Business
Stanbic IBTC reported an impressive 80.4% rise in pre-tax profits.
Stanbic IBTC reported an impressive 80.4% rise in pre-tax profits.
Stanbic IBTC has reported a substantial 80.4% increase in pre-tax profits, achieving N84.2 billion in the first quarter ending June 2024. This is the company’s highest quarterly profit in history, thanks to a strong 62% increase in gross earnings, which was driven by rising interest and non-interest revenue.
For the half-year period, pre-tax profits have risen to N147 billion, a significant increase from N82.9 billion during the same period last year, accounting for approximately 83% of the total pre-tax profit for 2023.
Dr. Demola Sogunle, the Chief Executive of Stanbic IBTC, acknowledged the challenging operating environment in the first half of the year, characterized by elevated inflation and diminished demand, which resulted in the Stanbic IBTC Bank Purchasing Manager Index (PMI) declining to a seven-month low of 50.1 points in June 2024. He also emphasized government efforts aimed at stabilizing the economy and attracting foreign investment.
Despite these challenges, the company reported a 71% year-on-year profit growth, driven primarily by a more than 100% increase in interest income due to higher yields and loan volumes. In addition, net fees and commission income increased by 62%, owing to increased digital banking transactions.
Operating expenses escalated by 58% due to persistent inflation and staff cost adjustments; however, the cost-to-income ratio showed improvement, reducing from 48.1% to 42.8%. These strong financial results enabled the board to propose a higher interim dividend of 200 kobo per share, up from 150 kobo in 2023, underscoring the company’s commitment to returning value to shareholders.
Nonetheless, despite its remarkable performance, Stanbic IBTC’s stock has experienced a 15% decline year-to-date as of September 4, 2024, although this marks an improvement from a 19% decrease reported in August. This recovery suggests a potential stabilization in investor sentiment and presents buying opportunities.
Looking ahead, analysts express optimism regarding Stanbic IBTC’s capacity to leverage its strong performance despite a challenging banking sector. Recommendations from NGX brokers vary; Bancorp Securities advises a “hold,” Afriinvest recommends an “accumulate,” and Meristen has issued a “buy” rating, reflecting a generally positive outlook for the stock.
Furthermore, Stanbic IBTC has maintained its Fitch AAA (nga) rating, affirming its status as Nigeria’s only financial services provider to hold this distinction for over two decades.
In terms of trading activity, Stanbic IBTC Holdings was ranked as the 49th most traded stock on the Nigerian Stock Exchange, with 98.9 million shares transacted over the past three months, indicating significant investor interest. Despite stock volatility, its low beta of 0.362 indicates relative stability, which may help mitigate risks.
Overall, Stanbic IBTC’s strong fundamentals and indications of recovery position it favorably for future growth, making the current stock dip a potentially attractive acquisition opportunity, especially as it trades below its 52-week high of N80, reached on October 13, 2023.
