SUN, MARCH 10 2019-theG&BJournal-Stanbic IBTC Holdings Plc unseats Guaranty Trust Bank Plc to become the lender with the highest return on equity in the Nigeria banking industry.
Data gleaned from the 2018 audited financial statement of both firms showed Stanbic IBTC recorded return on average equity (ROAE) of 35 percent, this compares with Guaranty Trust Banks’ 30.90 percent.
Stanbic IBTC has been growing earnings at a blistering pace since 2015 even amid a tough and unpredictable macroeconomic environment. Its stellar performances can be attributed to contribution from the pension business and a reduction in impairment of assets.
For instance, Stanbic IBTC Holdings net income was up 53.58 percent to N74.44 billion in December 2018 from N48.38 billion as at December 2017, N28.52 billion in 2016 and N18.89 billion in 2015.
The growth in profit was mainly driven by net impairment write-back/ (loss) on financial assets and contributions from non interest revenue, as it continues to intensify its risk management strategy while stamping its footprint in the Nigerian retail banking industry.
Non-interest revenue grew by 15 percent to N102.60 billion as at December 2018, driven by a 7 percent increase in trading income and 18 percent growth in net fees and commission.
Credit impairment charges improved by over 100 percent from N25.6 billion charges in December 2017 to a write back of N2.9 billion in December 2018, thanks to due to the lenders recovery efforts and strategy.
Stanbic IBTC has an excellent risk and portfolio management strategy as non-performing loan (NPLs) ratio trended downward to 4 percent in December 2018 as against 8.7 percent as at December 2017, below the regulatory benchmark of 5 percent.
NPLs in absolute figures improved to N17.71 billion in the period under review from N35.32 billion the previous years.
However, interest income was down 3.68 percent to N118.38 billion at December 2018 as a low yield environment undermined revenue, but a reduction in interest expense added impetus to net interest income.
Loans and advances to customers were up 7.74 percent to N411.26 billion as at December 2018, even as Banks in Africa’s largest economy have refused to turn the tap on lending.
“Loan book growth is on the back of improved economical activities with improved customer appetite to support their businesses,” said Yinka Sanni CEO and managing director of Stanbic IBTC Holdings.
Attractive yields on short term government securities have hindered Nigerian banks from lending to the economy.
Banking sector credit to the economy declined 2.9 percent quarter on quarter from N15.6 trillion in the third quarter of (Q3) of 2018 to N15.1 trillion in the fourth quarter of (Q4) of 2018 according to data from the Nigerian Bureau of Statistics’ (NBS).
On a year on year (y/y) basis, total banking sector credit to the economy declined 2.5 percent to N61.7 trillion in 2018 from N63.3 trillion in 2017.
Stanbic IBTC’s shares closed at N48 as of 2:00 pm, Friday, in Lagos, valuing st at N491.54 billion.