Gross earnings reported by Stanbic IBTC Holdings hit a 13-year high in the first half (H1) of 2024, according to findings by BusinessDay.
Data obtained from the Nigerian Exchange Limited (NGX) said the growth was mainly driven by a 2.2x surge in interest income, which offset the 91.2 percent growth in interest expense.
Stanbic IBTC’s grew interest income by 123 percent to N246 billion in the first half of the year from N110.2 billion in the same period of 2023, with interests earned on loans and advances to customers accounting for N163 billion of the total.
The Central Bank of Nigeria (CBN) raised the interest rate from 18.75 percent to 26.75 percent between July 2023 and July 2024 to rein in inflation and stabilise the naira. This has led to higher interest incomes for banks.
Analysts believe that the year-on-year growth in interest income was driven by both an increase in the volume of risk assets and growth in average yield due to a higher interest rate environment.
The bank’s interest expense also grew by 91.4 percent to N71.8 billion from N37.5 billion, on the back of a 42 percent increase in interest from borrowed funds and an 85.7 percent increase in interest on term deposits.
“Elsewhere, non-interest revenue (NIR) expanded by 31 percent, primarily driven by growths recorded in asset management fees (+41.6 percent) and brokerage & financial advisory fees (+144.4 percent),” CardinalStone said in a note.
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Fees and commission revenue reported by the holding company during the period grew by 65.2 percent to N88.7 billion from N53.7 billion, while fees and commission expenses declined by 119.7 percent to N5.7 billion from N2.6 billion.
The growth in the fees and commission income was supported mainly by moderate growth in asset management fees (up 41.7 percent) and accounted for 53 percent of total fees and commission income in the first six months. Brokerage and financial advisory fees and foreign currency service fees were up 148.9 percent and 127.9 percent respectively.
Stanbic IBTC reported a 32.6 percent increase in gross loans and advances to N2.3 trillion. A breakdown indicates that non-performing loans expanded by 114.3 percent to N81.6 billion, translating to an NPL ratio of 3.6 percent from 2.2 percent in H1’23.
In tandem with the substantial growth in gross loans, loan provisioning likewise improved, with cost-of-risk advancing to 2.4 percent from 0.8 percent.
As the cost of doing business in Nigeria increases due to energy supply disruptions and rising inflation, operating expenses (OPEX) grew by 57.8 percent to N129 billion from N82 billion.
The moderate growth in OPEX compared with the significant 77.1 percent growth in operating income led the cost of income ratio to improve by 42.8 percent.
CardinalStone added, “The main contributors to the higher operating expenses were staff costs (+46.0 percent), AMCON expenses (+70.9 percent), and information technology (+110.9 percent).”
Consequently, data from the NGX reveals that the holding company’s business activities are generating cash, as net cash flow from operating activities amounted to N1.19 trillion in H1, from N159 billion in the corresponding period of 2023.
Its net cash flow from investing activities for the period amounted to N155 billion from a negative of N148 billion. Net cash flow from financing activities to N123 billion from N48 billion.
Consequently, cash and cash equivalents for the period surged to N1.7 trillion in H1 from N720 billion in the corresponding period of last year.
