Stanbic IBTC’s profit drops 52%, declares N9b dividend

Stanbic IBTC Holdings Plc, the Nigerian subsidiary of South Africa’s Standard Bank Group, on Thursday reported a 52 per cent decline in pre-tax profit in the first half, highlighting the increasingly tough cost of fund and flattening of the company’s non-interest income.

The first-half earnings report of the company for the period ended June 30, 2015 showed 11 per cent growth in gross income and declines of 52 per cent and 40 per cent in pre-tax profit and net profit respectively.

Gross earnings rose by 11 per cent to N68.30 billion in first half 2015 as against N61.72 billion in comparable period of 2014. Profit before tax dropped from N19.95 billion to N9.54 billion. Profit after tax also declined to N9.70 billion in 2015 as against N16.18 billion in comparable period of 2014.

The report highlighted the decline in the profitability of the company’s core banking activities. While interest income had grown by 23 per cent from N34 billion to N41.72 billion, interest expense jumped by 78 per cent from N11.02 billion to N19.58 billion, leaving net interest income down at N22.14 billion in first half 2015 as against N22.98 billion recorded in corresponding period of 2014. Fee and commission income was flat.

Earnings per share dropped from N1.48 in first half of 2014 to 80 kobo in first-half of 2015, but the board of the holding company has recommended an interim dividend per share of 90 kobo , implying that the company would dip into its reserves to augment the payment. The company will distribute a total of N9 billion as interim dividend on the first half earnings. Shareholders on the register of the company as at July 31, 2015 will receive a dividend per share of 90 kobo. The dividend will be paid on August 28, 2015.

The company’s balance sheet appeared better. Total assets stood at N1.03 trillion in June 2015 as against N944.54 billion recorded by the year ended December 31, 2014, representing an increase of nine per cent. Customers’ deposits rose by 22 per cent from N494.94 billion in December 2014 to N601.73 billion in June 2015. Total liabilities rose by 10 per cent from N830.27 billion to N911.17 billion. Shareholders’ funds also increased by eight per cent from N110.05 billion to N118.76 billion.

Stanbic IBTC Holdings’ share price rose by 1.05 per cent to N25.01 per share yesterday at the Nigerian Stock Exchange (NSE), as against the general downtrend at the stock market where the benchmark index indicated a day-on-day decline of 0.82 per cent.

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Analysts at FBN Capital said the half-year results might be indicative of greater assets risks noting that Stanbic IBTC Holdings underperformed market expectations.

“The risk here is that the asset quality situation is worsening faster than the bank expects, and expanding into other sectors. We would not be surprised to discover that retail and small and medium enterprises exposures are contributing,” FBN Capital stated.

FBN Capital described the results as “weak”, noting that Stanbic IBTC Holdings appears to be on course to miss analysts’ performance expectation.

Analysts at SCM Capital also described the results as “below expectation”, pointing at impairment charges and higher cost of funds as major drawbacks.

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