What to know as Stanbic IBTC gets approval for N150bn Rights Issue

Stanbic IBTC Holdings Plc has received the approval of the Nigerian Exchange Limited (NGX) for a proposed Rights Issue of about N150billion. The approval for the Rights Issue was given on November 5, according to a recent NGX report.

The stockbrokers for the Rights Issue are Stanbic IBTC Stockbrokers Limited, FBNQuest Securities Limited, Greenwich Securities Limited, Meristem Stockbrokers Limited, and RenCap Securities (Nigeria) Limited.

Also, the Issuing House(s)/Financial Adviser(s) for the Rights Issue of Stanbic IBTC Holdings are: Rand Merchant Bank Nigeria Limited, Stanbic IBTC Capital Limited, Coronation Merchant Bank Limited, FCMB Capital Markets Limited, Quantum Zenith Capital & Investments Limited, United Capital Plc, and FSDH Capital Limited.

Stanbic IBTC Holdings, commonly referred to as Stanbic IBTC, is a financial service holding company in Nigeria with subsidiaries in Banking, Stock Brokerage, Investment Advisory, Asset Management, Investor Services, Pension Management, Trustees, Insurance Brokerage and life Insurance businesses.

Kunle Adedeji became the acting Chief Executive of Stanbic IBTC Holdings with effect from November 1. Adedeji brings a wealth of experience and a strong track record of leadership within the organisation.

In its unaudited consolidated and separate interim financial statements for the nine months to (9M) to September 30, 2024, Stanbic IBTC Holdings Plc reported gross earnings of N649.531billion as against N331.624billion in 9M’2023, representing 95.9 percent increase.
Profit Before Tax (PBT) also closed high at N222.931billion from N129.458 in 9M’23, up 72.2 percent, while Profit After Tax (PAT) of N182.871billion in 9M’24 represents an increase by 67.4 percent, from N109.249 billion in 9M’23.

Blessing Ishola, Lagos-based Coronation Research analysts in their October 28 note to investors said that Stanbic IBTC Holdings core revenue streams supported its nine months (9M) performance.

“Stanbic IBTC Holdings released its 9M 2024 results after close of business on Friday October 25, 2024. The results showed 72.2 percent year-on-year (y/y) growth in pre-tax profits and 68.5 percent y/y growth Net profits. Analysing Q3 24 performance alone, pre-provision operating profit rose 4.8percent quarter-on-quarter but net profits declined by 5.9 percent quarter-on-quarter (q/q) due to margin pressure.

“On balance, earnings were supported by growth in Interest Income (+130.7percent y/y), which is primarily attributable to improved market yields during the period. This supported income from investment securities and loans & advances to customers,” the Coronation research analyst said among other notes in the results first look.

Read also: Stanbic IBTC’s net interest income up 180% on rate hike

“Overall, the performance reflects strong growth in core revenue streams. Although asset quality shows some signs of stress, as evidenced by the rise in the NPL ratio and Cost of Risk, we attribute this to the group having a proactive approach to provisioning for losses, given the current macroeconomic headwinds and this reflects the group’s commitment to safeguarding financial stability.

“We expect elevated market yields to support income from core banking activities for the rest of year. On recapitalisation, the group received approval to raise N550billion through a combination of a N150billion rights issue and a N400 billion debt issuance programme at its Annual General Meeting in May: however, modalities are yet to be officially communicated,” Ishola noted.

Coronation research analysts rated the stock “Hold”, adding that their Price Target (TP) for the stock is N63.97. As at October 25 the stock price was N61. As at Friday November 8, the share price of Stanbic IBTC Holdings stood at N58.85 per share. The stock’s price had reached a 52-week high of N69.65 and a 52-week low of N45.

According to the company’s notification of share dealing by an insider, Babatunde (Babs) Jolayemi Omotowa, an independent non-executive director of Stanbic IBTC Holdings Plc on November 1 and 4, bought 303,800 units at N58.

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Stanbic IBTC Holdings had said that as part of the resolutions during the group’s Annual General Meeting (AGM) held on May 16, 2024, in Lagos it looks to raise N150 billion through a rights issue programme and N400 billion through a debt issuance programme, amounting to a total of N550 billion.

The Central Bank of Nigeria (CBN) raised the minimum capital base for commercial banks holding national authorisation to N200 billion, and those with regional authorisation to N50 billion. Also, banks with international authorisation now need N500 billion as the minimum capital to retain their licenses.

Another resolution of the AGM about six months ago was to increase the group’s share capital from the current N6.478 billion to N8.25 billion by creating an additional 3,543,002,837 ordinary shares. Presently, Stanbic IBTC Holdings has 12,956,997,163 fully issued ordinary shares.

In half-year (H1) to June, Stanbic IBTC Holdings paid an interim dividend of N2 per ordinary share of 50 kobo each, that amounted to N25.913billion. The dividend was paid to shareholders whose names appeared in the Register of Members as at the close of business on Wednesday September 18, 2024.