- Non-interest income was stronger (+6.0% YoY) in FY’19, supported by a 16.0% YoY improvement in trading income. In contrast, net fee income was relatively flat (+0.8% YoY) in the period.
- Net fee income was likely weighed by higher than expected growth in fee-related expenses (+237.8% YoY) which management attributed to the impact of an expense reclassification.
- Net interest income was slightly weaker (-0.5% YoY), dragged by higher interest expenses (+6.0% YoY). The growth in interest expenses is likely related to an increase in interest-bearing liabilities. Notably, the bank issued N30.0 billion in senior unsecured debt in December 2018 and N45.8 billion in commercial papers in 2019. We also note the 31.8% growth in other borrowings during the year.
- Cost to income ratio declined during the period to 50.4% (FY’18: 52.9%), owing to lower operating expenses (-1.6% YoY) and a 3.2% growth in operating income. Impairment charges were N1.6 billion in the review period compared to writebacks of N2.9 billion in the prior year. Consequently, the cost of risk printed at 0.3%.
- Customer deposits fell during the year (-21.0%) to N637.8 billion due to the reduction of more expensive term deposits. This, consequently, improved the contribution of low-cost deposits to 75.9% from 65.9% in FY’18.
- Gross loans and advances improved by 21.2% to N556.4 billion as at FY’19. We largely attribute this to CBN’s LDR measure, given that as at H1’19 gross loans was only 4.5% up at N479.7 billion. By our estimates, STANBIC’s LDR was 66.5% as at December 2019. NPL ratio was 3.9%, still within the regulatory limit.
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