[ANALYSIS] Stanbic IBTC unwinds derivative positions with notional value of N160 billion

Second Tier Nigerian lender Stanbic IBTC has just released its Half Year 2015 numbers and what struck us here at Nairametrics (apart from the ugly results) is the near total unwinding of FX derivatives positions, possibly as a result of the Central Banks tightening of the interbank FX market and banks ability to make money from naira volatility.

In the half year 2015 period the nominal value of Stanbic IBTCs Derivatives assets fell by 85 percent to N746 million from N4.86 billion at the end of 2014.

When Nairametrics looked at the banks full year 2014 audited results to get a clearer picture, we found that the assets consists of Foreign Exchange Derivatives (Forwards) of N3.54 billion and Interest rate Derivatives (Swaps) of N1.36 billion.

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Total Derivatives assets/liabilities were equivalent to a notional amount of N160 billion…(See Fig 1)

It is pertinent to note that Stanbic’s trading revenues were down 14 percent in the current H1 2015 period.

We assume that some if not all of this trading involved FX.

We believe that while the CBN has its merits in tightening the FX markets, it should not be done at the expense of innovation and development of the Nigerian financial services industry.