Stanbic IBTC Suffers Further Loss Of Revenue, Profit At H1

Stanbic IBTC Holdings Plc suffered a further loss of earnings in the second quarter with gross earnings down by over a quarter at half-year and profit dropping by as much as one-half.

The bank’s audited accounts for the half-year ended June 2021 shows a further weakening of earnings performance from the first quarter records of a 25 per cent decrease in revenue and a 45 per cent drop in profit.

The drop in gross earnings amounts to as much as N33 billion, which is accounted for by both interest and non-interest earnings. Interest income went down by about 20 per cent to N44 billion over the period, accelerating from a drop of 12 per cent at the end of 2020.

Non-interest income continued to lead to revenue drop in the year at a decrease of 34 per cent to less than N46 billion at the half-year. This is an accelerated drop from about 29 per cent in the first quarter. This compares with an increase of 15 per cent in non-interest earnings last year.

Trading income remains the critical factor in the revenue weakness of the bank this year. It increased its pace of decline from 77.6 per cent at the end of the first quarter to 84 per cent at half a year to close at N5.5 billion at the end of June 2021.

For the bank, it is a major downturn from a leading growth of over 43 per cent in trading income last year.

The bank’s management made reasonable cost savings from interest and loan impairment expenses over the review period. This was however quite insufficient to remedy the huge loss in revenue.

Interest expenses went down by over 35 per cent to N11 billion at half a year, which is further to a drop of 26 per cent last year. This is ahead of the 20 per cent drop in interest earnings over the same period.

While the cost saved from interest expenses could not remedy the drop in interest income, it reduced the rate of decline in net interest income. At roughly N33 billion, net interest income decreased by 12 per cent at half a year, slowing down from a 14 per cent drop in the first quarter.

The proportion of interest earnings claimed by interest expenses dropped from 32 per cent in the same period last year and from about 30 per cent at the end of 2020 to 25.7 per cent at the end of June 2021.

Total income closed 26.6 per cent down at almost N79 billion at half-year but the good news of loan recoveries and writebacks received in the first quarter was maintained in the second.

The bank shifted from a net loan impairment loss of N6.4 billion in the same period last year to a net write-back of credit losses of N1.3 billion at half a year. This topped up net income after the impairment charge to N80 billion at the end of June 2021. That still represents a drop of close to 21 per cent year-on-year.

The bank’s management could not prevent operating expenses from growing despite declining revenue. Operating expenses increased the rate of growth from 8.8 per cent in the first quarter to 14 per cent at half-year to close at N55 billion at half-year.

The proportion of gross earnings devoted to operating cost, therefore, grew from 38 per cent in the same period in 2020 to 59 per cent in the half-year. This is the highest operating cost margin seen among listed banks so far this year – which reflects the bank’s huge revenue losses.

Tax expenses maintained the declining pattern that has been on since last year. Tax expenses went down by 70 per cent year-on-year to N2 billion at half-year against a 77 per cent drop in the first quarter and 27.6 per cent cut last year.

The bank closed the half-year operations with an after-tax profit of N22.5 billion, which is a drop of 50 per cent year-on-year. Profit margin declined from 35.7 per cent in the same period last year and 34.5 per cent at the end of the 2020 financial year to 24 per cent at the end of half-year operations.

Stanbic IBTC Holdings closed the half-year operations with earnings per share of N1.92, which is a drop from N4.19 per share in the same period in 2020. The bank is paying an interim cash dividend of N1 per share to shareholders.

Insidebusiness.ng