Stanbic IBTC Holdings Plc, subsidiary of South Africa’s Standard Bank Group, has undergone several transformations in the last three decades and has evolved into a full-fledged financial services provider with nine subsidiaries across banking, pension, stockbroking, and financial advisory and two other indirect subsidiaries.
The history of the holding financial institution dates back to Investment Banking & Trust Company Limited which was established in February 1989 with Nigerian business mogul Peterside Atedo as pioneer chief executive.
Following the introduction of universal banking and a regulatory requirement for financial institutions to have a N25 billion minimum capital base, IBTC merged with Chartered Bank PLC and Regent Bank PLC in 2005 to become IBTC Chartered Bank PLC, which effectively transformed it into a universal bank.
Two years later in 2007, IBTC Chartered Bank PLC merged with the Nigerian subsidiary of Standard Bank Group Limited, to become Stanbic IBTC Bank PLC. The reforms in the Nigerian financial system, which led to the review of the Universal Banking Policy of the Central Bank of Nigeria and the introduction of a holding company model, led to the adoption of a Holdco structure by Stanbic IBTC in 2012 to retain its noncore banking businesses.
Stanbic IBTC Holding is currently Nigeria’s third most-capitalized lender on the Nigerian Stock Exchange with a market value of some N418 billion behind Guaranty Trust Bank ( N860bn) and Zenith Bank (N596bn). The bank has been consistent in delivering returns in the form of dividends to shareholders, capital appreciation and bonuses.
The company has reiterated commitment to ensuring sustainable value delivery to shareholders. According to a press statement by group’s chief executive Yinka Sanni, “We remain committed to operating at the highest level of corporate governance standards while delivering long-term loan growth to clients and stakeholders.”
Management Team
After laying a solid foundation for good corporate governance, Peterside Atedo in 2017, resigned as board chairman. The mantle of leadership fell on Basil Omiyi, a former Managing Director and subsequently Country Chairman of Shell Petroleum Development Company of Nigeria Limited.
Yinka Sanni is the Chief Executive of Stanbic IBTC Holdings having previously served as the Chief Executive at Stanbic IBTC Bank and IBTC Pension Managers Limited (IBTC Pensions). Yinka has a B. Agric. (Hons.), Agricultural Economics from the University of Nigeria, Nsukka, an MBA from the Obafemi Awolowo University (Great Ife) and has gone through the Harvard Business School’s Advanced Management Programme.
Other executive directors include Adekunle Adedeji currently the Chief Financial Officer of the Stanbic IBTC Group., has over 23 year’s post-graduation experience, with over 20 years in the banking sector. Before his appointment, he has served as Chief Financial Officer of Stanbic Ghana from May 2013 to March 2018.
Fabian Ajogwu, a Senior Advocate of Nigeria, and Professor of Corporate Governance at the Lagos Business School is a non-executive director while Salamatu Suleiman sits on the board as an independent nonexecutive director
In May 2018, its parent company Stanbic Africa Holdings Limited, acquired an additional 1.14billion ordinary shares in Stanbic IBTC Holdings PLC in an off-market transaction, bringing the total percentage shareholding of Stanbic Africa Holdings Limited in Stanbic IBTC to 64.44percent from 53.09percent.
Resilience amid headwinds
The group delivered N36.2 billion post-tax profit in the first half of 2019, which is 12 percent less than N43.1 billion posted in the preceding comparable period. The decline in bottomline is partly caused by a mild decline in net interest income and slim growth of non-interest income.
The group’s one percent increase in interest income from N59. 9 billion to N60.8 billion couldn’t save net interest income from shedding two percent as interest expense jumped 9 percent to N21.5 billion midyear 2019 from N19.8 billion.
Net interest income dropped to N39.3 billion in the review period from N40.2 billion a year before as major drivers asset yields tanked to 12.8 percent from 15.2 percent, and cost of funds rose to 5.2 percent from 4 percent. The bank attributed its increased cost of funds to higher funding to finance asset books, saying it will continue to take deliberate actions to substitute expensive term deposits with cheaper deposit liabilities.
As a result net interest margin, a metric that tracks how well a company is making investment decisions by comparing income, expenses, and debt, fell to 4.9 percent half-year 2019 from 5.9 percent last year on liquidity squeeze and reduced financial investment portfolio as a result of excess cash reserve assets.
The groups’ non- interest income grew a mere 2 percent to N54.9 billion in the review period from N53.8 billion last year, driven by a 10 percent increase in trading income and 10 percent growth in other revenue, which offset the impact of a 2 percent decline in net fees and commission.
Gross loan portfolio of the group increased some 5 percent to N479.7 billion in the first half of 2019. A look at the numbers showed that the local currency component of the loan jumped from 53 percent to 61 percent while the foreign part reduced to 39 percent from 47 percent.
Meanwhile, customer deposits declined 14 percent to print N693.5 billion in the review period from N807.7 billion fullyear 2018 due to release of expensive term and call products. However, the loan-to-deposit ratio for half-year 2019 stood at 51.75 percent, which is 9 percent lower than the 60 percent threshold of Nigeria’s Central Bank.
The lender recorded improved asset quality in the period as bad loans halved to N18.8 billion mid- year 2019 from N37.7 billion last year, even as NPL ratio trended lower to 3.9 percent within CBN’S five percent threshold.
A look at its NPL numbers showed that the company is exposed majorly to transportation and agriculture sectors of the economy.
Stanbic IBTC amid tough regulator
The apex bank as part of its regulatory functions imposed a heavy fine totaling N5.87bn on four banks and also directed the teleco-giant, MTN, to refund $8.1bn relating to the remittance of foreign exchange based on certain “irregular” capital importation certificates issued to MTN Nigeria Communications Limited. Out of this amount imposed on four banks, Stanbic IBTC directed to refund N1.886bn.
Also recently, after several years of legal battle, the Supreme Court delivered a judgment between the bank and Longterm Global Capital and Patrick Akinkuotu and ordered the bank to pay the sum of N2.5bn Bullish on full-year outlook For Nigeria’s economic and political environment, the company expects moderate economic growth, stability in crude production and relative peace in the Niger Delta region, Brent to hover around $60 per barrel, headline inflation for the year to print at 11 percent and accretion in external reserves.
Stanbic IBTC Holding company says it would focus on cost-efficiency, improved risk asset quality, loan growth, growing low-cost deposits, improving customer experience and digitalization, but risks to performance centers on low-cost deposit growth, regulatory intervention, and competitive asset pricing.
For the banking industry, management envisages interest rates to hover around 12 to 14 percent, naira stability, pressured net interest margins, relatively tight liquidity regime, heightened regulation to drive loan growth, better digital efficiency and relative improvement in asset quality.
It expects NPL ratio to remain below 5 percent in 2019, net interest margin to hover between 4 -5 percent; cost-to-income to fall between 50 – 55 percent; return on equity to print between 25 -30 percent and loan growth of at most 15 percent.
