FSDH Initial Reaction: Stanbic IBTC FY22 results 
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February 1, 2023/FSDH Research

Key Performance Highlights:

• Stanbic bank reported solid FY22 results, and the bank also reported strong 4Q22 numbers. In FY22, total income surged 40.5% YoY to N240.4 billion, primarily due to a 50.1% YoY rise in net interest income to N113.1 billion, coupled with a 32.9% YoY increase in non-interest revenue to N127.3 billion in FY22. Interest income jumped by 45.7% YoY to N152.7 billion, powered by an increase in the volume and the average yield of loans and investments, partially offset by a 34.6% YoY jump in interest expense to N39.6 billion, resulting in a 50.1% increase in net interest income to N113.1 billion in FY22 from N75.4 billion in FY21. The interest income increased primarily due to a 54.4% rise in income from loans and advances to customers to N120.0 billion.
   
• The non-interest revenue vaulted in FY22 to N127.3 billion, a 32.9% YoY increase. The non-interest revenue increased primarily due to a 161.1% YoY spurt in trading revenue to N34.7 billion in FY22 versus N13.3 billion in FY21. The net fee and commission revenue grew 10.3% YoY to N91.4 billion in FY22. However, net income from life insurance activities declined 62.5% YoY to N66 million in FY22 from N176 million in FY21. The company reported a net impairment loss on financial assets of N10.3 billion in FY22 versus a write-back in net impairments of N1.5 billion in the prior period.
   
• The bank’s operating expenses soared 21.5% YoY to N129.6 billion in FY22 due to increased inflationary impact and growth in regulatory-induced costs, as well as additional investments in information technology to position the group as a platform business. The other operating expenses jumped 21.6% YoY to N78.6 billion, and staff costs increased 21.3% YoY to N51.0 billion in FY22 from N42.0 billion in FY21. Although the company’s tax expenses grew to N19.5 billion in FY22 (effective tax rate of 19.4% in FY22 compared to 13.7% in FY21), Stanbic recorded a 42.3% YoY jump in net profit to N81.1 billion owing to the solid revenue growth and a proportionately lower increase in operating expenses; the earnings per share stood at N6.05 in FY22 versus N4.20 in FY21.
   
• Looking at the quarterly performance, Stanbic’s total income jumped 34.9% YoY to N66.4 billion in 4Q22, powered by a 56.5% YoY growth in net interest income to N33.5 billion, helped by 18.3% YoY growth in non-interest revenue to N32.9 billion. The bank reported robust performance on a sequential basis and reported a 10.9% spurt in gross earnings in 4Q22 while net profit grew 5.6% QoQ.
   
• Looking at the financial performance by segments, total income in the Business & Commercial segment expanded by 43.1% YoY to N47.2 billion. At the same time, the segment’s net profit stood at N12.7 billion in FY22 versus a profit of N6.9 billion in FY21, an 83.7% YoY increase. The Corporate and Investment Banking segment was the best performer this year, with total income rising a massive 69.4% YoY to N107.0 billion and net profit soaring 73.9% YoY to N52.1 billion in FY22. The performance of the Consumer & High Net Worth segment also remained positive, with a 15.0% YoY growth in total income to N89.9 billion; however, the segment net profit slipped 19.2% YoY to N16.2 billion in FY22. The bank recorded solid growth in gross loans and advances to customers that stood at N1,238.6 billion in FY22, a 30.9% surge, driven primarily by a 39.5% jump in the Corporate and Investment Banking segment to N814.3 billion from N583.6 billion in FY21.

Market Reaction: The investor reaction to the blockbuster FY22 performance was subdued as the stock remained unchanged at N33.55 versus a 0.15% gain for the All-Share Index (31/1).

Stanbic Earnings Highlight FY22

Source: Company Financials, FSDH