Article Summary
- Stanbic IBTC, Nigeria’s largest pension fund, posted a pre-tax profit of N34.2 billion in 2022, representing a 5% increase from the same period in 2021.
- The pension arm of the group reported a pre-tax profit of N10.2 billion in the first quarter of 2023, making it the dominant pension fund in Nigeria with an Asset Under Management of about N5.7 trillion.
- Stanbic IBTC faces competition from other banks, such as Access Bank and GTCO, who are acquiring pension fund asset management licenses and increasing market share. Despite the challenges, Stanbic IBTC plans to continue growing its client franchise, assets under management, and digitization efforts.
Nigeria’s largest pension fund, Stanbic IBTC posted a pre-tax profit of N34.2 billion in 2022. This represents a 5% increase from the N32.4 billion reported in the same period in 2021.
The earning is gross of consolidations and intergroup eliminations. The group owns about 88% equity of Stanbic Pensions Ltd shares.
In the first quarter of 2023, the group also reported a pre-tax profit of N10.2 billion for its pension fund business.
Stanbic IBTC Pension is the dominant pension fund in Nigeria with an Asset Under Management of about N5.7 trillion as of December 2022 and earns money by charging fees for managing the pension funds. The pension arm is only second to the banking division which posted N59.9 billion in pre-tax profits in 2022.
Proven model
Stanbic IBTC’s Pension business has been the model being followed by tier-one banks who have in recent years acquired pension fund asset management licenses as they transit to bank holding companies.
At over N30 billion in pre-tax profits, the pension subsidiary earns more than some standalone commercial banks tier two commercial banks.
Despite the impressive growth in profits, the bank’s earnings growth has been volatile on either side of the covid-19 year of 2020. For example, in 2018 and 2019, pre-tax profits were N28.1 billion and N28.3 billion respectively. In 2020, it fell to N27.9 billion before rising 16.1% to N32.4 billion in 2021.
Nigeria’s pension funds have an Asset Under Management of about N15.4 trillion as of February 2023 (it was N14.9 trillion in 2022) out of which Stanbic IBTC controls about 38% of the market share.
Growing competition
However, with the increasing wave of pension fund acquisitions in the market, Stanbic IBTC faces huge competition from the likes of Access Bank which disposed of its custodian business to acquire Sigma Pensions. GTCO also has a pension management company that reported a pre-tax profit of N446 million in 2022 after operating for just 11 months.
However. the likes of Access Bank and GTCO have the wind in their sails as they see a growth opportunity. For example. GTCO’s profit was a 1,184% growth from the same period last year. They are also likely to come after not just Stanbic IBTC’s market, they are also likely to raid their employees and agents as competition intensifies.
Premium Pensions, one of the fastest-growing pension fund asset managers reported it crossed the N1 trillion mark in assets under management. delivering a pre-tax profit of N3.9 billion, a 35% growth from the prior year.
Still numero
Despite the challenges posed, they face a steep climb considering Stanbic’s market dominance, penetration, and innovation. Stanbic IBTC’s pension business is grouped under its Consumer and High Net Worth Clients (non Bank) segment.
According to details contained in its financial statements, fees earned from the segment topped N60 billion in 2022 up 6% from N57 billion earned a year earlier. It also has about 1.8 million customers.
The bank stated it will continue to focus on growing its client franchise and assets under management, leverage customer insights and technology to offer refined value propositions, and deepen the level of digitization amidst growing competition.
