By Esther Agbo
Stanbic IBTC Holdings Plc has reported a remarkable 71 percent increase in profit after tax, reaching N116.36 billion in the first half of 2024, up from N67.92 billion in the same period last year.
This growth comes amidst a challenging economic environment, showcasing the bank’s ability to navigate rising interest rates and increased operating costs effectively.
According to the bank’s recently filed financial statements with the Nigerian Exchange Limited, the surge in profit was primarily driven by a 54 per cent rise in net interest income, which grew to N174.30 billion from N72.68 billion in H1 2023.
This increase was fueled by a 123 percent boost in interest income, jumping to N246.13 billion, from N110.26 billion, reflecting the bank’s ability to capitalise on market opportunities despite higher interest expenses.
In contrast, the cost of borrowing also rose sharply, with interest expenses growing by 91 percent to N71.83 billion from N37.58 billion, a direct result of elevated interest rates and increased borrowings.
Additionally, the bank’s non-interest revenue saw a 31 percent rise to N129.15 billion, compared to N98.62 billion in the previous Year, driven by higher fee and commission income, which played a critical role in its revenue diversification strategy.
However, Stanbic IBTC faced challenges in asset quality, as net impairment losses surged by 344 percent to N26.55 billion from N5.98 billion, reflecting the impact of the macroeconomic environment on the bank’s loan portfolio.
Operating expenses also grew by 58 percent to N129.89 billion from N82.34 billion, primarily due to increased staff costs and other operational expenditures.
The bank disclosed the recognition of N563bn in off-balance sheet pledged assets, accounting for 30 percent of a transaction related to a cross-currency interest rate swap agreement with Standard Bank of South Africa Limited and the Central Bank of Nigeria (CBN).
The agreement involves the exchange of $1 billion for N1.482 billion, signalling Stanbic IBTC’s commitment to innovative financial solutions to hedge against currency risk.
Additionally, Stanbic IBTC’s loan commitments stood at N123.99 billion as of June 30, 2024, compared to N97.71 billion at the end of December 2023, indicating the bank’s growing role in supporting businesses and individuals through its loan products.
“An amount of N563 billion has been recognised as off-balance sheet pledged assets, which represent 30 percent of the original transaction that was ceded to Stanbic IBTC Bank by Standard Bank of South Africa Limited in a Cross-Currency Interest Rate Swap agreement with CBN involving the exchange of $1 billion for N1.482 billion.
“As of 30 June 2024, the group had loan commitments amounting to N123.99 billion (Dec 2023: N97.71 billion) in respect of various loan contracts. The expected credit loss on the off-balance sheet exposures amounts to N663m (Dec 2023: N619 million),” it noted.
Looking ahead, Stanbic IBTC has ambitious plans to raise about N550 billion through a debt issuance programme and a rights issue, a move that reflects the bank’s commitment to bolstering its capital base and expanding its operations.