IBTC earnings has been estimated to rise to about N125.5 billion in the financial year 2023. The financial services group has seen its market valuation accelerate above N1 trillion mark in the stock market.
In its update, the research unit of the Nigerian leading investment firm CardinalStone is prospecting higher earnings for the group, citing improvement in operating income as a major driver.
According to CardinalStone, Stanbic’s earnings will likely cross the N100 billion mark to about N125.5 billion in the financial year 2023 based on the improvement in operating income.
The firm said, unlike most banks, Stanbic’s relatively modest FX gains of about N14.0 billion recorded on the bank’s $50 million net-open position in the first half of the year was not at the forefront of the earnings drive.
Ex-revaluation gain, the bank’s most noticeable tailwind emerged from a 44.3% surge in net interest income (NII) to N72.7 billion.
Meanwhile, CardinalStone Research noted the impact of FX liberalization on trading income as the bank recorded about 2.0x growth in trading income to N30.7 billion
“We see scope for an improvement in net interest margin (NIMs) to 7.2% in the financial year 2023, from 6.7% in 2022, with positive pass-through to net interest income”, the firm said in the update.
Analysts said their prognosis is premised on 1 the bank’s consistent double-digit loan growth and its legroom to reprice loans, with 61.7% maturing within 12 months. Stanbic recorded an average loan of 25.2% annually over 5 years.
“We expect these gains to mask expected interest expense pressures”, CardinalStone said.
The investment banking firm said it does not foresee any material deterioration in loan quality and expects the cost of risk to remain below 3.0%, which aligns with the bank’s guidance.
“We are impressed by the bank’s ability to maintain a relatively low cost-of-risk of 0.9%, especially considering its 37.1% growth in loans and advances in the first half of 2023″
In a period where counterparts have reported material increases in impairments, analysts at CardinalStone said they are comforted by the continued and improving loan recoveries of N1.2 billion versus N370 million reported in the comparable period in 2022.
The firm expects the launch of the bank’s Fintech subsidiary— Zest Payment Limited— in 2023 to support its existing digital banking strategy, which is poised to grow transactional volumes by improving client experience on its digital platforms.
To this point, a year after its initial announcement, management has detailed 4 key platforms which are payment solutions, storefront and marketplace, lifestyle and mobile and value-added service biller hub.
Source: NAIJA TIMES
