Stanbic IBTC’s net interest income up 180% on rate hike

Stanbic IBTC recorded a 180 percent rise in its net interest income on rate hike.

The bank’s nine-month financial report for September 2024 filed with the Nigerian Exchange Limited on Friday indicated a 67.3 percent increase in its after-tax profit to close at N182.8 billion in 9M, compared to N109.2 billion recorded in the same period of 2023.

Interest income calculated using the effective interest rate rose to N425.7 billion from N184.5 billion while the bank’s interest expense surged 171.3 percent to N173.9 billion from N64.1 billion driven by the high-interest rate environment.

Data obtained from the NGX revealed the bank’s trading revenue for the period surged to N80.2 billion from N59.7 billion mainly driven by trading of fixed-income securities and currencies during the period.

The Central Bank of Nigeria (CBN) has increased interest rates by a total of 850 basis points in 2024, thereby increasing the interest charged by banks on loans.

As of September 24, 2024, Nigeria’s monetary policy rate (MPR) stood at 27.25 percent from 26.75 percent in July. As a result, Stanbic IBTC’s revenue streams reported significant growth during the reviewed period.

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Further analysis reveals that fees and commission revenue reported by the bank during the period grew by 58.9 percent to N134.3 billion from N84.5 billion. Also, fees and commission expenses rose to N9.7 billion from N5.01 billion.

The growth in the fees and commission income was supported mainly by significant growth in asset management fees (up 37.8 percent) and accounted for 54 percent of total fees and commission income while brokerage and financial advisory and foreign currency service fees were up 133 percent and 126 percent respectively.

Stanbic IBTC reported impairment loss on financial instruments totaling N59.3 billion, from an impairment write-back of N9.95 billion.

As the cost of doing business in Nigeria increases due to energy supply disruptions and rising inflation, operating expenses (OPEX) grew to N183.5 billion from N123.1 billion.

During the period, the bank’s business activities generated cash, as net cash flow from operating activities amounted to N1.84 trillion, up from N406 billion. Its net cash flow from investing activities for the period was negative amounting to N405 billion due to cash spent for capital expenditure, and purchase of financial instruments.

Stanbic IBTC paid dividends totaling N56 billion. It repaid borrowings and debt securities worth N119 billion and N44 billion respectively, thereby bringing net cash flow from financing activities to N107 billion. Consequently, cash and cash equivalents for the period increased by 129.3 percent to N1.9 trillion from N837 billion.

The bank’s loans and advances grew by 37 percent to N2.42 trillion from N1.77 trillion, thereby bringing total assets to N7.2 trillion.

Deposits and current accounts were up to N3.46 trillion from N2.49 billion, while total shareholders’ funds grew by 33.7 percent to N630 billion from N471 billion.

Ultimately, the bank declared earnings per share of N1,390 per share in 9m from N825 per share in the corresponding period of 2023.