• Thursday, May 23, 2024
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Stanbic IBTC’s 16% growth overrides cost of funding, other challenges


The key challenges encountered in 2012 by Stanbic IBTC Group were the cost of funding and high credit impairment charges. An analysis of financial results for the year ended December 31, 2012, released by the bank showed that expensive term funding accounted for more than 50 percent of the group’s deposit book in 2012.This adversely impacted the net interest income and profitability. More so, the group conservatively provided for its loan book in the light of the prevailing high interest rate environment.

“Our banking activities achieved pleasing revenue growth of 16 percent, which is testament to our solid client franchises. Credit impairments was up by over 100 percent, somewhat higher than anticipated due to our conservative stance on impairments on loans due to the high interest rate environment. The group’s profitability was hampered by margin compression, a function of the high interest rate environment, with limited ability to increase lending rates, particularly in the corporate customer segment, and high cost of funding. Profitability was also adversely impacted by the growth in credit impairment charges,” the bank said.

However, the group delivered a 45 percent growth in gross income to a record N91.9 billion, and a 22 percent growth in total income to N67.4 billion. Profit before and after tax grew by 16 percent and 53 percent, to N11.7 billion and N10.2 billion, respectively. Total assets stood at N676.8 billion, thus representing a 22 percent growth. Gross loans and advances grew by 5 percent to N279.5 billion, while the deposit liabilities increased by 24 percent to N355.4 billion.

Highlights in 2012 performance indicated that the group’s 2012 financial results reflect increased transactional volumes and activities, strong deposits growth, improvement in asset quality, diversified revenue stream, albeit an increase in cost of funding and growth in impairment charges.

According to the bank, a major focus area for 2012 was on driving transactional banking revenues. In the corporate and investment banking business unit, transactional products and services revenue grew by 66 percent, chiefly on the back of increased revenue from custody business. In personal and business banking business unit, total revenue grew by 48 percent as a result of increased volume of transactions and activities, as the bank continue to leverage on its expanded network.

“Income growth far exceeded cost growth for the first time in three years as we continued to leverage our expanded branch network. Income growth in 2012 was 22 percent, while cost growth was 17 percent, resulting in a lower cost-to-income ratio compared with what was recorded in 2011,” it said further.

Furthermore, wealth business unit results were particularly strong with total income up 40 percent. The business unit maintained its market leadership as the number one wealth manager in Nigeria.

The bank’s mobile money product celebrated its first anniversary during the year, as the bank is currently the market leader with over 700,000 clients on its mobile money platform and is one of the few operators whose solution works with all mobile telecom firms.

In line with the ongoing reform by the Central Bank of Nigeria, aimed at promoting a sound financial system, the group complied in 2012 with the regulatory directive on the separation of banking business from non-banking activities, adopting the holding company structure in the latter part of 2012. The new corporate structure became effective November 23, 2012, with the de-listing of Stanbic IBTC Bank’s shares and listing of Stanbic IBTC Holdings plc’s shares on the Nigerian Stock Exchange.