Stanbic IBTC Holding Company, a tier-two lender in Nigeria with a market value of around N835 billion released its full-year result for the period ended 30th December, 2024.
The holding company reported a 43.7 percent rise in its after-tax profit to N202.1 billion in 2024 from N140.8 billion in 2023 driven by high interest rates in a high-yield environment.
These are the key takeaways from the result:
Increasing yield environment boosts interest income
The interest income of Stanbic IBTC calculated using the effective interest rate rose to N566 billion from N270 billion.
This is not surprising, as interest earned from loans and advances to customers drove the holding company’s interest income growth by 69 percent of the total.
Analysts at CardinalStone research in a note said interest income benefited from the high-yield environment, which nudged asset yields higher to 17.5 percent from 11.3 percent.
The bank also devised other ways to generate earnings and this justifies the 173 percent and 347 surge in interest on investments and interest on loans and advances to banks, respectively.
As a result, despite the 63.5 percent increase in interest expense, Net Interest Income (NII) surged by 134.3 percent to N410.5 billion, reclaiming its role as the primary earnings driver (63.5 percent), compared to 49.3 percent in FY’23 and 47.2 percent in FY’22.
Corporate and Investment Banking drives profit
Stanbic IBTC posted a 193 percent rise in its after-tax profit in 2024 on the back of a deepened corporate and investment footprint.
Interest expense also rose to N108.7 billion from N83.4 billion during the surveyed period. Operating expenses also rose to N98 billion from N57 billion.
The holding company disclosed in the financial statement that the Corporate and Investment Banking (CIB) segment serves large companies (multinational, regional and domestic), governments, parastatals, and institutional clients across Africa and internationally.
“Our clients leverage our in-depth sector and regional expertise, our specialist capabilities, and our access to global capital markets for advisory, transactional, trading, and funding support,” it said.
Read also: Stanbic IBTC leverages NGX invest for N148.7bn rights issue
Declining trading revenue
The holding company’s trading revenue declined by 9 percent as Stanbic IBTC could only generate revenue from its fixed income and currencies during the period.
While commodities and equities did not see any returns, the bank is positive that it will generate revenue going forward.
Management plans going forward/ full-year outlook
Stanbic IBTC is currently in the market for its N148.7 billion rights issue which opened on Wednesday, January 15, and is scheduled to close on Friday, February 21, 2025.
The company is offering existing shareholders 2,944,772,083 ordinary shares of 50 kobo each at N50.50 per share. The Rights Issue is based on 5 new issue shares for every 22 ordinary shares held as of the close of business on Tuesday, October 29, 2024.
The N59.5 per share that Stanbic IBTC trades nears its 52-week high of N65.4 percent as against a 52-week low of N45.
The holding company plans to allocate 27 percent of the N148.71bn proceeds from its ongoing rights issue to support its business and commercial banking operations.
This move is aimed at facilitating the growth of small and medium-sized enterprises and commercial enterprises, particularly in the general commerce sector.
It also revealed plans to invest 42 percent of the funds in corporate and investment banking to support sectors such as manufacturing, power, agriculture, and telecommunications. Additionally, 14.11 percent will go towards IT upgrades, while 2.22 percent will be used to expand its branch network with environmentally friendly and tech-enabled facilities.
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