Stanbic IBTC Plc Q2 2025 -Earnings Strength Priced In; Limited Upside Ahead

Event

Stanbic IBTC (“the Group”) delivered a strong performance in the second quarter of 2025, with notable improvements across key financial indicators. One of the standout achievements was the significant growth in its net interest margin, which rose to 3.94% from the 2.80% recorded in the first half of 2024. This impressive expansion in net interest margin is primarily attributed to a reduction in the Group’s cost of funds. Specifically, the cost of funds declined to 1.71% from 2.14% in H1 2024.

Outlook

Following a comprehensive review of the Group’s performance and macro assumptions, we estimate the fair value of the stock at N97.66 (previously: N88.29). Our projection is anchored on an interest income of N783.40 billion and a lower interest expense of N137.57 billion, reflecting softening yields and reduced funding costs. Consequently, we forecast a net interest margin of 8%, above the Group’s 6%–7% guidance.

We also project a 65% year-on-year growth in profit after tax to N371.41 billion, translating to an EPS of N23.36 (FY 2024: N17.39) and a total dividend of N6.75 (including the N2.50 interim payment).

At the current market price of N118.00, the stock offers a total return of -12% after accounting for the 6% dividend yield. Notably, the share price has appreciated by 99% since our last report. Accordingly, we downgrade our recommendation to SELL.

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Thank you.