Stanbic surprised many with a 46% drop in pre-tax profits to N4.8billion this quarter and just three months after posting a blistering 2014 Full year results. 2014 was a stellar year for the company reporting a 57% rise in group profits to N32billion. This was one of the best results in 2014 for any Nigerian banks in terms of profitability growth. So what happened in Q1?
Interest Cost
- A look at Stanbic results shows it generated an interest income of N19.7billion in interest income compared to N17billion reported same period last year.
- However, interest expense spiked a whopping 70% to N9billion compared to N5.2billion.
- We couldn’t lay our hands on their notes to account to find out what was the specific reason for this spike.
Loan Impairment
- Stanbic IBTC also booked a higher impairment on loans as it took a charge of N3.9billion this quarter compared to N1.1billion same period in 2014
- In fact, the N3.9billion charge it took this quarter is higher than the entire charge it took in 2014 which was N3.2billion
- This perhaps suggest the bank must have recognised some of its loans are going bad and complied to IFRS requirements by recognising the potential losses early on.
- We also do not have notes to this account and cannot ascertain specifically which of its loans is impaired.
Share price
- Stanbic IBTC share price closed the week at N29 off its week high of N30
- It is still one of the most expensive banking stock and trading at 10x price earnings ratio
Disclosure – Nairametrics and the author of this article does not own shares in Stanbic IBTC Plc and does not plan to buy shares in Stanbic IBTC Plc in the next one week. The author of this article wrote it themselves, and did not write this article on behalf of Stanbic IBTC Plc, its associates or representatives. The article is purely their opinion.