Stanbic IBTC Plc (‘the Group’) recorded an impressive financial performance in FY 2022, driven by interest and non-interest components. Gross earnings grew by 39% year-on-year to N287.54bn. Interest income rose by 46% year-on-year to N152.67bn while non-interest income grew by 34% year-on-year to N134.87bn.

Operating income grew by 33% year-on-year to N229.82bn. Occasioned by a 600 basis points decline in cost margin to 56% in FY 2022, the Group’s profit before tax rose by 52% year-on-year to N100.35bn. However, a higher effective tax rate moderated net profit growth to 42% to N80.81bn.

Increased Appetite for Risk Assets Delivers Strongly

The Group’s loan book grew by 31% year-on-year to N1.20trn, with significant loans booked in the manufacturing and oil & gas sectors. The two sectors accounted for half of total loan book growth in FY 2022. As a result, interest income on loans grew markedly by 54% year-on-year and accounted for c.90% of the total interest income growth.

In line with the loan book expansion, the non-performing loan ratio advanced slightly to 2.37% in FY 2022 from 2.11% in FY 2021, well below the regulatory 4.00% benchmark. In our view, we believe that this underscores the quality of risk assets. We particularly like the currency composition of the Group’s risk assets. The foreign currency (FCY) component of loan book increased to 57% of total loan book in FY 2022 from 44% in FY 2021. Given the rising trend of interest rates in the United States and persistent pressures leading to domestic currency depreciation, we believe that the Group’s loan book composition is strong.

Cost of Fund Rises in Line with Higher Rate Environment

The total average interest-bearing liabilities grew by 15% year-on-year to N1.87trn. Therefore, interest expense grew as well – however, owing to repricing of deposits due to rising interest rate, interest expenses increased steeper by 35% year-on-year to N39.55bn in FY 2022. Meanwhile, we note the increase in the Group’s CASA ratio to 72% in FY 2022 (FY 2021: 66%). This implies that the portion of cheap deposits increased in FY 2022, and it is expected to be positive for future net interest margins.

Speaking of net interest margins, the Group benefitted from the rising interest rate environment as a result of the structure of its balance sheet. The Group’s assets are more sensitive to interest rate movements than its liabilities. Therefore, when interest rate rises, the Group is able to reprice assets faster than liabilities.

Net interest income grew by 50% year-on-year to N113.12bn in FY 2022. Post-impairment, net interest income grew by 34% year-on-year to N102.83bn. This was because of an impairment charge of N10.29bn in FY 2022 due the new loans booked, relative to an impairment writeback of N1.51bn in FY 2021.

Trading Gains Buoy Non-Interest Income Growth

The growth in non-interest income was largely driven by a rebound in trading gains which grew by 161% year-on-year to N34.67bn. There was a low base in FY 2021, where trading income declined to levels not seen since FY 2016. Hence, a normalisation of trading gains to historical levels supported non-interest income growth.

Fee and commission income also grew, by 9% year-on-year to N96.07bn in FY 2022. Asset management fees sustained its status as the biggest driver of fee and commission income by accounting for 61% of total fee and income commission income (FY 2021: 61%).

Bottomline Boosts on the Back of Operating Efficiency

The combined impact of net interest income growth (+34% YoY) and net non-interest income (+32% YoY) resulted to a 33% year-on-year growth to N229.82bn. Operating expenses grew by 21% year-on-year to N129.47bn. The increase in operating income was faster than the increase in operating expense. Effectively, the Group’s cost-to-income ratio improved and that translated to a 42% growth in net profit.

In addition to a N1.50 interim dividend declared during the fiscal year, the management proposed a N2.00 final dividend. In total, the dividend declared for FY 2022 was N3.50 (FY 2022: N3.00). The qualification date is on the 3rd of April 2023 while the payment date is on the 26th of May 2023.

Banking Metrics

We analysed the financial health of the Group, by assessing key metrics including the capital adequacy ratio (CAR), liquidity ratio, and asset quality. Across these metrics, the Group’s ratios are well above (or below) regulatory thresholds. The Group’s CAR of 21.18% as of FY 2022 was higher than the 15.00% regulatory benchmark.

Liquidity ratio closed at 85.04% in FY 2022 (FY 2021: 105.35%). The average liquidity ratio during the year was 114.98% – materially higher than the regulatory benchmark of 30.00%. We wish to highlight that the Group’s capital and liquidity positions, and asset quality are very strong, and we emphasise that the combination of these ratios points to a strong business franchise.


Our expectation is a rising interest rate environment in 2023. Given the structure of the Group’s balance sheet (i.e., higher interest rate sensitivity of assets relative to liabilities), we expect to see higher net interest margin to expand in FY 2023. We also do not see any major deviation from the asset growth trend in the near term. We expect inflationary pressures to  negatively impact  profit margin.

We expect earnings per share (EPS) to grow by 16% to N7.22 in FY 2023. We revise our fair value estimate to N37.94 (previous: N33.09). At the stock’s current price, the forward price-to-earnings (P/E multiple) of 5.09x trades at a 3% discount to our justified P/E multiple of 5.25x. The forward P/E also trades at a 13% discount to its historical average P/E multiple of 5.91x.

Based on the estimated total return of 14%, we are recommending a HOLD.  This means that the projected performance of the company is in line with the market’s expectations. We do not see a significant catalyst event that could cause a substantial swing in the share price. Hence, we continue to hold and see if any notable developments emerge.

Please follow the link “Stanbic IBTC Plc FY 2022 – RoE Rises by 200bps to 23%, Underscoring a Profitable Year” to view the whole report.

Thank you.

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