Connect with us
nairametrics

Columnists

StanbicIBTC: Modest earnings despite frail Q4 performance

Stanbic’s AUDITED report shows no differences in the consolidated statement of profit or loss and the Consolidated statement of financial position.

Published

on

Stanbic IBTC Holdings Plc

Following the release of its UNAUDITED financial report, Stanbic recently published its AUDITED report where we observed no differences in the Consolidated statement of profit or loss and the Consolidated statementfinancial position, suggesting credibility in its financial reporting. A  final dividend of N2.o was declared, bringing the total dividend for FY 2019 to N3.0. Based on todayís closing price of N35.7, the final dividend translates to a dividend yield of 5.6%.

See below the major highlights of its financial performance as we initially published;

Stanbicís Gross Earnings grew 5% y/y growth to N233.8 billion, slightly below our 2019 estimate of N234.2 billion. Profit before tax also increased 3% y/y to N90.9bn, slightly ahead of our FY 2019 estimate of N90.4 billion. On a q/q basis however, Gross Earnings declined marginally, down 2% q/q to N57.7 billion while Profit before tax fell 11% q/q to N21.8 billion.  We highlight that the Q4 performance was affected by weakness in Interest Income (down 3% q/q), Net Fee and Commission Income (down 2% q/q) alongside the rise in OPEX (up 4% q/q).

Interest Income grew marginally 2% y/y to N120.4bn in FY 2019 but declined 3% q/q to N29.4 billion. The growth in Interest Income was driven by higher Interest on loans and advances to customers (up 4% y/y), reflecting the growth in the loan book (Net loans to Customers grew 23% y/y in 2019). We highlight that the growth in the bankís loan book is the highest since 2014; 40.6%. Accordingly, we believe the strong growth was on the back of CBNís guideline which mandated banks to maintain an LDR of 65% by December 2019.  As of 9M 2019, the bankís Loan to funding ratio stood at 62.9%.

[READ MORE: UBA: Modest growth in FY 2019 profit despite a disappointing Q4 performance)

GTBank 728 x 90

Interest Expense, however, rose by 6% y/y to N42.3 billion in FY2019 but declined 6% q/q to N10.9 billion. The increase in Interest Expense was driven by increase in other borrowings (new real sector support fund taken from the CBN, disbursement from Development Bank of Nigeria), as well as debt securities issued (Senior unsecured bond of N30bn raised in December 2018). The rise in Interest expense ensured Net Interest Income remain flat, both on a y/y basis and q/q basis.

Non-Interest Income grew 6% y/y to N108.8 billion but declined marginally by 1% q/q to N26.8bn. The y/y growth was driven largely by the increase in Trading Income (up 16% y/y) amidst the flattish growth in Net Fee and Commission Income (up 1% y/y). However, the quarterly decline was due to weaker Net Fee and Commission Income (down 2% q/q) as well as lower Trading Income (down 5% q/q)- we attribute this to lower yields on risk-free instruments during the quarter.

Unlike in 2018 when the bank recorded writebacks of N2.9bn, the bank had Impairment Charge assets of N1.6 billion. However, we are still comfortable with the cost of risk of 0.3% in FY 2019.

Deal book 300 x 250
Coronation ads

Operating income grew modestly, up 3% y/y to N186.6bn but was slightly pressured in Q4 (down 1% y/y)- Again, we suspect this was due to the lower yield environment.

Cost efficiencies, however, remained firm as Operating Expenses declined by 2% y/y but grew sub-inflation in Q4; 4% q/q. The decline in OPEX coupled with a single-digit growth in Operating Income (+3% y/y) led to the 248bps improvement in Cost to Income Ratio (CIR ex provisions) to 50.4%.

READ MORE: Buhari proposes sweeping changes to tax laws in 2019 Finance Bill

Pre-tax Profit grew 3% y/y to N90.9 billion, largely on account of stronger Trading Income and the moderation in OPEX.  On a quarterly basis, however, Pre-tax Profit fell 11% q/q to N21.8bn. Profit after tax grew marginally 1% y/y to N75.0 billion, owing to higher effective tax rate of 17.5% compared to 15.6% in FY 2018. RoAE stood at 27.3% in FY 2019 compared to 34.5% in FY 2018.

We have a target price of N55.01/s for Stanbic (current price: N35.7) with a BUY recommendation.

Jaiz bank ads

StanbicIBTC: Modest earnings despite frail Q4 performance

Stanbic IBTC

_______________________________________________________________________

CSL STOCKBROKERS LIMITED CSL Stockbrokers,

Member of the Nigerian Stock Exchange,

First City Plaza, 44 Marina,

PO Box 9117,

Lagos State,

NIGERIA.

Click to comment

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Columnists

Here are 7 ways to plan for the unexpected in your small business

Learn what to do to prepare yourself for the unexpected as you build your business.

Published

on

Business, female entrepreneurs, Palladium, Here are skills you need to be a successful entrepreneur,

It is not easy to maintain a business, whether big or small. A lot of things have to be in place before things can work smoothly with a business. Many entrepreneurs get the shock of their lives when they start a business and they end up facing things that they never even expected in the first place. This piece is going to expose you to the things you should do to prepare yourself for unexpected scenarios.

Prepare for the Rainy Day

Do not be deceived even if your business is booming, things can change very quickly. The economy can enter a recession or sales can dry up without any warning. For this reason, you should have some funds saved away for days like these. The funds can be used during emergencies or when things are very tight for you.

READ: Nigeria not broke, budget to be passed before end of the year – Budget Office

Do Background Checks Properly

GTBank 728 x 90

Doing a business means you will need to buy some items or at least incur certain costs, such as the price of renting your working space. You should not go ahead with this without doing a detailed investigation. If you’re looking for an office in LA, for instance, you have to make sure that you are renting out a coworking space for your employees, and get the most out of the payment that you’re making. Business owners who do not investigate and run background checks end up getting shocked by the turn of events. Do not let this happen to you so conduct your investigations very well regarding the costs.

Be Attentive to Customers

If you want your business to thrive then you have to pay very close attention to your customers. You have to interact with your clients and be attentive to all their needs. Customers often change their preferences and if you do not pay attention, you may be shocked with unexpected outcomes. You also have to be on top of your game so that you know the latest trends in the market and this way, nothing is going to get you by surprise.

Coronation ads

(READ MORE: Many millionaires plan to buy Crypto before 2022)

Moderation is Key

Quite a few business owners get surprised by the difficulty in maintaining a balance between the running of the business and also keeping their home. You have to draw a very practical plan that will help you to strike a balance between your family and your business. This way, you are not going to melt down into a mode of shock when you start running your business. Fortunately, there are lots of resources on the Internet that you can make use of to help you with this. There are even professional advisers that guide entrepreneurs with this. If you can afford their services then you should not hesitate to go for these services because you are going to gain massively from them at the end of the day. It is a very smart move for your business.

READ: AMAC raises alarm over proliferation of fake revenue officers

Get Finances in Order

Jaiz bank ads

Well, what makes any startup tick and succeed is a constant flow of cash. If the cash flow dries up, then you can as well just kiss the business by. You need to fully comprehend your business cycle and come to the realization that there will be some time when customers will pay well and there are some other times when payments will plunge. This can be as a result of unpleasant economic times or even personal financial issues that your customers are facing.

Stanbic IBTC

Whatever the case, you have to figure out well ahead of time how you are going to maintain constant liquidity. This is going to put you in a very safe and comfortable position so that even when the business cycle dips, your business is going to be safe, fine, and running. You can decide to go for corporate loans, depending on your savings, or use any other credit facility available for you.

(READ MORE: Protecting your money from fraudsters)

Sort Taxes Swiftly

Yes, even small businesses have to pay taxes too. Your size is not immune to taxes. If you do not do your calculations very well, you will be very shocked when the tax documents arrive. Discuss this with the law attorney so that you can get all the necessary information.

READ: Huawei competes with Apple, announces release date for new smartwatch

Pay Attention to the Rules and Regulations

Governments keep making business laws all the time and these laws apply to all kinds of businesses, whether big or small. By paying attention to the business legislation, nothing is going to get you unawares. Here is where a good business attorney can also be of help.


About author

Rachel Eleza, Growth Marketing Director at UpSuite and a part-time writer.

app

Continue Reading

Columnists

Financial Literacy and its relevance in the 21st Century

Published

on

One of the most important lessons that a person can learn is how to manage their money. Many young people go into adulthood with little knowledge about financial management and they end up making mistakes that cost them a lot of regrets in the long run. Educating young people about the importance of financial management and making sound financial decisions will go a long way to prevent them from making costly mistakes. This will also encourage them to be financially prudent when making decisions. Thus, the importance of educating young people on financial literacy can never be overhauled or overemphasized.

Financial literacy is the act of acquiring set of skills and knowledge that allows an individual to make informed and effective decisions with all of their financial resources. Financial literacy also involves the skillfulness of financial principles and concepts such as financial planning, budgeting, forecasting, compound interest debt management, profitable savings techniques and also, the importance of understanding the value of money and the principles of wealth management. The lack of financial literacy leads to making poor financial choices that can have negative consequences on the financial well-being of an individual.

On the 3rd of January, 2019, Acting Gov. Sheila Oliver of New Jersey in America signed a law that mandates the state Board of Education include financial literacy instruction in the curriculum for sixth- through eighth-grade students in public schools across New Jersey. This bill was signed at President Barack Obama’s Elementary School in New Jersey City. Although the new law gone into effect in September 2019, New Jersey has actually been ahead of the financial literacy curve for years now. In 2014, the state adopted the program Standard 9, 21st Century Life and Careers, which include guidelines for what students need to know and be able to do in order to be successful in their careers and to achieve financial independence and health. Included are specific financial literacy standards broken out by grade level. However, the 2017 Financial Report Card from Champlain College’s Center for Financial Literacy provides the grades for all states, based on their efforts to produce financially literate high school graduates. Sadly, only five states received an “A” grade for their financial education efforts, namely; Alabama, Virginia, Tennessee, Utah and Missouri. These five states require high school students to take at least a half-year Personal Finance course as a graduation requirement. Only 17 states in total require high school students to take a course in personal finance.

After graduation every step our kids take from college through retirement will be directly influenced by their ability to manage their finances: student loans, credit cards, jobs, mortgages, savings, etc. Once they hit 18 years old, they are required, and able, to make decisions that could affect their entire life, often without the necessary financial knowledge and skills. The point being, understanding finance is a critical skill needed as an adult, yet it is not a mandatory high school course in most states.

The Central Bank of Nigeria made a commitment in 2011 which she referred to as the “MAYA DECLARATION”. The purpose of this declaration is to reduce the number of financially excluded Nigerians from 46.3% in 2010 to 20% by the 2020. To ensure the fulfilment of this obligation, a National Financial Inclusion Strategy was accordingly developed and launched in October 23, 2012. The strategy identified consumer protection and its constituent pillars of Market Conduct, Dispute Resolution & Consumer Education as critical to the attainment of its  objectives. Sometime in 2015, The Central Bank of Nigeria said it has commenced discussions with the National Education Resource Centre to introduce financial literacy programs into the education curriculum of secondary schools in Nigeria.

GTBank 728 x 90

At a recent stakeholders meeting conference that was held in Abuja on the 17th and 18th of January 2019, the Central Bank of Nigeria (CBN) in collaboration with a variety of financial industry stake holders came out with a number of policy positions that will help to educate more Nigerians on Financial Literacy and its importance in the society today. It said once the discussions with NERC are finalized, Financial Literacy will be taught as a subject in all Nigerian secondary schools before the end of this year. The commencement of the financial literacy program will assist in improving the savings culture among secondary schools in Nigeria. An important aspect of this strategy is the implementation of financial literacy programs across various target groups of Nigerian population. On the 19th of July 2019, Central Bank of Nigeria (CBN) said it is in partnership with churches and mosques in the promotion of financial literacy in the country. The bank’s Director, Consumer Protection Department, Mr Kofo SalamAlada made this known in an interview with News Agency of Nigeria (NAN) in Abuja. SalamAlada said the apex  Bank had organized outreach programs to educate members of some faiths based organizations with a view to educate them on the program and the need to key into it. CBN decided to use such religious organizations because of the spiritual and religious nature of most Nigerians. However, CBN is ready to work with any organization willing to set up an in house financial literacy program.

The five key points from the conference that was held in Abuja on the 17th and 18th of January at the stakeholders meeting include;

1. With Financial Technology (Fin-tech) becoming an increasingly important part of the business ecosystem , there must be deeper collaboration amongst the various regulatory authorities and private market participants such as deposit money banks (DMBs), Telco, retail stores and payment system banks (or agency banks). The regulators must ensure a seamless set of rules and responsibilities that cover issues related to the services rendered by each retail and wholesale market participant.

Coronation ads

2. Consumer education needs to be broadened and deepened. Multilevel platforms need to be adopted for the education of a wide range of consumers of financial services:

  • Market men and women
  • Students-primary, secondary and tertiary
  • Artisans
  • Crop Farmers
  • Animal Husbandry Farmers
  • Sellers of small unit items at the margins of urban economies

3. Consumer dispute processes must be fashioned in manners that guarantee quick, easy and inexpensive resolution of differences between service vendors and customers. This may also require speedy resolution of differences between regulatory agents, meaning there must be clarity over role and responsibilities in cases of dispute.

4. The target of national exclusion must be reduced from 46.3% in 2010 to 20% in 2020. The current exclusion rate in 2018 was about 36.8% according to a recent report by Enhancing Financial Innovation and Access (EFINA).

5. To reach the financially excluded, market infrastructure needs to be enhanced. Poor communication, especially in respect of Telco services in rural communities need to be urgently addressed. Many payment bank agents suffer frustration because of weak network connection and slow data processing time.

The lack of financial literacy can lead to owing large amounts of debt and making poor financial decisions. For example, the advantages or disadvantages of fixed and variable interest rates are concepts that are easier to understand and make informed decisions about if you possess financial literacy skills. Based on research data by the Financial Industry Regulatory Authority, 63% of Americans are financially illiterate. They lack the basic skills to reconcile their bank accounts, pay their bills on time, pay off debt and plan for the future.

Jaiz bank ads

The current realities in the Financial Sector show that, it is only when the interest of consumers is given proper attention and protected that public confidence would be restored in promoting a strong and stable economy. Though there exits many educated and literate Nigerians, a high percentage of the population does not have the requisite skills to effectively manage their financial transactions and take advantage of the opportunities presented by the financial products and services to improve their well-being. An important aspect of this strategy is the implementation of financial literacy programs across various target groups of Nigerian population.

Stanbic IBTC

Consumers of Financial Services have also been subjected to unethical practices from financial institutions which could be attributed to their low levels of financial literacy arising from their lack of knowledge of their rights and obligations in their relationships with the financial institutions. Financial illiteracy affects all ages and all socioeconomic levels. Financial illiteracy causes many people to become victims of predatory lending, subprime mortgages, fraud and high interest rates, potentially resulting in bad credit, bankruptcy or foreclosure.

However, some signs of lack of financial literacy include;

  • Not having a budget, a goal or a plan.
  • Excessive spending
  • Living on debt.
  • Not having emergency savings.
  • Borrowing for the wrong reasons.
  • Banking on an expected money
  • Not investing for the long term.
  • Ignoring insurance.
  • No retirement plan
  • Pressure from social media and friends.
  • The main steps to achieving financial literacy include;
  • Learning the skills to create a budget
  • The ability to track spending
  • Learning the techniques to pay off debt
  • Effectively planning for retirement.

These steps can also include counseling from a financial expert. Education about the topic involves understanding how money works, creating and achieving financial goals and managing internal and external financial challenges.

Financial literacy helps individuals become self-sufficient so that they can achieve financial stability. Those who understand the subject should be able to answer several questions about purchases, such as whether an item is required, whether it is affordable, and whether it an asset or a liability. This field demonstrates the behaviors and attitudes a person possesses about money that is applied to his daily life. Financial literacy shows how an individual makes financial decisions. This skill can help a person develop a financial road map to identify what he earns, what he spends and what he owes. This topic also affects small business owners, who greatly contribute to economic growth and stability.

How can financial literacy be encouraged in Nigerian?

  • There is a need for increased consumer financial literacy to improve the literacy penetration ratio which is still embarrassingly low. An 80% penetration by 2021 is targeted.
  • Nigerian youths need to be more actively engaged in financial literacy to create a more active financial industry participation rate for a demography group between 16 and 35 years of age. This represents over 60% of Nigeria’s population of an estimated 198million people
  • Women need to be especially targeted since research evidence show that they are more reliable borrowers of funds at the MSME levels
  • The different segments of the financial ecosystem; banks, insurance companies, pension fund managers and stockbrokers need to be more intimately related to provide consumers
    with a more robust understanding of products and services rendered by each market segment and how they are linked or complementary.
  • A process of monitoring and evaluation has been designed to ensure that processes or procedure agreed are actually followed

Children and youths are an important target group for the purpose of the financial literacy program. It should be noted that financial literacy is better learned at a young age instead of in adulthood. This is because a habit imparted in the youth at an impressionable age becomes a way of life. Where the youth grow without financial education, it would be difficult for them to have financial literacy as well as being capable of managing their own financial matters in a way that will impact their well-being when they become adults. When financial literacy is achieved, it will help to boost financial inclusion in any country-Nigeria to be precise.

It should be noted that being financially literate is different from acquiring normal education as some people are educated but financially illiterate.


Written by Chukwuma Aguwa

Continue Reading

Columnists

The role of Artificial Intelligence in modern businesses and marketing

Among all the new innovations, the role of artificial intelligence (AI) has become more important.

Published

on

Embracing new technologies has become a significant facet in the development of businesses in modern times. In order to grow in the market, businesses have to be dynamic. The adoption of new tech innovations has enabled businesses to manage business operations very efficiently. The marketing on the internet has also become more emphasized as a special target market can be reached through new digital tools.

Among all the new innovations, the role of artificial intelligence (AI) has become more important. This technology helps businesses to save money as well as time whether it comes to marketing or operating various activities of the businesses. Here, we are going to show you how AI is very essential for modern businesses.

Artificial Intelligence: What Is It?

The basic concept of Artificial intelligence can be defined as the computer language or informatics tool that can be taught about businesses. Further, it can analyze and study the various works of the business and it can generate operational solutions with the motive to enhance its capacity so that the business can perform more effectively in the market. In a nutshell, this new tech is really quick and smart that provides various business benefits online.

What Businesses Are Benefitting from Artificial Intelligence?

Every business that is residing on the internet to serve the consumers is going to take advantage of AI tech. The concept of digital marketing mainly depending on artificial technologies and apart from that, it can bring many operational benefits as well. The Arts & entertainment sector, education sector, information & communication, healthcare, financial services, and the gaming sector are among the main business sectors that are taking the most benefits from artificial intelligence.

Emerging businesses like online sportsbooks and online casinos are using AI tech optimum to reach the target market and offer the best and suitable game proposals to the customers. Gaming sites like Wink Bingo are witnessing impressive successes by diverting customers to the online platform to play games like bingo. This all has become possible through the use of modern artificial intelligence. It helps all the businesses to focus on the target market and eventually convert them into customers. Once the marketing has been done successfully, it helps to suggest the most suitable options available at any business.

GTBank 728 x 90

The Various Roles of Artificial Intelligence in the Businesses

Artificial intelligence can help the business in several ways. Here are some of the benefits that artificial intelligence offers in order to grow the business:

It Saves Money and Time

As a business owner, one has to focus on multiple things and with the help of artificial intelligence, some of the many tasks can be done automatically. This not only reduces the manpower requirements but also helps to save a lot of time as well. Thus, the businesses can perform other more interesting tasks, increasing the overall productivity of your business.

Coronation ads

In the long term, it will help to enhance the productivity of the business without requiring more time and financial investment.

Reduces the Possibility of Errors

Artificial intelligence, as an automated tool, is much less prone to making mistakes than humans. When it comes to performing monotonous and routine tasks, people lose concentration, due to exhaustion or overload, as the hours go by and that is why we make mistakes that would affect the company. This is not the case with artificial intelligence operations systems that reach a response and service accurately. Since AI mages to process a lot of data and use it for decision making, the chances of occurring mistakes are minimal.

Improve Customer Experience

The role of AI is not only limited to marketing and operations because it also helps to enhance the customer experience. AI apps collect and analyze data of the customers and present very detailed information about every consumer group. All this allows businesses to personalize offers for the customers by adapting the product or service to their needs and increasing their degree of loyalty to your brand, or improving your help channels to generate faster responses to their requests or needs.

Virtual Assistants

This is another role of AI to enrich the customer experience. Virtual assistants are created with the help of AI tech so, they make communication between businesses and customers easy. It helps to solve customers’ queries and carry out certain actions. In order to make communication more reliable and error-proof, data should be processed in a large amount.

Smart Advertising

As we mentioned earlier, most businesses are using AI for marketing. Social media marketing and digital marketing through keywords and consumer searches are part of smart marketing by artificial intelligence. This helps the businesses to reach potential customers who would be interested in the goods or the services of the businesses.

Jaiz bank ads

Sales Performance Analysis

Sales are essential in the business, especially if you are just starting out. There are various tools that artificial intelligence uses to evaluate emails, calls, or conferences to analyze what has worked and what has not in order to improve strategies when selling. For instance, these platforms compare the sales techniques used by the salespeople of the business, analyzing variables such as the chosen vocabulary or the time spent talking or listening to the customer. With this, the most effective techniques for attracting clients can be established to be carried out by the rest of the team.

Stanbic IBTC

Continue Reading