Stanbic IBTC 9M’20: Non bank subsidiaries once again lift profit to new highs

Must Read

List of United Bank for Africa (UBA) Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number that usually identifies both the bank and the branch where an account is held. The sort...

List of Access Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number which usually identifies both the bank and the branch where an account is...

List of First Bank of Nigeria Sort Codes in Nigeria

The sort code is a number that usually identifies both the bank and the branch where an account is held. The sort...
- Advertisement -

Higher Non-interest Income, Opex growth remains tame

STANBIC IBTC released its unaudited 9M’20 financials yesterday, posting a 4% y/y increase in Gross Earnings to N183.3 billion (Vetiva estimate: N190.2 billion). The growth in earnings came despite a 10% y/y decline in Interest Income to N81.9 billion (Vetiva estimate: N83.3 billion).

This was mainly due to a 19% y/y jump in Non-Interest Income to N101.3 billion, which was boosted by a 63% y/y jump in Fixed Income and Currency trading revenue to N44.4 billion. Meanwhile, Provisions grew from a net write-back of N90 million to a loss of N7.0 billion, while Opex grew by a tame 3% y/y to N73.7 billion (Vetiva Estimate: N74.6 billion).

Stanbic IBTC 9M'20: Non bank subsidiaries once again lift profit to new highs

We note that STANBIC’s Opex growth has been very mild in 2020, which bodes well for the company’s improving profitability even as the banking arm continues to struggle. Ultimately, the firm reported an 11% y/y rise in PBT to N76.9 billion (Vetiva estimate: N79.7 billion) and a PAT figure of N66.1 billion, 19% higher y/y. This yields an EPS of N5.80 (9M’19: N5.30).

Q3 dip unlikely to affect FY’20 profit momentum

In Q3’20, Stanbic IBTC reported declines across several line items. Gross earnings were down 13% q/q to N56.7 billion as the result of a 20% q/q dip in Non-Interest Income to N29.9 billion. Furthermore, as expected, the drop in interest rates affected both interest income and expenses, although the rise in dividend and other income alone, more than made up for the 2% q/q decline in Net Interest Income to N18.7 billion.

- Advertisement -

Also, Stanbic IBTC appears to have shed a significant part of its balance sheet, with Cash and short term funds declining from a high of N1.1 trillion at H1’20 to N930 billion at 9M’20, while total assets fell from N3.0 trillion to N2.58 trillion as at 9M’20. We believe that the shedding of these assets along with some trading and derivative assets and some deposits is a strategic response to the current economic environment.

Read Also:  External Reserve: Across the US$40bn Threshold, and Counting

However, we do not expect this to affect full-year profitability, as Stanbic IBTC has already created a suitable buffer, with any further losses or impairments unlikely to significantly drag FY’20 profits.

TP revised to N42.43 (Previous: N42.20)

We have revised our Net Interest Income expectation to N76.4 billion (Previous: N75.9 billion) mainly due to our expectation of even lower Interest Expense in Q4. We also revised the loan loss expectation to N9.8 billion (Previous: N12.1 billion) due to the beat in Q3. Finally, we lowered our Opex forecast to N99.7 billion (previous: N101.8 billion).

All in, we raised our PBT estimate to N102.9 billion (Previous: N102.7 billion) and our PAT forecast to N84.9 billion (Previous: N84.7 billion), yielding an EPS of N8.06 (Previous: N8.04) and an unchanged final dividend of N1.90. Consequently, we adjust our target price to N42.43 (Previous: N42.20).

- Advertisement -

The bank is currently trading at a 4.1% premium to its target price and a P/Bv of 1.6x. The recent rally in the market has seen it and other banking names rise into overbought territory, therefore we recommend a SELL on the stock.

Stanbic IBTC Non bank subsidiaries once again lift profit to new highs Brandspurng
Source: Company filings, Vetiva Research

- Advertisement -
Stanbic IBTC 9M'20: Non bank subsidiaries once again lift profit to new highs - Brand SpurStanbic IBTC 9M'20: Non bank subsidiaries once again lift profit to new highs - Brand Spur

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Stanbic IBTC 9M'20: Non bank subsidiaries once again lift profit to new highs - Brand SpurStanbic IBTC 9M'20: Non bank subsidiaries once again lift profit to new highs - Brand Spur

Latest News

The Boutique Hotel Under Gudou Holdings Co., Ltd. Further Expands to Panyu District, Guangzhou— Guangzhou Gudou Quanfeng Residence Officially Opens on 10 February 2021

HONG KONG SAR - Media OutReach - 25 February 2021 - Gudou Holdings Limited ("Gudou Holdings" or "Company", which together with its subsidiaries, is referred to as the "Group", SEHK stock code: 8308), is pleased to announce that Guangzhou Gudou Quanfeng Residence, the Group's first boutique hotel project in Panyu District, Guangzhou City, has officially opened on 10 February 2021.

Guangzhou Gudou Quanfeng Residence has 33 guest rooms, including 2 two-bedroom suites and 3 three-bedroom suites. The design is modelled on one of the ancient Lingnan (southern Chinese) architectural style, "Guanyindou", which features the shape of two handles of a wok on either sides of the roof of a building in the ancient town of Shawan, Panyu. Carrying on the tradition of the "Gudou" brand, the hotel organizes one-stop leisure and entertainment activities and are installed with comprehensive facilities to provide a new experience for tourists who prefer to enjoy the finer things in life in the traditional ambience.

Read Also:  Capri Sun 100ml Pouch Size For Kids Excites Consumers

Guangzhou Gudou Quanfeng Residence is conveniently located in the Hills Ecool Creative Park in Panyu, which occupies a total site area of​​340,000 square meters at the southern tip of Panyu District. The hotel is easily accessible by a developed network of roads around the Hills, including South China Expressway, Xinguang Express, Nansha Port Express and other highways. Therefore, it is easy to travel from the hotel to Zhujiang New Town in Guangzhou, and thus elsewhere in the Pearl River Delta. It takes five minutes to reach the Chimelong Paradise, and the Blessing Colorful World within easy reach. The Clifford Station on Metro Line 21 will also be opened in 2021 and it is only an about 10-minute walk from the hotel. In the Panyu Golden Valley Eko Creative Park, a head office for environmental operation of business and a district for shopping and leisure will be built. Such plan has earned the park a reputation as "China's Number One Low-Carbon Community". The rising occupancy rates of the office buildings in Panyu will also mean an increase in business travelers who, in turn, can drive up the occupancy rates of the hotel and the spending there.

There are many well-known tourist attractions near Guangzhou Gudou Quanfeng Residence, including Chimelong Paradise, Blessing Colorful World, Dafu Mountain Forest Park, Lianhua Mountain Tourist Area, Shawan Ancient Town and IKEA Store, which is popular with young people. The Evergrande Football Stadium, which can seat 100,000 spectators, is also expected to be completed in 2022 and will be able to accommodate tourists who stay in Guangzhou for two days and one night.

Mr. HON Chi Ming, Chairman, Chief Executive Officer and Executive Director of the Group, said, "The Group is very satisfied and encouraged by the opening of the Guangzhou Gudou Quanfeng Residence. The hotel is conveniently located in an area where there are comprehensive facilities. Therefore, the area is expected to attract a large number of tourists. Since the apartment hotel has already been renovated and equipped with upgraded facilities and soft furnishings, not much more capital will be required for putting the hotel in operation in a short time. This means cost-effectiveness at the hotel and can quickly responding to the trend of tourism recovery. Looking ahead, tourism property development will remain the focus of the Group's business development. Specifically, we will actively expand our tourism property business in Guangdong Province, provide more quality services to meet customer needs, and increase investors' awareness of Gudou Holdings' brand. All this is aimed at creating better returns."


About Gudou Holdings Limited

Gudou Holdings is a hot spring resort and hotel operator and a tourism property developer in the People's Republic of China ("PRC"). It principally engages in (i) the operation and management of the hot spring resort and hotel facilities of Gudou Hot Spring Resort, which is a national AAAA-level tourist area, and provision of consultancy and/or management services; and (ii) the development and sale of tourism properties in Guangdong Province. The "Gudou" brand is a well-known brand of integrated hot spring resort in the PRC. Gudou Holdings operates six theme hotels, among which Royal SPA Hotel was rated as a five-star hot spring by the National Hot Spring Tourism Enterprise Star Rating Committee in 2020. The resort complexes with a variety of leisure and recreational facilities, including hot spring facilities, hotels, commercial stores, food and beverages outlets, recreational waterpark, a spa centre, a conference centre, parks, tourist attractions and other ancillary leisure and recreational facilities. The Group's newly established Guangdong Gudou Quanfeng Cultural Tourism Development Co., Ltd. has further expanded its presence to Guangzhou with the official opening of Guangzhou Gudou Quanfeng Residence on 10 February 2021, marking the latest headway following the official operation commencement of Gudou Spring Superior Hotel, located in the center of Jiangmen on 15 January 2021.


Stanbic IBTC 9M'20: Non bank subsidiaries once again lift profit to new highs - Brand Spur
- Advertisement -
BrandsPur Weekly Cartoons
- Advertisement -Stanbic IBTC 9M'20: Non bank subsidiaries once again lift profit to new highs - Brand SpurStanbic IBTC 9M'20: Non bank subsidiaries once again lift profit to new highs - Brand Spur