2018 has largely been an unremarkable year in the Nigerian banking space. The absence of one time events such as foreign exchange revaluation gains, and a tapering in the yield on treasury bills, has left banking results largely flat in the tier one space. Growth remains tepid, hence banks have also exercised caution in ramping up lending.
Tier two banks such as Sterling and FCMB have shown marked improvement. Stanbic IBTC, however, seems to lead the pack, and from all indications, may exceed its robust FY 2017 performance.
Recent Results
Results for the Group show that gross earnings increased from N97.1 billion in 2017 to N114 billion in 2018. Profit before tax jumped from N29 billion in 2017 to N50.7 billion in 2018. Profit after tax also surged from N24.1 billion in 2017 to N43 billion in 2018.
About Stanbic IBTC
Stanbic IBTC Holdings is a member of the Standard Bank Group. The company has nine direct subsidiaries: Stanbic IBTC Bank Plc, Stanbic IBTC Pension Managers Limited, Stanbic IBTC Asset Management Limited, Stanbic IBTC Capital Limited, Stanbic IBTC Investments Limited, Stanbic IBTC Stockbrokers Limited, Stanbic IBTC Ventures Limited, Stanbic IBTC Insurance Brokers Limited and Stanbic IBTC Trustees Limited.
The bank is the resulting entity of the merger between IBTC Chartered and the local arm of South Africa’s Standard Bank. IBTC was founded by Atedo Peterside.
Price Information
Current Share Price: N45
Year High: N52.05
Year Low: N39.76
Year to Date: 8.43%
One Year Return: 7.91%
Price Outlook
The stock will most likely continue trading within its current price range, due to bearish market sentiments. Year to date, the stock is up 8.43%, outperforming the NSE All Share Index which is down 14.44%.
Possibilities of a sharp fall in price are, however, unlikely as the stock is fairly illiquid.
Valuation
Stanbic is trading at 6.97 times earnings. While a bit high compared to some tier two banks such as Sterling and Fidelity, Stanbic in some regards is a mid-tier bank, comparable to Ecobank Trans International (ETI) which is trading at 5.67 times earnings.
Outlook
Stanbic’s H1 2018 profit after tax of N43 billion has nearly exceeded the bank’s full-year 2017 profit after tax of N48.3 billion.
Stanbic paid an interim dividend of N1 per share for H1 2018, but investors expecting a bumper final dividend may have to lower their expectations. The bank typically pays a large interim dividend and a small final one.
Stanbic has continued to perform in its areas of strength namely wealth, corporate and investment banking. The bank’s pension subsidiary is a dominant player in that space and may continue to do so in the forseeable future.
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