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Stanbic IBTC Holdings: BUY ratings maintained on impressive half year scorecard

Stanbic IBTC Holdings: BUY ratings maintained on impressive half year scorecard

Recently, Stanbic IBTC Holdings Plc released its financial statements for the half year (H1) period ended June 30, 2022.

The impressive half year scorecard

The Group’s gross earnings increased by 43.93percent to N133.704billion in the review H1 period as against N 92.895billion in H1 2021. Profit Before Tax (PBT) increased by 61.81 percent to N39.98billion from N24.71billion in corresponding H1 of 2021. Also, profit after tax (PAT) increased by 36.05percent for the period ended June 30 to N30.67billion compared with N22.54billion in H1’21.

Reward for shareholders
Following the impressive the impressive half year scorecards, the directors recommended the approval of an interim dividend of 150 kobo per share (June 30, 2021: 100 kobo per share) for the period ended 30 June 2022.

The proposed interim dividend is valued at about N19.435billion, subject to deduction of appropriate withholding tax and regulatory approval. The interim dividend will be paid to shareholders whose names appear in the Register of Members as at the close of business on Tuesday September 6, 2022. The Register of Shareholders will be closed from Wednesday September 7 2022 to Wednesday September 14, 2022.

On Wednesday September 21, 2022, the interim dividends will be paid electronically to shareholders whose names appear on the Register of Members as at close of Trading on Tuesday September 6, 2022, and who have completed the e-dividend registration and mandated the Registrar to pay their dividends directly into their bank accounts.

Analysts maintain BUY rating on impressive scorecard

Ope Ani, senior analyst at Lagos-based Coronation Research said in an August 24 note that loan book expansion, trading revenue recovery drove the financial holding company’s half-year (H1) earnings growth.

“The market’s reaction to the results was positive, as stock rose 8.9percent (on Wednesday August 24), buoyed by the increased dividend and the double-digit earnings growth,” Coronation Research further noted.

Though year-to-date, the stock is down 15.3percent but they maintained that the stock has upside potential supporting their BUY rating with a price target of N45. The share price was N30.50 as at August 24, 2022.

“We are encouraged by the recovery from the highly disappointing performance in H1’ 21, especially the Return-on-Equity (RoE) uplift. We expect improved market yields will positively impact Net Interest Income (NII) and Net Interest Margin (NIM) over the rest of the year.

“In addition, we hope the group can sustain the recovery in Trading revenues which have historically been a solid contributor to Net revenue. The stock has declined by 15.3percent year-to-date (YtD), making its valuation more compelling and dividend yield more attractive than at the beginning of the year”, Coronation analysts said, while also maintaining their BUY recommendation on the stock.

Also, while maintaining their BUY rating for Stanbic IBTC stock, Meristem research analysts said in their August 24 note that their target price of N42.45 per share implies an upside potential of 51.61percent as against N28 it was the preceding day.

“Impressive growth in the group’s key performance metrics and positive outlook for 2022FY. Meristem research analysts further said: “The company proposed an interim dividend of N1.50 per share, which represents a dividend yield of 5.36 percent from its closing price (N28) on August 23, 2022. The ticker’s present price is the lowest since August 2020 and presents a good entry point”, adding that “the company’s plan to launch a Fintech subsidiary in third quarter (Q3) 2022 to further boost end-to-end financial service offerings,” Meristem research analysts said.

Joshua Odebisi, equity research analyst at Vetiva in an August 25 note to investors said Stanbic IBTC profits soared 36percent year-on-year (y/y) on impressive earnings growth. Their target price for Stanbic IBTC Holdings N43.

While Vetiva maintained its BUY rating for Stanbic shares, it said: “We have slightly adjusted our forecasts for Stanbic for second half (H2), with our Gross earnings estimate increased to N270 billion (previous: N263 billion), while our provisions estimate has also been raised to N7 billion from a net positive figure of N0.9 billion.

Ultimately, our PAT projection has been lowered to N67.6 billion (previous: N69.4 billion). Therefore, we lower our 12-month target price (TP) to N43 (previous: N43.93) but maintain our BUY rating on the stock. The bank is currently trading at a 41percent discount to this target price and at a P/B ratio of 1.0x.”

It is compliant with NGX free float requirements

Stanbic IBTC Holdings Plc with a free float percentage of 30.96percent as at June 30, 2022 (June 2021: 31.49percent), is compliant with the Nigerian Exchange Limited’s free float requirements for companies listed on the Main Board. Its free float is valued at N134.578billion as at June 30, 2022 (December 2020: N140.769billion).

About the company

Stanbic IBTC Holdings is a member of Standard Bank Group. Standard Bank Group is Africa’s largest banking group ranked by assets and earnings and has been in business for over 150 years.

The Group’s ownership structure shows Stanbic Africa Holdings owns 67.5percent equity while other shareholders own 32.5percent equity in the holding company. Stanbic IBTC Holdings has ten direct subsidiaries: Stanbic IBTC Bank, Stanbic IBTC Pension Managers Limited, Stanbic IBTC Asset Management Limited, Stanbic IBTC Capital Limited, Stanbic IBTC Insurance Limited, Stanbic IBTC Stockbrokers Limited, Stanbic IBTC Ventures Limited, Stanbic IBTC Insurance Brokers Limited, Stanbic IBTC Trustees Limited, Stanbic IBTC Financial Services Limited (formerly Stanbic IBTC Bureau De Change Limited) and one indirect subsidiary, namely: Stanbic IBTC Nominees Limited. Note that Stanbic IBTC Financial Services Limited is yet to commence operations.