Stanbic IBTC Holdings plc has remained profitable despite foreign exchange restrictions and a slow economy as analysts see the recent easing of monetary rates by the central bank resulting in fresh liquidity injection.
For the first nine months through September 201, Stanbic IBTC Holdings gross earnings increased by 8 percent to N104.41 billion as against N94.63 billion the same period of the corresponding year 2014.
The growth in gross earnings can be attributed to a 8 percent rise in interest income to N62.67 billion in 2015 as against N52.30 billion last year. Net interest income also followed the same growth trajectory as it moved by 8 percent to N32.93 billion in the period under review compared with N34.71 billion last year.
However, interest expense jumped by 69.03 percent to N29.74 billion in 2015 from N17.60 billion though analysts believe the reduction in interest rates will help reduce interest expense starting form 2016.
Nigeria’s central bank reduced the Monetary Policy rates to 11 percent from 13 percent previously held for the first time in six years. The Abuja based bank also reduced the Cash Reserve Requirement (CRR) to 20 percent from 25 percent.
Analysts say the new rate relation will increase liquidity to as much as N1trillion, increase lending to the real sector of the economy and compliment government spending on infrastructure.
The decision of the MPC to reduce the MPR and the CRR will significantly improve the liquidity in the system and strengthen the statue of most banks as sound counterparts in interbank transactions, according to Femi Ademola Head, Corporate finance BGL Capita Limited, in a recent report.
“The decision will lead to lower interest rates at the interbank and money market while bond yields are expected to moderate,” said Ademola Stanbic IBTC net income however fell by 46.25 percent to N13.56 billion in 2015 as against N25.26 billion last year. The drop sharp drop in profits is attributable to a 524 percent increase in credit impairment charges to N12.48 billion in 2015 as against N2 billion last year.
Lenders in Africa largest economy have been grappling with huge write offs stoked by delinquent debtors. A couple of lenders including Stanbic had published lists of these debtors on the pages of the dailies.
Stanbic IBTC’s loan to deposits ratio fell to 77.83 percent in 2015 from 80.53 percent last year. Loans and advances to customers were down by 1.64 percent to N392.05 billion in 2015 compared with N398.60 billion the previous year. Deposit to customers increased by a mere 1.74 percent to N503.68 billion in the period under review as against N398.60 billion last year. The bank’s share price closed at N17.20 on the exchange while market capitalization was N172 billion.
