Hike in tax expenses, slow growth in gross earnings, weaken Stanbic IBTC profit for 2019

With nearly 16 per cent increase in tax income and slow growth in gross earnings, Stanbic IBTC Holdings Plc unaudited report for the financial year ended December 31, 2019 showed weak performance in profit after tax.The Holdings financial institution reported a Profit After Tax of 0.8 per cent to N75.04 billion in 2019 from N74.44billion reported in 2018, while Profit Before Tax (PBT) rose from N88.15 billion in 2018 to N90.93 billion at the full year 2019, a 3.14 per cent growth.

Stanbic IBTC Holdings in its results to the Nigerian Stock Exchange (NSE) on Thursday disclosed that group’s recorded Gross Earnings of N233.808 billion in the review period which 5.15 per cent improvement on N222.360 billion recorded in 2018.

Improvement in Gross, Earnings was driven by an increase in several components including Interest Income, which rose from N118.382 billion at FY2018 to N120.412 billion at FY2019, implying 1.71per cent growth.

Non-Interest Revenue leapt by 6 per cent, rising from N102.604 billion at a full year performance of 2018 to N108.755 billion in the corresponding period of 2019.

Trading Revenue surged from N31.311 billion at year-end 2018 to N36.332 billion at full year 2019, translating to a 16 per cent increase.

However, total operating expenses dropped by 1.6 per cent to N94.03 billion in 2019 as against N95.60 billion reported in 2018.

From the balance position, the group total assets rose by 13 per cent to N1.88trillion in 2019 from N1.66 trillion reported in audited 2018 financial year results. The increase in total assets was driven by 22.9 per cent increase in loans & advances to customers to N532billion in unaudited results of 2019 as against N432.7billion reported in 2018, while trading assets hits N248.9billion in 2019 from N84.35billion in 2018.

Earnings Per Share (EPS) however declined from N7.04 at FY2018 to N6.92 in the relative period of 2019, translating to a 1.7per cent drop.

Its outstanding shares currently stand at 10,504,967,358 valued at N435.9 billion as its share price on the NSE closed flat at N41.50 per share on Thursday.

The Chief Executive Stanbic IBTC, Yinka Sanni, presenting the first-quarter results to market, stakeholders said, “The operating environment in the first a quarter of this year was challenging evidenced by the slowdown in economic activities which were impacted by the socio-political environment leading to muted client activity.

“These factors affected the growth pace of our overall business volumes and earnings. The Group achieved a resilient performance despite the declining interest rate environment causing a decline in asset pricing. Profits declined year-on-year due to the decrease in fees and commission revenue resulting from the regulatory induced reduction in asset management fees as previously guided, relatively quiet capital market activity and lower recoveries made from delinquent and previously written-off loans compared to the similar period in 2018.

This was positively offset by the growth in interest income earned mainly from growth in investment securities; marginal growth in trading revenue arising from improved FX flows from foreign investors and well-managed expense levels. Total operating expenses were broadly unchanged reflecting the successful impact of our cost-saving initiatives.

The contraction in our loan book is due to significant repayments and pay-offs witnessed in the manufacturing and general commerce sectors, amongst others. This is in-spite of the new disbursements during the quarter which could not adequately compensate these portfolio runoffs.

“Overall, we continued to maintain solid business momentum and our capital and liquidity levels remained robust during the quarter. We expect economic activities to improve over the rest of the year even as the election season is over, and we are strategically positioned to benefit from any improvement in the economic environment. We will continue to leverage our universal financial services capability to ensure delivery on our Guidance for 2019.”

Stanbic IBTC is a member of Johannesburg-headquartered Standard Bank, itself Africa’s biggest lender by assets. With over 180 branches all over Nigeria, its operations cover personal and commercial banking.

Stanbic IBTC has maintained a consistent dividend history for long as it has been rewarding its shareholders with cash dividends every year since 2005.