BY EMEKA EJERE
Stanbic IBTC Holdings Plc is confronting the post COVID-19 economic realities with a strategic widening of income sources in a bid to dampen the blow of the pandemic on its earnings.
Despite positive developments for the bank in the final quarter of 2021 that tend to raise some hopes for an upturn in the 2022 financial year, its unaudited accounts for the 2021 full year show that gross earnings went down by 12.2 percent to N205.8 billion while Profit After Tax (PAT) dropped even much faster at 31.5 percent to close below N57 billion for the year.
Cost increases added to the drop in earnings to stretch profit drop well ahead of revenue. This includes operating expenses, which rose by 12.8 percent to more than N106 billion.
Operating expenses claimed an increased share of gross income at 51.7 percent compared to 40.2 percent in 2020. This is the highest operating cost margin the bank has recorded in many years.
Loss of revenue cut across all the bank’s income lines in the year, with non-interest income, which led revenue growth in the preceding financial year, being the worst hit.
Total non-interest earnings went down by as much as N29 billion or 23 percent to N95.8 billion at the end of the year. The drop in non-interest income was led by trading revenue, which fell from over N52 billion to N13 billion during the period.
Also, other income of N1.4 billion in the preceding financial year turned into other losses of N566 million in 2021.
However, revenue gains and cost savings in the final quarter resulted in an increase in profit quarter-on-quarter, which is a change from the declining profit trend the bank experienced up to the third quarter.
Stanbic IBTC Bank earned PAT of N18.5 billion in the final quarter, which is an increase of 8 percent quarter-on-quarter, accounting for 32.5 percent of the bank’s full year profit.
But the final quarter upturn was insufficient to change the full year position that saw profit plunge to roughly N57 billion. Expectedly, the lender is not leaving any stone unturned in its strive to return to full year profitability.
Last month, the financial services group announced that it was waiting to get the blessings of regulators for the fintech subsidiary it plans to set up any time soon.
According to the group, the fintech firm, which is to be christened Stanbic IBTC Financial Services Limited, will function primarily as a Payment Solution Service Provider (PSSP).
“Subject to receiving all required regulatory approvals, including licensing by the Central Bank of Nigeria (CBN), the new subsidiary will function primarily as a Payment Solution Service Provider (PSSP),” the holdco said in a note to the Nigerian Exchange Limited.
In January 2021, Stanbic IBTC Holdings discontinued its Bureau De Change operations, about seven weeks after it established a life insurance business, citing policy shift that had enabled customers to purchase forex at branches of its commercial banking arm.
A release announcing the establishment of the bank’s wholly-owned Life Insurance Subsidiary, read in part:
“Stanbic IBTC Holdings PLC (“Stanbic IBTC” or “the Company”), is pleased to announce that it has obtained all required Regulatory Approvals as well as a License from the National Insurance Commission to establish a wholly-owned Life Insurance subsidiary to be known and referred to as Stanbic IBTC Insurance Limited (“SIIL”).
“The establishment of this new subsidiary essentially complements the bouquet of product offerings by Stanbic IBTC as it continues its goal of being the leading end-to-end financial solutions provider in Nigeria.
“In this regard, SIIL will aim to facilitate long term insurance for already financially included individuals and will seek to become the preferred Insurer in the Life Insurance Business.”
Just last week, the founder of Stanbic IBTC Bank Plc, Mr. Atedo Peterside, celebrated the founding staff of the financial service company. He took to his official Twitter handle to express gratitude to God for the lives of those who contributed their quota to developing the bank in its formative years.
“Exactly 33 years ago, IBTC now Stanbic IBTC was founded when I was 33 years old,” Peterside said.
“That was on 02 February 1989. Today, 33 years later, I thank God for the lives of all those who played a part in building this great institution and in making it possible for me to look back 33 years.”
Peterside had returned to Nigeria In the late 1980s, when the country was beckoning on some of its best brains to return home for the development of its commonwealth.
The country was at the time grappling with multiple shades of recessions, and was seeking economic means of getting through public hardship.
Peterside set up Investment Banking and Trust Company (IBTC) at a small office in Marina, Lagos, with the aim of driving and developing investment banking in Nigeria, a bank which later grew into a giant in the industry.
By 2003, he listed the bank on the then Nigerian Stock Exchange. In 2004, IBTC merged with Chartered Bank in what became IBTC Chartered Bank, following a recapitalisation of Nigerian banks under Charles Soludo, as governor of CBN.
Stanbic IBTC Holdings PLC, a member of Standard Bank Group, is a full-service financial services group with a clear focus on three main business pillars – Corporate and Investment Banking, Personal and Business Banking and Wealth Management.
The group’s largest shareholder is the Industrial and Commercial Bank of China (ICBC), the world’s largest bank, with a 20.1% shareholding. In addition, Standard Bank Group and ICBC share a strategic partnership that facilitates trade deals between Africa, China and select emerging markets.
Standard Bank Group is the largest African financial institution by assets. It is rooted in Africa with strategic representation in 21 countries on the African continent.
Standard Bank has been in operation for over 158 years and is focused on building first-class, on-the-ground financial services institutions in chosen countries in Africa; and connecting selected emerging markets to Africa by applying sector expertise, particularly in natural resources, power and infrastructure.