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STANBIC IBTC Holdings: Running on diversified earnings

In Nigeria Stanbic IBTC could be said to have originated from the Investment Banking and Trust Company Ltd (IBTC) which came into existence in 1989 as one of the early indigenous private sector merchant banks in the country. After series of transitions, mergers and acquisitions, Stanbic IBTC has emerged as one of the growing lists of formidable Nigerian South African corporate alliances.

•Atedo Peterside, Chairman, Stanbic IBTC & •Sola David Borha, MD/CEO.
•Atedo Peterside, Chairman, Stanbic IBTC & •Sola David Borha, MD/CEO.

As part of the moves to comply with CBNN regulations on holding company model in the industry Stanbic IBTC Holdings Plc was incorporated as the parent company of the bank with other group members in diverse sub-sectors of the financial services.

Operations of the group is organized long three major lines, namely, corporate and investment banking group, personal and business banking group and wealth management group. During the 2014 financial year some of the subsidiaries attained important industry milestones and leadership.

The Pension subsidiary crossed the N1trillion mark and became the undisputed leader in that sub-sector. The stockbroking subsidiary lead the market in both volume and value of transactions in the Nigerian Stock Exchange for the 7th consecutive year. Assets under custody by Stanbic IBTC Nominees hit the N2.3 trillion mark. Also a sub-sector lead.

Capital Adequacy

Stanbic IBTC as a group reported shareholders’ funds of N114 billion in 2014, up from N98 billion. Every indication shows this to be adequate to provide cushion to the respective businesses under the group portfolio. With our analysts estimate of risk size of N555 billion, we estimate a risk coverage ratio of 20 %.

Though down from 24% estimate for 2013, this is considerably high enough to support the risk inherent in the group’s business and satisfies the Basle 11 requirement of 10% minimum regulatory capital for banks in that category.The bank’s estimated risk weighted asset ratio of about 15% under the new framework.

Asset Quality

In 2014, the group extended gross loans of N413 billion to its customers, significantly up from N303 billion in 2013. The largest chunk went to manufacturing, trailed by oil and gas, consumer credit, transport and communications. However term loans was almost 86% of the total. Having adopted best practices in risk governance standards, policies and procedures for each major risk type the bank was able to achieve a considerably high quality portfolio. Non-performing loans ratio was 4% in 2014 as was in 2013.

Liquidity Risk

In 2014, the group reported deposit and current accounts of customers at N507.7 billion up from N419 billion. Liquidity ratio was at minimum of 50.8% and maximum  of 84.7% resulting in average of 72.6%. In our analysis liquid to total assets ratio was about 44% while adjusted liquidity ratio was 46%. Notwithstanding the divergence in estimates these liquidity levels are considered very much adequate to satisfy stakeholders and meet regulatory requirements.



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