NIGERIA: Fees, Commission Drive Stanbic IBTC’s Earnings

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2013 has been widely described as a tough year for Nigerian banks because of various policy measures introduced by the regulators.
 
In view of the tough banking environment occasioned by the tight monetary policy, a lot of Nigerian banks have been working relentlessly to firmly hold on to segments of the market where they have comparative advantage.
 
Indeed, while most of the tier-2 banks seems to be feeling the pain of the regulatory policies more than the tier-1 bank’s, Stanbic IBTC Bank Plc’s recently released audited full year results for 2013 showed the bank was able to weather the storm as its top and bottom line performance beat the expectation of the market.
 
The results showed the bank’s top line performance was driven by a 27 per cent and 84.8 per cent increase in net fees and commission income and other operating income to N32.9 billion and N15.3 billion 2013, from N25.8 billion and N8.3 billion in 2012 respectively.
 
Stanbic IBTC’s profit after tax was up by 104.5 per cent to N20.8 billion. In addition, its gross earnings grew by 21.1 per cent to N111.2 billion in the year under review, from N91.9 billion in 2012.
 
The bank reported a net interest margin of 5.5 per cent lower than tier-2 average of 6.7 per cent.
 
This was primarily driven by an 8.2 per cent increase in interest income relative to a 5.4 per cent increase in interest expense in 2013.
 
According to analysts at Afrinvest Securities Limited, the increase was mainly from a 37 per cent growth in income from investment securities.
 
Further analysis revealed that income from loans and advances accounted for 67 per cent of the bank’s total interest income, as income from investment securities represented 29 per cent.
 
The bank's net loan grew by 32 per cent to N383.9 billion in 2013, from N290.9 billion in 2012, nudging the loan to deposit ratio to 82 per cent.
 
“Despite this commendable growth in risk assets, the bank reported a 61.3 per cent decline in impairment charges to N2.6 billion in 2013 from N6.9 billion in 2012, revealing significant improvement in asset quality.
 
“The high proportion of loan to deposit ratio however restricts the option of taking        advantage of opportunities and therefore requires increased momentum in galvanising deposits,” Afrinvest stated.
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