Stanbic IBTC 2016 profit rise by 51% with worrisome impairments


Stanbic IBTC Holdings, Nigerian unit of Standard Bank is posting a better result than it did in 2015 despite Nigeria’s biting recession that has left banks reeling in bad debts.

However, the bank’s underlying outlook is also rocky even when its asset has not hit NGN1 trillion.

The bank’s gross posted NGN156.4 billion in gross earnings for fourth quarter 2016 compared to NGN140.0 billion recorded same period 2015.

A serious sign of worry for anyone who wants the bank to succeed is its impairment charges that has spiked by 20%. This is a common denominator amongst Nigerian banks who are suffering from their huge exposure to the oil and gas industry and poor capital positions.

The bank disclosed that it booked a total of NGN102.6 billion in impairment charges in contrast to NGN85.7 billion recorded in 2015.

However, there was a somewhat efficiency in managing cost as operating expenses for the year was NGN69.0 billion compared to NGN62.0 million recorded in the financial year 2015.

The company recorded NGN37.2 billion as profit before taxation compared to NGN23.6 billion recorded in 2015. After all deductions and expenses, Stanbic IBTC profit for the year increased by 51% to NGN28.5 billion in 2016 from NGN18.8 million recorded in 2015.

For the first time, the bank’s asset has hit the trillion mark. Total asset value at the end of the period was NGN1.0 trillion in the year in review compared to NGN937.5 billion recorded in the year before.

On the flip side, impairment and delinquent loans have given muscle to it liabilities which which has increased to NGN912.7 billion compared to NGN808.5 billion recorded in 2015.

With a net asset of about NGN200 billion, the risk to its bottom line is glaring. Stanbic IBTC is not the only bank in Nigeria facing this type of risks. Fitch raised an opinion yesterday that Nigerian banks will face a challenging future as toxic loans pile up and macro-economic outlook of Nigeria remains negative in the medium term.

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