Stanbic IBTC posted an impressive pre-tax profit of N303.8 billion, reflecting a 75.70% YoY growth.
This growth was driven by a significant expansion in net interest income (+134.29%) and net fees and commission income (+54.52%), indicating robust revenue generation across interest and non-interest income streams.
Key highlights (2024 vs 2023):
- Interest Income: N566.462 billion +109.34% YoY
- Interest Expense: N156.011 billion +63.53% YoY
- Net interest income; N410.451 billion +134.29% YoY
- Net fees and commission income: N170.394 billion +54.52% YoY
- Net impairment loss on financial assets: N99.360 billion +543.02% YoY
- Income after impairment charge for losses: N547.485 billion +61.16% YoY
- Operating expenses: N243.689 billion +46.09% YoY
- Profit after tax: N202.104 billion +43.73% YoY.
- Earnings per share N15.31 +44.16% YoY
- Loans and advances to customers N2.348 trillion +15.55% YoY.
- Cash and Cash equivalents N2.245 trillion +62.13% YoY
- Total Assets N6.912 trillion +34.34% YoY.
- Customers’ deposits N3.009 trillion +45.20%.
- Shareholders’ funds: N647.441 +27.72% YoY
Investor insights & key takeaways
Total interest income surged by 109.34% YoY. However, there was a shift in income sources:
- Interest income from loans and advances to customers grew by 71%, but its contribution declined to 69% from 85% in 2023.
- Interest income from securities surged by 347%, increasing its contribution to 28.49% of total interest income.
- This suggests that the bank is increasingly leveraging fixed-income securities as an income source, possibly due to high yields on government securities.
Deposit growth and rising funding costs
Customer deposits expanded by 45.20% to N3.009 trillion, reflecting a strong liquidity position and customer confidence. However, the cost of funding these deposits is rising:
- Interest expenses on customers’ deposits increased by 173%, constituting 54% of total interest expenses.
This suggests that higher interest rates and intense competition for deposits have driven up funding costs, which could affect net interest margins in the future.
Credit risk and rising impairments
- Loans and advances to customers grew by 15.55%, indicating that Stanbic IBTC continued to expand its lending portfolio.
- However, loan impairments surged by 561% to N88.664 billion, far outpacing loan growth.
This sharp increase suggests a deterioration in asset quality, potentially driven by macroeconomic challenges, loan defaults, or increased exposure to riskier borrowers.
- The mismatch between moderate loan growth and soaring impairments raises concerns about the bank’s credit risk management and potential impact on future profitability.
Efficiency and shareholder value
- Operating expenses increased by 46.09%, suggesting rising costs, though the bank managed to maintain strong profitability.
- Earnings per share (EPS) increased by 44.16% YoY, enhancing investor returns.
- Shareholders’ funds grew by 27.72%, reflecting retained earnings growth and potential value appreciation.
Overall. Stanbic IBTC delivered an exceptional performance in 2024, with strong profit growth, higher interest income, and a solid balance sheet.
However, rising impairments and funding costs pose risks. The bank’s shift towards securities income, rather than pure lending, reflects a strategic adjustment to optimize earnings in a high-interest rate environment.
Investors should monitor credit risk trends and funding costs, but the overall outlook remains positive given its profitability and asset expansion.
