Stanbic IBTC Holding of Nigeria Bank reported half-year results that fell short of expectations, sending a lackluster signal about the state of banking and the wider economy.
For the first six months through June 2015, Stanbic IBTC’s net income shrank by 40 percent to N9.69 billion, from N16.18 billion in the previous year.
Based on Naira Metrics investigations, the significant fall in profit was fueled by a 78 percent rise in interest expense to N19.58 billion and a 449 percent rise in credit impairment charges.
Stanbic’s rising operating expenses was also a drag on profitability.
Analysts have said that the multiple regulations imposed by the Central Bank will hurt lenders in the long run.
One of such policies is the increase in Monetary Policy Rate (MPR) to 13 percent, from 12 percent previously held, and the Apex Bank unified cash reserve ratio for public- and private-sector funds at 31 percent to improve the transmission of monetary policy.
Previously, the rate for private-sector funds was 20 percent and 75 percent for public funds.
It will be a tough half-year as the restrictions in foreign-currency trading are the biggest risk to banks.
This policy squeezes liquidity in the foreign exchange market and prevents lenders from buying dollars in the interbank market without matching orders.
The Abuja Based Bank applied the rules and restriction to stabilize the naira after it fell to a record low in February as oil price plunged more than 40 percent since 2014.
Stanbic IBTC, the leading tier 2 bank had been one of the best performers based in increased profitability, cost efficiency and solid interest and non interest income.
Financial Highlights
- For the first six months through June (HY) 2015, gross earnings increased by 11 percent to N68.30 billion, from N61.71 billion in the previous year.
- Interest income increased by 23 percent to N41.71 billion in HY 2015 as against N34 billion the previous year.
- Operating expenses were up by 31.04 billion in the period under review compared with N29.11 billion the previous year.
- Loans and advances to customer rose 3 percent to N409.90 billion in HY 2015 compared with N398.60 billion as at June 2014.
- Deposits from customers increased by 22 percent to N601.73 billion in HY 2015 compared with N494.93 billion last year.
