Stanbic IBTC Holdings Plc is on the path of starting the year with a boom as it recorded a spike of 44 percent in its profit after tax to N23.1 million in the first quarter of 2018 from N16.1 million in the same period of last year, according to its first quarter financial statement.
Analysts who spoke with BusinessDay has attributed this to recovery to write-back in loan loss provision.
“One of the reasons is a write back of about N1.5 billion in loan loss provision and that materially boosted their profitability. So, in effect, it simply means that they have recovered their bad loans and the quality of risk passage has also improved,” Johnson Chukwu, CEO of Lagos-based financial advisory firm, Cowry Assets, said on the phone.
“Because one other part of making additional loans is that they are arriving back to earlier provisions, which is one of the major factors that influenced their profitability,” Chukwu further added.
Stanbic IBTC Holdings’ was among the banks in which their loans and advances fell by 7 percent. At N354.7 billion, Stanbic IBTC Holdings’ loans and advances were lower by 7 percent when compared with N381.7 billion granted to different calibres of their customers in Q1 2017.
Its gross earnings at N154.220 billion were an increase of 34.5 percent over the N114.622 billion achieved in the corresponding period in 2017.
The bank’s total assets also rose to N1.4 billion from N1.39 in the same quarter of last year, while net interest income rose to N18.85 million compared to N18.89 in the previous year. Non-interest revenue shot up to N27.7 million, a 37.9 percent increase from N20.1 million in the corresponding period of 2017
On why the loans and advances of banks fell amidst rising profitability, Saheed Bashir, senior analyst at Meristem Securities, attributed the development to the sluggish first quarter disease, improving loans quality and high non-performing loans in 2017.
“The first quarter of the year is always sluggish as most economic activities would not have picked up. Again, the rising crude oil prices at the international market have made banks to reclassify some of the loans regarded as bad last year. In that situation, you don’t expect banks to give out a lot of loans to customers”, Bashir said.
As at Monday 23th April, the company’s share price rallied at 50 year to-date, outperforming the NSE All share index with a market capitalization of 502.5 billion and outstanding shares of 10.1 billion.
BUNMI BAILEY
