By Emeka Anaeto

HOPES for effective recovery of lost grounds in the capital gains on Stanbic IBTC Bank Plc appeared dashed by market reversal, as the bank’s impressive results portended an equally impressive stock valuation outlook.

Stanbic IBTC’s stock had received positive sentiment following the announcement of its belated 2015 audited results and 2016 interim results at the advent of the Yuletide holiday.

Benefit of the good results

A subsequent rally had pushed the stock price 10.4 per cent higher to N15.69 on the new year’s trade with many investors expecting a full recovery to 2016 highs of over N17, but a reversal had set in abruptly, aborting the positive sentiment, while denying investors the full benefit of the good results, the only one around that period.   Though some improvements have been recorded in the share price, the Year-to-Date, YtD, of investment return was flat as at last weekend.

Though the new year bear run appeared to have been restrained last weekend, some market dealers do not expect the full recovery soon as the market itself is still soft.

Following the resolution of the long lingered accounting issues with the Financial Reporting Council of Nigeria, FRCN, Stanbic IBTC Bank Plc eventually released its financial results both audited and unaudited, both long over due as a result of the face off with FRCN.

The figures, though not as bad as most analysts expected, they came with similar uncomfortable numbers seen in a few other banks last year.

The 2015 audited full year results show a mixed performance with marginal improvements in top line and a huge downturn in bottom line. Gross earnings was N140 billion, up 7.1 per cent from N130.7 billion in the corresponding period of 2014.

But Profit Before Tax had a big fall, declining -45.5 per cent to N23.7 billion.

Performance profile

Consequently, Earnings Per Share, EPS, nose-dived -51.1 per cent to N155, from N317 while just as Total Assets declined marginally to N937.6 billion from N941.9 billion.

However, the most current performance profile being the unaudited results for nine months to September 2016 show improved performance in key indicators, top line and bottom line.

For instance, the bank improved its Gross Earnings by 9.8 per cent to N114.6 billion, ahead of consensus estimate by 4.4 per cent.

In the bottom line it also surpassed consensus estimates by 11.7 per cent on Profit Before Tax, PBT, which stood at N25.7 billion, up 67.2 per cent from N15.4 billion recorded in the corresponding period of 2015, just as Profit After Tax showed a huge 48.6 per cent jump to N20.2 billion, beating consensus estimate by 5.7 per cent.

Also heart-warming is the developments in its interest expenses which declined by -25.7 per cent to N22.1 billion during the period, signifying a more comfortable cost of funds and liquidity position.

Consequently, though Interest Income declined -2.4 per cent to N61.2 billion, the Net Interest Income remained resilient at N39.1 billion, about 18.7 per cent improvement over the corresponding period of 2015.

However, loan loss expenses rose significantly by 22.3 per cent to N15.3 billion, disappointing the consensus estimate of N12.9 by 18.1 per cent. It toed similar trend in the 2015 full year result which saw impairment charges souring 365.6 per cent to N14.9 billion.

Stunted growth

Though Operating Expenses rose to N51 billion, up 10 per cent against N46.4 per cent recorded in 2015, this was significantly better than inflation rate as at the period under review.

Stanbic IBTC appeared frightened by the adversities it had suffered in the preceding year on bad loans as it recorded a stunted growth of 1.1 per cent in net loan position at N357.4 billion.

However, it’s Total Assets remained upbeat crossing a trillion Naira mark to hit N1.146 trillion, up 22.3 per cent from N937.5 billion recorded in the corresponding period of 2015. The bank’s Net Assets moved up by 12.3 per cent to N144.8 billion.

The bank also grew its deposit base by 22.8 per cent to N606.1 billion from N493.5 billion.