Stanbic IBTC scales down on earnings from top to bottom line in 2021

Fiscal 2021 has turned out a down year for Stanbic IBTC Bank Plc with earnings numbers plunging from the top to the bottom lines.

The bank‘s unaudited accounts for the 2021 full year show that gross earnings went down by 12.2 percent to N205.8 billion. After tax profit dropped even much faster at 31.5 percent to close below N57 billion for the year.

Cost increases added to the drop in earnings to stretch profit drop well ahead of revenue. This includes operating expenses, which rose by 12.8 percent to more than N106 billion.

Operating expenses claimed an increased share of gross income at 51.7 percent compared to 40.2 percent in 2020. This is the highest operating cost margin the bank has recorded in many years.

Loss of revenue cut across all the bank’s income lines in the year. Worse hit is non-interest income that led revenue growth in the preceding financial year.

Total non-interest earnings went down by as much as N29 billion or 23 percent to N95.8 billion at the end of the year.

The drop in non-interest income was led by trading revenue, which fell from over N52 billion to N13 billion during the period.

Also, other income of N1.4 billion in the preceding financial year turned into other losses of N566 million in 2021.

There were however positive developments for the bank in the final quarter that tend to raise some hopes for an upturn in the 2022 financial year.

These include an increase of nearly N10 billion in gross income quarter-on-quarter to N61 billion at the end of December 2021.

This is powered by interest income, which grew by 33 percent to roughly N32 billion and an increase of 6 percent in non-interest income to N27.8 billion.

However, trading revenue maintained its falling trend across quarters, dropping by about 45 percent quarter-on-quarter to N4.3 billion.

Another positive development for the bank in the final quarter is a change of position from a net loan loss expense of N2.9 billion in the same period in 2020 to a net write-back of N4.4 billion. 

This enabled the bank to achieve a net loan impairment write-back of N1.2 billion in the full year. This is a strong gain from a net charge of N9.9 billion in the preceding financial year.

Other positive signals for the bank in the final quarter include a slowdown in operating expenses, which reduced operating cost margin to 44.3 percent.

Net income after loan impairment charge also grew by 30 percent to N53.6 billion. The full year position however is a decline of 9 percent to N172 billion.

The revenue gains and cost savings in the final quarter resulted in an increase in profit quarter-on-quarter, which is a change from the declining profit trend the bank experienced up to the third quarter.

Stanbic IBTC Bank earned an after tax profit of N18.5 billion in the final quarter, which is an increase of 8 percent quarter-on-quarter, accounting for 32.5 percent of the bank’s full year profit.

The final quarter upturn was insufficient to change the full year position that saw profit plunge to roughly N57 billion.

The bank’s loss of profit in the year reflects the loss of revenue and profit margin. Net profit margin went down from 35 percent to 27.7 percent over the review period.

Critical factors to watch on the bank in the current financial year include whether there will be a rebound in non-interest income to rebuild revenue, whether interest expenses will slow down to save additional cost and whether or not loan loss write back will be maintained.