 per cent increase to N14.9 billion. With regards to the actual Q4 provisions, they surprised positively relative to our estimate and declined by 47 per cent. Essentially the high levels of provisions for the full year can be traced to what Stanbic IBTC had already reported in the nine months period,” they said.
