NIGERIA'S STANBIC IBTC BASIC STAND IN 2018.

From the audited figures for 2018 released last week, Nigeria's Stanbic IBTC plc scored a hattrick within the year: It recorded 44.1% growth in profit before tax to N88.2 bn from just 4.67% rise in gross earnings to N222.4bn.

How come?. Not far fetched. The same figures say that the bank took a basic stand on its loan portfolio within the year that led to a 88.5% drop in impairment provision to N2.94bn from 2017's N25.6bn.

In view of the fact that its loans to customers increased by 16.3 to N432.7bn, such a drastic reduction in impairment provision indicate a drastic review of the portfolio, or far more performing loans.

Either way, reverse the sharp decline in impairment provision, and Stanbic's strong profit before tax growth could vanish into thin air.

The main reason was that the 4.67% growth in gross earnings recorded was driven mainly by 29.1% increase in trading income to N31.3bn and 52.6% jump Other income to N1.45bn amidst 6.46% drop in net interest income to 78.2bn from N83.6bn.

The net interest income drag on gross earnings came from 3.68% decline in interest income to N118.4bn accompanied by 2.16% rise in interest expense to N40.173bn.

On its part, fee and commission revenue had recorded double digit growth (19.9%) to N71.2bn but this was rubbish by 311.8% leap in expense associated with it to N1.4bn.

If after all these, Stanbic IBTC had had firm control over its costs, then the impact of the impairment provision decline would have been less visible. But, given the inflationary environment and slow macro economic recovery, this was not possible.

In the end, the group's total operating expenses increased by 11.2% to N95.6bn driven principally by 18.5% growth in staff cost to N43bn and 5.84% increase in Other operating expenses to N52.6bn.

Hence, ending the year with improved double digit bottom line was very good news for Stanbic IBTC in these times but provided its basic stand on its loan portfolio holds in 2019 especially, and beyond.

STANBIC IBTC Nbn Full year.
                              2018.            2017
Gross earnings   222.4.           212.4
Interest income. 118.4.           122.9
      " Expense.        40.2.             39.3
Net interest inc.    78.2.             83.6
Fee & Comm.inc   71.2.             59.4
    " Expense.            1.4.             0.34
Trading income    31.3.           29.1
Other revenue.       1.45.           0.91
Impairment.           2.94.          25.6
Staff cost              43.0.           36.3
Other Op. Cost     52.6.           49.7
Profit before tax. 88.2.           61.2
Profit margin %   39.7.            28.8

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