Trading revenue swings Stanbic’s gross earning to decade high

Gross earnings reported by Stanbic IBTC Holdings hit a decade high in 2022 on the back of a 131 percent surge in trading revenue, according to findings by BusinessDay.

Data obtained from the Nigerian Exchange Group (NGX) revealed the bank’s gross earnings grew by 39.15 percent to N287.54 billion in 2022 compared to N206.64 billion in 2021, while trading revenue for the period surged to N34.69 billion in 2022 from N13.29 billion in 2021.

The NGX data also shows that the bank generated the sum of N34.69 billion from the trading of fixed-income securities and currencies during the period and N2 million from the equities market.

The Central Bank of Nigeria, in 2022 increased interest rates by a total of 600 basis points, thereby increasing the interest charged by banks on loans.

As a result, Stanbic further added to its revenue stream by reporting a 45.75 percent growth in interest income to N152.67 billion in 2022 from N104.75 billion in 2021, with interests earned on loans and advances to customers accounting for N119.96 billion of the total interest income reported.

“The year-on-year growth in interest income was driven by both increase in volume of risk assets and growth in average yield due to a higher interest rate environment,” analysts at CSL Stockbrokers Limited said in a note.

Its interest expense also grew by 34.62 percent to N39.55 billion in 2022 from N29.38 billion in 2021 on the back of a 124 percent increase in interest generated from savings accounts and 62.36 percent increase in interest from borrowed funds.

Fees and commission revenue reported by the bank during the period grew by 8.77 percent to N96.07 billion in 2022 from N88.32 billion in 2021, while fees and commission expenses declined by 8.05 percent to N5.01 billion in 2022 from N5.44 billion in 2021.

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The growth in the fees and commission Income was supported mainly by moderate growth in asset management fees (up 6.6 percent) and accounted for 61 percent of total fees and commission income in 2022, while card-based commission and brokerage and financial advisory were up 112.2 percent and 24.4 percent respectively.

Stanbic IBTC reported impairment loss on financial instruments totaling N10.29 billion in 2022, down from an impairment write back of N1.5 billion in 2021.

Cost of risk in 2022 comes to 0.94 percent, with non-performing loan to total loan ratio amounting to 2.4 percent compared with 2.1 percent in 2021.

As the cost of doing business in Nigeria increases due to energy supply disruptions and rising inflation, operating expenses (OPEX) grew 21.4 percent to N129.47 billion in 2022 from N106.65 billion in 2021.

The moderate growth in OPEX compared with the significant 40.3 percent growth in total operating income led the cost of income ratio (CIR ex provisions) to improve by 839 to 53.9 percent in 2022 compared with 62.3 percent for 2021.

Consequently, profit after tax deductions increased by 41.85 percent to N80.81 billion in 2022 from N56.97 billion in 2021, bringing profit margin up 54 basis points to 28.11 percent in 2022 from 27.57 percent in 2021.

However, despite Stanbic IBTC reporting profit growth during the period, data from the NGX reveals that the bank’s business activities are not generating cash, as net cash flow from operating activities amounted to N-84.23 billion in 2022, down from N83.60 billion in 2021.

Its net cash flow from investing activities for the period was negative amounting to N98.83 billion due to cash spent for capital expenditure, and purchase of financial instruments.

During the year, Stanbic paid dividends totaling N48.87 billion, repaid borrowings and debt securities issued of N27.37 billion and N25.50 billion respectively. It also received proceeds from borrowings amounting to N64.83 billion, and proceeds from debt securities issued totaling N46.17 billion, thereby bringing net cash flow from financing activities to N10.25 billion in 2022.

Consequently, cash and cash equivalents for the period, declined by 22 percent to N611 billion in 2022 from N783 in 2021.

Its loans and advances grew by 29 percent to N1.2 trillion in 2022 from N937 billion in 2021, thereby bringing total assets to N3.03 trillion in 2022.

Deposits and current accounts were up 11.42 percent to N1.74 trillion in 2022 from N1.56 billion in 2021, while total shareholders’ funds grew by 8.17 percent to N407.67 billion in 2022 from N376.87 billion in 2021.

Stanbic’s return on equity for the full year period of 2022 increased by 470 basis points to 19.82 percent compared to 15.12 percent in 2021.

Ultimately, the bank declared earnings per share of N603 per share in 2022 from N420 per share in 2021, and proposed a final dividend of N2.00 per ordinary share of 50 kobo each.