NIGERIA| BANKS| STANBIC IBTC

Quick Take: Strong start to the year

Stanbic's Q1 2024 unaudited numbers showed a 129.7%y/y increase in Interest Income to N115.8bn driven by improved yields on risk assets. Net Loans to customers grew 6.5% in Q1 2024 compared with the December 2023 position (inclusive of the impact of the devaluation on foreign currency loans). Interest Expense also grew strongly, up 177.1% y/y to N38.9bn. Customers Deposits were up 9.1% in Q1 2024 compared with December 2023. Overall, Net Interest Income grew 111.4% y/y to N76.9bn in Q1 2024.

STANBIC IBTC Q1 2O24

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Source: Company's Financials, CSL Research.

Net Fee and Commission was up 67.2% y/y mainly driven by increased volume of digital banking transactions and investment banking fees.

Other Income (Income from life insurance activities, trading Revenue and Other Revenue) stayed flat, down 0.2% y/y to N19.7bn.

The group reported Impairment Charge of N7.1bn in Q1 2024, 116.6% higher than N3.3bn reported in Q1 2023 bringing Q1 2024 annualised Cost of Risk (COR) to 1.3%. Non-performing loan to total loan ratio was up slightly to 2.95% compared with 2.35% in December 2023.

Operating Expenses grew 65.1% y/y. The slightly stronger y/y growth in Total Operating Income (+70.7% y/y) compared with the growth in OPEX led to a slight improvement in Cost to Income Ratio (CIR ex provisions) to 49.5% in Q1 2024 from 51.2% in Q1 2023.

The group's Pre-tax Profit was up 73.0% y/y to N62.7bn in Q1 2024 while Net Profit grew higher by 58.1% y/y to N45.6bn, bringing Q1 2024 annualised ROAE to 35.0%.

Under segment reporting, Business and Commercial banking reported a Pre-tax Profit of N7.97bn in Q1 2024 compared with Pre-tax Profit of N5.08bn in Q1 2023 while Corporate and Investment Banking reported Pre-tax profit of N37.5bn in Q1 2024 compared with N19.5bn in Q1 2023. The Personal & Private banking business reported Pre-tax Loss of N2.2bn in Q1 2024 compared with a Pre-tax Loss of N7.4bn in Q1 2023. Finally, the Insurance and Assets Management business reported Pre-tax Profit of N19.5bn in Q1 2024 compared with N19.1bn in Q1 2023.

The Group maintained adequate level of capital during the period. The Group's total capital adequacy ratio closed at 14.6% (Bank: 12.8%) higher than the 11% minimum regulatory requirement.

We have a BUY recommendation on Stanbic. Current price: N45/s. Our estimates are under review.

Kindly click on the below link to download the full report.

"‹"‹"‹"‹"‹"‹"‹"‹"‹"‹"‹Stanbic-IBTC-Holdings-Q1-2024-Earnings-Quick-take.pdf"‹

"‹"‹"‹"‹"‹Kind Regards,

Gloria Fadipe

Email: CSLResearch@fcmb.com"‹

Address: 44 MARINA, LAGOS ISLAND, "‹

Website: www.cslstockbrokers.com