stanbic ibtc - the vault...fy 2016 financial results presentation contents macro economic update...
TRANSCRIPT
Stanbic IBTC
FY 2016
Financial results presentation
Contents
Macro economic update
Financial results - FY2016
Business unit results
Outlook for 2017
Questions and Answers
Appendix
2
Chief ExecutiveStanbic IBTC Holdings PLC
Yinka Sanni
Macro economic update
Challenging operating environmentMovement in external reserves
Headline inflation
Crude oil price movement (monthly average)
External reserves remained on a downward trend for the first ten
months of 2016 before trending upwards in the last 2 months of
the year from November 2016. This accretion in the reserves has
been maintained in 2017 with the reserves eventually touching
US$30 billion in March 2017 for the first time in more than a year.
The increase in reserves is due to increase in oil production and
rising oil price.
Headline inflation rising on the back of increase in cost of food
and other commodities. Headline inflation closed 2016 at 18.55%,
the highest in the past 2 years, and an average of 15.7% during
the year. Inflation is expected to start trending downwards in
2017.
The average crude oil price in 2016 has remained around $45 per
barrel but appreciated to $54.69 at the end of the year and has
remained above $50 in 2017.
4
22.0
23.0
24.0
25.0
26.0
27.0
28.0
29.0
US$ billions
0.00
10.00
20.00
30.00
40.00
50.00
60.00
US$
0
2
4
6
8
10
12
14
16
18
20%
Challenging operating environmentExchange rate movement
Interest rate movement
The Naira still remained under
pressure despite the adoption of
flexible exchange rate by the CBN
in June 2016. The scarcity of fx
resulted in continued depreciation
of the naira in the parallel market,
reaching a high of N520/$1 in
February 2017, while trading at
N305/$1 in the interbank market.
The Naira has recently appreciated
in the parallel market with the
Central Bank’s introduction of fx
sales in commercial banks to retail
customers to meet PTA/ BTA,
school fees and medical needs.
The CBN has also continued to
intervene in the wholesale fx
market.
Though market interest rates
slumped in Q4 2015 as the Central
Bank of Nigeria (CBN) gradually
eased its tight monetary policy.
This was however reversed in
2016 due to the continued rise in
inflation rate.
5
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
Average inter-bank call rate Tbills - 91 daysTbills - 182 days Tbills - 1 yearBond - 3 year
0
100
200
300
400
500
600
Interbank foreign exchange rate (N/US$) BDC foreign exchange rate (N/US$)
N/$
Chief Financial Officer Stanbic IBTC Holdings PLC
Victor Yeboah-Manu
Financial results
FY 2016
Summary of FY 2016 performance
Profitability
• PAT increased by 51%YoY to N25.8 billion on the back of lower interest expense and growth in non-
interest revenue.
• ROE improved to 18.9% from 12.9% in 2015 due to growth in profits.
• Interest expense dropped by 24% to N29.6 billion (2015: N38.8 billion), resulting from increase in
CASA ratio to 57% from 44% in 2015.
• Credit impairment charges increased by 33% to N19.8 billion occassioned by accelerated write off of
some delinquent risk assets.
• Operating expenses increased by 11% YoY to N69.0 billion, though below inflation rate of 15.7%.
Balance sheet
Capital
• Customer loans (net) remained flat at N353 billion due to maturities and a difficult operating
environment which supports increased caution in growth of risk assets.
• Financial investments grew by 55% to N252.8 billion as we repositioned the balance sheet due to
increased credit risk.
• Customer deposits grew by 14% to N561.0 billion driven by a concerted effort at raising CASA to
replace expensive term deposits sourced to cushion impact of the Federal Govt’s Treasury Single
Account.
• Total assets increased by 12% to N1.05 trillion (2015: N937.6 billion) following a growth in financial
investments funded by growth in deposits.
• Shareholders’ fund increased by 11% to N137.1 billion.
• Total Capital Adequacy Ratio for the group increased to 22.8% from 21.3% in 2015, while the
ratio for Bank closed at 21.0% from 18.3% in 2015, driven by growth in profitability.
7
Income
Statement
Balance sheet
Key ratios
Key highlights in FY 2016
2016
N’billion
2015
N’billion
YoY
growth
Gross earnings 156.4 140.0 12%
Net Interest Income (NII) 57.9 43.9 32%
Non Interest Income (NIR) 68.2 56.8 20%
Credit impairment charges -19.8 -14.9 33%
Profit before tax 37.2 23.7 57%
Profit after tax 28.5 18.9 51%
Loans & advances (net) 353.0 353.5 0%
Financial investments 252.8 162.7 55%
Customer deposits 561.0 493.5 13%
Shareholders’ fund 137.1 123.7 11%
Net interest margin 5.9% 4.7%
Cost to Income ratio 54.8% 61.7%
Credit loss ratio 5.2% 3.8%
Return on Equity 18.9% 12.9%
Return on Assets 2.5% 1.7%
Capital adequacy ratio - Group 22.8% 21.3%
Capital adequacy ratio - Bank 21.0% 18.3%
8
Income
Statement
Balance sheet
Key ratios
Overview of income statement in FY 2016
9
Drivers of group income statement
87,467
(29,608 )68,194
(19,803 )
(69,041 )
37,209
(8,689 )28,520
0
20 000
40 000
60 000
80 000
100 000
120 000
140 000
Interest income Interest expense Non-interestrevenue
Credit impairmentcharges
Operatingexpenses
Profit beforetaxation
Taxes Profit aftertaxation
Nmillion
Income
Statement
Balance sheet
Key ratios
Income statement - NIIEvolution of net interest income
Drivers of net interest income
Net interest income increased by 32% due
to a 24% drop in interest expense and a
6% growth in interest income.
Increase in asset yield was on the back of
higher yields on investment securities
which contributed to the growth in interest
income.
Cost of funds declined on the back of
growth in current and savings deposits
which were acquired to replace the
expensive term deposits acquired in 2015
to meet the increase in cash reserve
requirement and the implementation of
Treasury Single Account policy by the
federal government.
Consequently, net interest margin
improved as a result of the decline in cost
of funds and increase in asset yields.
The 200bps difference in NIMs before and
after credit impairment charges is due to
elevated credit loss ratio which was on the
back of an accelerated write off of
delinquent loans in the last quarter of the
year.
10
33,554 37,013 46,658 47,716 57,865
5.0% 4.9%5.5%
4.7%
5.9%
3.9%4.5%
5.1%
3.6% 3.9%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2012 2013 2014 2015 2016
Net Interest income
Net interest margin before impairment charges
Net interest margin after impairment charges
Nmillion
7.7
13.6
9.7
11.2
13.0 13.7
2.2
5.0 4.9 3.9
5.2 4.2
4.9 5.4 4.9 5.5
4.7 5.9
2011 2012 2013 2014 2015 2016
Asset yield Cost of funds Net interest margin
%
Income statement - NIREvolution of non-interest revenue
Breakdown of non-interest revenue by type
Non-interest revenue grew by 20%
driven by a 28% increase in net fees
and commission revenue and 23%
growth in other income.
Growth in net fees and commission
revenue was driven by increased
transactions on alternative banking
channels with fees from card
transaction growing by 67% and E-
banking fees increasing by 31%.
Wealth business grew fees by 21%
occasioned by 18% growth in assets
under management, while the poor
performance of the capital market
impacted negatively on our
stockbroking and custody businesses.
Trading revenue declined by 1% due to
reduction in FX flows into the interbank
market.
2016 2015
11
33,856 48,219 57,987 56,788 68,194
50%
57% 55% 56% 54%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2012 2013 2014 2015 2016
Non-interest revenue % of total income
Nmillion
Fees & commisi
ons 77%
Trading revenue
22% Other revenue
1%
Fees & commisi
ons 72%
Trading revenue
27%Other
revenue1%
Income statement – credit impairment Credit impairment charges trend
Movement in credit impairment charges
Credit impairment charges increased
by 33% in 2016 as the economy
slipped into recession for the first time
in over two decades.
The decline in government revenues
and falling crude oil prices resulted in
higher impairments in the banking
industry as government employees,
public sector suppliers and vendors
experienced delayed payments,
thereby making it difficult for them to
fulfil their obligations to lenders.
We also accelerated provisions on
some credits to enable us take the
opportunity for early write off provided
by the CBN to reduce our NPL book.
Credit loss ratio deteriorated to 5.2%
(2015: 3.8%) due to increased credit
impairment charges.
change 2016 2015
% Nmillion Nmillion
Specific credit impairment charges 34 16,394 12,192
Provision for performing loans 33 3,878 2,922
Total impairment charges 34 20,272 15,114
Recoveries >100 (469) (183)
Credit impairment charges 33 19,803 14,931 12
6,391
1,922 3,502
12,009
15,925
504 745
(285)
2,922 3,878
-1.5
-0.5
0.5
1.5
2.5
3.5
4.5
5.5
6.5
(2,000)
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2012 2013 2014 2015 2016
Credit impairment charge on non-performing loansCredit impairment charge on performing loansCredit loss ratio
Nmillion %
Income statement – operating expenses Operating expenses and cost-to-income ratio
Taxation and effective tax rate
Operating expenses increased by 11% from
2015.
Staff cost was up 22% due to increase in
accrued performance reward and increase
in staff salaries to adjust for inflation.
Average headcount also increased to
ensure adequate manpower to drive our
strategy.
Other operating expenses increased by 4%
reflecting our successes in managing cost
growth in the high inflationary environment.
Cost management initiatives introduced
during the year resulted in a decline in cost
of printing and stationeries, travel and
entertainment and security expenses. A
decline of 65% in provision for legal costs,
levies and fines also resulted in lower
operating costs.
Cost to income ratio improved to 54.8%
from 61.7% recorded in prior year.
Effective tax rate is lower than corporate
tax rate of 30% due to income from tax
exempt sources, while the increasing trend
in effective tax rate is due to the increased
profit in 2016.
13
48,789 57,948 57,901 62,066 69,041
72.4%68.0%
55.3%61.7%
54.8%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2012 2013 2014 2015 2016
Operating expenses Cost-to -income ratio
Nmillion
1,255 3,844 9,068 4,760 8,689
11.0%
15.6%
20.8% 20.1%
23.4%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2012 2013 2014 2015 2016
Taxation Effective tax rate
Nmillion
Balance sheet – Total assets
Total assets mix Total assets and ROA trend
Breakdown of total assets
14
1,053,523
316,61545,158 14,317
252,935
352,96547,858 23,675
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
Total Assets Cash & loans tobank
Trading andderivative assets
Pledged assets Financialinvestments
Loans & advancesto customers
Other assets Intangible assets,property &equipment
Nmillion
19%28%
16%25% 30%
17% 6%11%
13% 4%4% 3%
4%
0% 1%
13% 18%22%
17% 24%
39% 38% 42% 38% 34%
4% 4% 3% 3% 5%4% 3% 3% 3% 2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2012 2013 2014 2015 2016
Intangible assets, property & equipment Other assets
Loans & advances to customers Financial investments
Pledged assets Trading & derivative assets
Cash & loans to banks
1.4%
1.6%
2.9%
3.7%
1.7%
2.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
-
200
400
600
800
1,000
1,200
2011 2012 2013 2014 2015 2016
Total assets Return on assets
Nbillion
Balance sheet – Loans and advances Loans and advances trend
Contribution to loans and advances by product
Gross loans portfolio declined marginally by 1% in
2016 due to the difficult macro-economic
environment which constrained new loan advances
to customers.
Term loans, installment sales and finance leases and
mortgage loans declined as a result of maturities in
the year.
Increase in overdraft loans was due to a review of
risk appetite considering the current economic
situation.
9.3% of the loan portfolio was restructured during the
year
15
LCY loans FCY loans Total loans
Nmillion Nmillion Nmillion
Personal & Business Banking 127,550 24,809 152,360
Mortgage lending 8,924 - 8,924
Instalment sale & finance leases 15,351 772 16,123
Overdrafts 24,743 3,343 28,086
Term loans 78,532 20,695 99,226
Corporate & Investment Banking 88,830 134,126 222,956
Term loans 64,661 134,126 198,787
Overdrafts 23,019 0 23,020
Instalment sale and finance lease 1,150 - 1,150
Gross loans 216,380 158,936 375,316
% of gross loans 58% 42% 100%
Gross loans and advances by currency
279.5 303.3 413.4 379.4 375.3 -
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
450.0
2012 2013 2014 2015 2016
Nbillion
379,428
( 1,029 ) ( 6,104 ) 11,888 ( 8,867 )
375,316
Gross loansand
advances -FY 2015
Mortgagelending
Installmentsales andfinanceleases
Overdrafts Term loans Gross loansand
advances -FY 2016
Nmillion
Balance sheet – Loans and advances
Breakdown of loans by sector
2016
Agriculture6%
Construction and real estate
7%Electricity & other utilities
2%Finance & Insurance
2%
Consumer credit16%
Manufacturing
20%Upstream Oil
& gas12%
Downstream Oil & gas
3%
Oil & gas services
2%
General commerce
12%
Transportation &
communication
14%
Government4%
2015
16
Agriculture8%
Construction and real estate
10%
Consumer credit14%
Manufacturing27%
Upstream Oil & gas
8%
Downstream Oil & gas
8%
Oil & gas services
2%
General commerce
10%
Transportation &
communication
9%
Government4%
Balance sheet – Loan performance Non-performing loans and NPL ratio Non-performing loans ratio by sector
17
Non-performing loans by currency
2016
% of total
NPLs 2015
% of total
NPLs
Local currency 21,345 89% 24,572 76%
Foreign currency 2,678 11% 7,655 24%
Total NPLs 24,023 100% 32,227 100%
2016 2015
Sector% of Total
NPL
NPL ratio
(%)
% of Total
NPL
NPL ratio
(%)
Agriculture 15.4% 11.5% 3.5% 4.9%
Construction and real
estate1.8% 1.0% 0.4% 0.6%
Consumer credit 23.7% 9.9% 16.0% 8.2%
Government 0.7% 1.0% 0.0% 0.0%
Electricity & other utilities 0.0% 0.0% 27.2% 118.3%
Manufacturing 8.2% 1.8% 0.2% 0.1%
Downstream Oil & Gas 2.2% 1.6% 2.6% 6.5%
Oil & gas services 8.4% 22.9% 0.9% 3.3%
Upstream oil & gas 0.0% 0.0% 9.5% 6.7%
General commerce 13.3% 7.8% 14.6% 10.6%
Transportation &
communication26.3% 16.6% 25.0% 15.5%
Grand Total 100% 6.4% 100% 8.5%
14.3 15.8 27.7 32.2 24.0
4.7%
3.8%
6.6%
8.5%
6.4%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
-
5.0
10.0
15.0
20.0
25.0
30.0
35.0
2012 2013 2014 2015 2016
Non-performing loans NPL/ total loans
Nbillion
The non-performing loans declined to N24.0 billion
(2015:N32.2 billion) as a result of the write off of loans
that were fully provisioned by the end of the year taking
advantage of the one-off opportunity provided by the
CBN.
Consequently, NPL ratio declined to 6.4% from 8.5%
recorded in 2015.
Balance sheet – Customer deposits Customer deposits and CASA ratio
Contribution to customer deposits by product
Customer deposits grew by 13% to close at N561.0
billion from N493.5 billion in 2015 .
The drive to grow transactional balances resulted in a
47% growth in current account balances, while
savings account balances grew by 41% from FY
2015.
Term deposits acquired to cushion the impact of CRR
increase and TSA implementation were exited
resulting in a 85% drop in term deposits.
The deposit mix improved with CASA ratio increasing
from 44% in 2015 to 57% at the end of 2016.
18
Customer deposits by currency
355.4 416.4
494.9 493.5 561.0
43%
52%49%
44%
57%
0%
10%
20%
30%
40%
50%
60%
- 50.0
100.0 150.0 200.0 250.0 300.0 350.0 400.0 450.0 500.0 550.0 600.0
2012 2013 2014 2015 2016
Deposit liabilities CASA mix
Nbillion
493,513
93,375 4,111 11,329 ( 41,359 )
560,969
CustomerdepositsFY2015
Currentaccounts
Calldeposits
Savingsaccounts
Termdeposits
CustomerdepositsFY2016
Nmillion
LCY
deposits
FCY
deposits
Total
deposits
Nmillion Nmillion Nmillion
Personal & Business Banking 256,411 96,780 353,190
Current Accounts 112,679 76,198 188,877
Savings Accounts 38,630 - 38,630
Call Deposits 9,680 7 9,687
Fixed Deposits 95,421 20,575 115,996
Corporate & Investment Banking 146,388 61,391 207,779
Current accounts 54,168 38,478 92,646
Call deposits 22,203 10,413 32,616
Term deposits 70,017 12,500 82,517
Total deposits 402,799 158,171 560,969
% of total deposits 72% 28% 100%
Balance sheet – Capital and liquidity Risk weighted assets and capital adequacy ratio
Breakdown of balance sheet funding
Equity14%
Deposits from customers
53%
Deposits from banks10%
Trading liabilities
2%
Other liabilities10% Borrowings
11%
2016 2015
The group maintained adequate
capital with total capital adequacy
ratio at 22.8% (Bank: 21.0%) which is
above the regulatory requirement of
10%.
The group’s balance sheet was
funded mainly by deposits from banks
and customers which accounted for
58% of total assets.
The group’s liquidity ratio closed at
69.2% (Bank:59.1%) against a
regulatory minimum of 30%
19
20.7%22.0%
17.1% 17.4%18.6%
22.3%24.5% 20.4% 21.3%
22.8%
10.0% 10.0% 10.0% 10.0% 10.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
-
100
200
300
400
500
600
700
800
2012 2013 2014 2015 2016
Risk weighted assets Tier 1 capital adequacyTotal capital adequacy Statutory minimum
Nbillion
Equity13%
Deposits from customers
53%Deposits
from banks
5%
Trading liabilities
1%
Other liabilities17%
Borrowings11%
Balance sheet – Shareholder value Return on equity
Net assets value per share and price-to-book ratio
The increase in profitability impacted
positively on ROE resulting in an increase to
18.9% from 12.9% achieved in 2015.
The price-to-book ratio declined on the back
of depressed share price resulting from the
poor performance of the stock market.
Stanbic’s market capitalisation remained on
a steady decline in the last two years as a
result of the decline in the stock market
performance and the absence of financial
information over the period.
20
10.9%
21.0%
29.6%
12.9%
18.9%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
2012 2013 2014 2015 2016
857 979 1,160 1,237 1,371
1.3
2.3 2.3
1.3
1.1
0.0
0.5
1.0
1.5
2.0
2.5
0
200
400
600
800
1,000
1,200
1,400
1,600
2012 2013 2014 2015 2016
Net asset value per share Price- to- book
kob Times
Market capitalisation
110.0
213.5
270.0
165.3 150.0
0
50
100
150
200
250
300
2012 2013 2014 2015 2016
Nbillion
Executive Director Stanbic IBTC Bank
Babatunde Macaulay
Personal & Business
Banking
PBB Financial analysis
22
Performance highlights
2016 Change % 2015
Income statement Nmillion Nmillion
interest income 31,882 (4) 33,347
Interest expense (1,918) 84 (11,747)
Net interest income 29,964 39 21,600
Non-interest revenue 14,512 77 8,213
Credit impairment charges (9,504) 41 (6,756)
Operating expenses (36,656) 15 (31,839)
Loss before tax (1,684) 81 (8,782)
Loss after tax (1,613) 81 (8,632)
Balance sheet 2016 2015
Total assets 227,148 (8) 248,226
Gross loans & advances 152,360 (7) 163,977
Deposit liabilities 353,189 40 253,122
Key ratios 2016 2015
Cost-to-income (%) 82.4 106.8
Net interest margin (%) 12.6 8.5
Credit loss ratio (%) 6.0 4.1
Growth in net interest income on the back
of a decline in interest expenses as a result
of growth in current and savings account
deposits.
Significant growth in non-interest revenue
due to increased transaction volumes on
our alternative banking channels and
increase in account maintenance fees.
Credit impairment charges grew by 41%
due to increase in general provisions on the
loan book and accelerated specific
provisions on loans to be written off.
Operating expenses growth is on the back
of inflation adjustment to salaries and
increased cost of running branches.
Although cost growth remained below
inflation of 18.55% at year end.
Loan book declined marginally due to
maturities at the end of the period.
Deposit book increased on account of
significant growth in current and savings
deposit balances as we continue to focus
on acquiring new customers with regular
flow of activities.
2016 Achievements
PBB Financial analysis
23
Amid macroeconomic challenges in 2016, the business progressed in key areas, including 49% year-on-year
growth in total income, 40% year-on-year growth in customer deposits with 64% growth in low cost deposits,
which led to lower than budgeted Net Interest Expense. The business also made progress on the three key
success measures of our new strategy:
- Active customers increased by 34.5% year-on-year
- NIR to Total income ratio of 33.2% which represents an increase of 5% year-on-year
- Low cost deposits to total deposits of 64% which represents an increase of 9% year-on-year.
The business acquired 255,912 new customers in 2016, which represents 47% year-on-year growth in
customer acquisition. The substantial acquisition is directly correlated to the 20% increase in total customer
base of 1.42million.
Digital journey: The business continues to make significant investments in digital channels aimed at enhancing
customer experience. This has led to increased adoption and volume growth across all our digital banking
channels, as highlighted below:
ATM – Volume of transactions have grown by 24% YoY, while value of transactions have also increased
by 26%
Transaction volumes and values on our Mobile banking have grown by over 800% and 1000%
respectively in the last one year
Internet Banking recorded 37% and over 700% growth in transaction volumes and values respectively
from last year
Mobile money transaction volumes increased by over 200%, while transaction values increased 9%
YoY
Point-of-sale (POS) transaction volumes grew by 39% YoY, while the transaction values were above
prior year by 38%
Volumes of Card transactions grew by 42% YoY with transaction values increasing by 39% from prior
year
2016 Achievements continued
PBB Financial analysis
24
In 2016, we launched the first digital branch located at Maryland Mall which marks the beginning of a new
phase with regards to customer interface, channels and access to products and services. The future of banking
is digital and the idea is for our customers to be able to bank on the go, paperless environment and self-
service. This is the first amongst many of digital branches to be rolled out by the business.
The business has also made progress in the customer experience journey with improving customer satisfaction
and reduction in customer complaints. Some of the initiatives include the Customer Contact Centre (CCC)
revamp project, monitoring of Net Promoters Score (NPS), proactive and reactive monitoring on our digital
channels and successful implementation of Operational Excellence across all our branches. The progress is
manifest in the 2016 KPMG Banking Industry Customer Satisfaction Survey (BICSS) with rating improvement
to 4th position in 2016, up from 7th in 2015.
Moving forward 2017
PBB Financial analysis
25
Focus on digital banking in a bid to increase digital adoption and penetration;
with emphasis on the SIBTC Mobile Banking App.
Focus on customer service and experience at our branches and touch points
such as digital channels and relationship management.
Focus on growing the number of active customers in our chosen segments and
reducing dormancy rate.
Focus on growing the loan book with good quality loans and selling multiple
products to customers across the segments to improve retention rates.
Roll-out of various service management initiatives to deliver improved customer
experience across all our channels.
Deepen customer relationships through targeted value and channel propositions
to deliver growth in balance sheet and revenues.
Chief ExecutiveStanbic IBTC Bank
Demola Sogunle
Corporate & Investment
Banking
CIB Financial analysis – FY 2016
27
Performance highlights2016 Change % 2015
Income statement Nmillion Nmillion
interest income 51,892 12 46,477
Interest expense (27,690) 2 (27,079)
Net interest income 24,202 25 19,398
Non-interest revenue 25,308 2 24,800
Credit impairment charges (10,299) 26 (8,175)
Operating expenses (22,492) 3 (21,735)
Profit before tax 16,719 17 14,288
Profit after tax 14,923 (1) 15,079
Balance sheet 2016 2015
Total assets 779,058 18 658,365
Gross loans & advances 222,956 3 215,451
Deposit liabilities 207,780 (14) 240,390
Key ratios 2016 2015
Cost-to-income 45.4 49.2
Non-interest revenue to total income 51.1 56.1
Net interest margin 3.4 2.9
Credit loss ratio 4.7 3.8
Net interest income was up 25% due to
favourable yields on investment securities and
slower growth in interest expense.
The adoption of flexible exchange rate system
impacted positively on trading revenue, while
net fees and commissions also witnessed
growth on the back of increased trading
activities, although FX scarcity muted this
growth.
Credit impairment charges increased by 26%
as the business accelerated the provisions on
some loans to enable it take advantage of the
CBN window that allowed the write off of fully
provisioned loans.
Operating expenses grew by only 4% as
management maintains a disciplined approach
to cost to improve efficiency resulting in a
decline in cost-to-income ratio to 45.5% (2015:
49.2%).
Loan book increased by 3% due to a cautious
approach to lending and revaluation of FX
assets.
Customer deposits declined by 15% as the
drive to replace expensive term deposits with
transactional deposits continues.
2016 Achievements
CIB Financial analysis
28
Maintained stockbroking business dominance of the secondary equity stock market with a market share
of 15.41%, of the value of shares traded on the floor of The NSE. This represents a 14% increase on
prior year market share of 13.57%.
Custody business maintained its dominance as the largest non-pension custodian in the Nigerian
market with approximately 80% market share of foreign institutional portfolio investment in the Nigerian
market.
Stanbic IBTC through its subsidiary Stanbic IBTC Nominees Ltd is driving different initiatives such as
the Electronic Certificate of Capital Importation and the use of extended SWIFT Message Type by the
Central Securities Depository amongst others in the custody business.
A number of awards won across all business units
Best Loan Finance Bank in Nigeria and Best Overall Bank in Nigeria (Euromoney Real Estate
Awards)
Best Sub-Custodian in Nigeria (Global Finance Magazine)
Best Investment Bank of the Year (BusinessDay Banking Awards)
Best Foreign Investment Bank and Best Debt House in Nigeria (EMEA Finance African Banking
Awards)
Best Stockbroker (BusinessDay Banking Awards)
Best Dealing Member Firm (The Nigeria Stock Exchange CEO’s Awards)
Moving forward 2017
CIB Financial analysis
29
Continue to build long-term relationships, develop deeper insight into client needs
and reaffirm our commitment to providing bespoke solutions.
Working in partnership with all parts of the franchise, across Stanbic IBTC and
Standard Bank, to service our clients more effectively.
Continue to improve the resilience of the business while ensuring it remains
profitable and sustainable.
Chief Executive Stanbic IBTC Pension Managers
Eric Fajemisin
Wealth
Wealth Financial analysis – FY 2016
31
Performance highlights2016 Change % 2015
Income statement Nmillion Nmillion
Interest income 3,693 29 2,862
Interest expense - -
Net interest income 3,693 29 2,862
Non-interest revenue 28,374 19 23,775
Operating expenses (9,893) 16 (8,492)
Profit before tax 22,174 22 18,145
Profit after tax 15,210 22 12,444
Balance sheet 2016 2015
Total assets 47,317 53 30,973
Assets under management 2,076,423 18 1,757,882
Retirement savings accounts (Nos) 1,508,040 6 1,428,842
Key ratios 2016 2015
Cost to income ratio (%) 30.9 31.9
Net interest income grew by 29%
on account of higher yields on
financial investments.
Non-interest revenue grew by 19%
due to increased revenue from
asset management fees as assets
under management continue to
grow.
Operating expenses grew by 16%
driven by 4% growth in staff cost
due to inflation adjustment to
salaries, while other operating
expenses increased by 28% on the
back of upgrade of facilities in
preparation for the transfer window.
Cost-to-income ratio improved to
30.9% at the end of the period
from 31.9% recorded in 2015.
Maintained its leading position as the largest institutional investment business and number
one wealth manager in Nigeria with asset under management of ₦2.08 trillion (US$ 6.6
billion).
Stanbic IBTC Money Market fund maintained its position as arguably the largest managed
mutual fund in Nigeria with Net Assets Value (NAV) of over N60bn.
Stanbic IBTC Insurance Brokers Limited (SIIBL) obtained its insurance brokerage license
from the National Insurance Commission (NAICOM) and effectively commenced operations
in February.
Successfully launched Stanbic IBTC Dollar Fund and SIAML Pension ETF 40 to enhance
alternative investment offering to the investing public.
Increased Eurobond investment inflows from $24.2million (N4.9billion) to $26.2million
(N7.9billion) as at 31 December 2016 representing a nominal increase of 61.22% after
adjusting for currency devaluation.
Introduced the Smart-Beta Fund to enhance our passive investment strategy capability. This
also provided fund managers with additional tools in delivering optimal returns on managed
funds /portfolios.
2016 Achievements
Wealth Financial analysis
32
Enhance our alternative investment products and capabilities by launching new funds also in
consideration for the Shariah compliant segment.
We aim to position the mutual funds for more inclusion at the retail end by reducing the minimum
subscription amount from N50,000 to N5,000 in response to the current economic realities.
Introduce electronic delivery of quarterly reports to clients with privately managed funds to improve
security of clients’ confidential information as well as prompt and efficient delivery of reports.
Improve service and enhance convenience for mutual fund subscribers by deploying an automated
feedback system and introducing online chat on the asset management company website.
Deployment of Customer Relationship Management (CRM) in the Trust company for ease of operations
and efficiency.
Increased footprint in the social media space to reach a wider audience as we place greater focus on
industry advocacy to champion best in class business practices.
Engage key associations and unions across the pre-qualified micro-pension market whilst also seeking
relationships with institutions who already partner with and service the informal sector market for
collaboration in readiness for micro pension.
Moving forward 2017
Wealth Financial analysis
33
Chief ExecutiveStanbic IBTC Holdings PLC
Yinka Sanni
Guidance for FY 2017
Outlook in FY 2017
Recovery in economic performance with slight growth in GDP.
Sustained pressure on foreign currency reserves due to monetary authority intervention in the FX
market.
Headline inflation should moderate in 2017. Inflation rate for February 2017 declined to 17.8% from
18.7% in January 2017.
Asset quality concerns in the banking industry resulting in higher NPLs.
Compression in non-interest revenue (NIR) driven by limited E-banking income and reduced FX
revaluation gains.
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Guidance for FY 2017
We are focused on delivering the following in FY2017
Cautious loan growth with focus on agriculture and manufacturing – 5% - 7.5%.
Deposit growth at 10% – 15%, with focus on growing CASA up to 60% of deposits.
Focus on reducing NPL ratio to around 5%
Focus on reducing cost of risk to 4% region from 5.2% in 2016
Maintain net interest margin of about 5%
Cost-to-income ratio of 50% - 55%
Achieve return on equity of between 18% – 20%
Growth in AUM of around 10%
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Questions & Answers
Appendix
Group income statement
39
Change
%
2016
Nmillion
2015
Nmillion
Gross income 12 156,425 140,027
Net interest income 32 57,859 43,860
Interest income 6 87,467 82,686
Interest expense (24) (29,608) (38,826)
Non-interest revenue 20 68,194 56,788
Net fees and commission revenue 28 52,154 40,704
Fees and commission revenue 28 52,918 41,257
Fees and commission expense 38 (764) (553)
Trading revenue (1) 15,326 15,503
Other revenue 23 714 581
Total income 25 126,053 100,648
Credit impairment charges 33 (19,803) (14,931)
Income after credit impairment charges 24 106,250 85,717
Operating expenses 11 (69,041) (62,066)
Staff costs 22 (30,173) (24,825)
Other operating expenses 4 (38,868) (37,241) #DIV/0!
Profit before taxation 57 37,209 23,651
Direct taxation 83 (8,689) (4,760)
Profit for the period 51 28,520 18,891
Group quarterly income statement
40
Q4 2016 Q3 2016 Q2 2016 Q1 2016
N’million N’million N’million N’million
Gross income 52,007 36,123 34,558 33,737
Net interest income 18,770 16,240 12,299 10,550
Interest income 26,282 24,472 19,037 17,676
Interest expense (7,512) (8,232) (6,738) (7,126)
Non-interest revenue 15,299 20,968 14,989 16,938
Net fee and commission revenue 12,070 12,678 13,222 14,184
Fee and commission revenue 12,292 12,831 13,445 14,350
Fee and commission expense (222) (153) (223) (166)
Trading revenue 3,054 7,956 1,681 2,635
Other revenue 175 334 86 119
Total income 34,069 37,208 27,288 27,488
Credit impairment charges (4,525) (6,828) (6,181) (2,269)
Income after credit impairment charges 29,544 30,380 21,107 25,219
Operating expenses (18,023) (19,317) (16,725) (14,976)
Staff costs (7,368) (8,427) (7,161) (7,217)
Other operating expenses (10,655) (10,890) (9,564) (7,759)
Profit before taxation 11,521 11,063 4,382 10,243
Taxation (3,153) (1,171) (1,913) (2,452)
Profit for the period 8,368 9,892 2,469 7,791
Group statement of financial position
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Change
%
2016
Nmillion
2015
Nmillion
Assets
Cash and cash equivalents 42 301,351 211,481
Pledged assets (67) 28,303 86,570
Trading assets (56) 16,855 37,956
Derivative assets >100 14,317 911
Financial investments 55 252,823 162,695
Assets held for sale (57) 112 262
Loans and advances (3) 368,229 380,295
Loans and advances to banks (43) 15,264 26,782
Loans and advances to customers (0) 352,965 353,513
Other assets 65 39,220 23,741
Deferred tax assets (9) 22,962 25,311
Property and equipment >100 713 -
Intangible assets 4 8,638 8,342
Total assets 12 1,053,523 937,564
Equity and liabilities
Equity 7 140,798 128,967
Liabilities
13 912,725 808,597 Trading liabilities (78) 5,325 24,101
Derivative liabilities >100 11,788 383
Deposit and current accounts 4 614,735 588,959
Deposits from banks (44) 53,766 95,446
Deposits from customers 14 560,969 493,513
Other borrowings 18 96,037 81,107
Subordinated debt 18 27,964 23,699
Current tax liabilities 9 9,508 8,727
Deferred tax liabilities (61) 47 120
Provisions 6 10,581 10,027
Other liabilities 91 136,740 71,474
Total equity and liabilities 12 1,053,523 937,564
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