IBTC: Strong Fundamentals, Poor Yield!

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DAVID EKPEME ONYE

 

Despite the gloomy state of the Nigerian economy, Stanbic IBTC, one of the strongest lenders in Nigeria has put a smile on the faces of shareholders for the year ended 2018.

The bank distributed N15.360billion, representing N1.50 per share to its teeming investors. The dividend, which was a 12 months productive effort of the financial power house, translates to a 3.12 per cent growth, and is lower than the minimum of 5 per cent that is expected in the equity market. Nevertheless, N1.50 represents about 36 per cent higher than the N1.10 the bank paid as dividend in the previous year 2017 totalling N10billion.

However, the lender’s stock was the highest valued or priced share on the Nigerian Stock Exchange (NSE) price chart at N48.00 per share in the banking subsector as at March 13, 2019. The value of the bank’s stock has overtaken that of GT Bank which was put atN37.65 per share on the same day. GTBank had maintained the top priced stock position for a long time in that subsector.

On the flip side for IBTC however, shareholders expected that a bank whose stock price is the highest in the industry should pay a higher dividend than the N1.50 per share it I offering. This is more so when GT Bank paid N2.50 and Zenith Bank paid N2.70 per share I the corresponding period.

Beyond that however, IBTC’s shareholders have gained 17.3 per cent or N7.1 per share from capital appreciation in one year and two months since January 2, 2018.

Analysts believe that the bank’s strong fundamentals are reliable and can stoke confidence in investors. However, the bank grew its profit before tax 44 per cent from N 61.166billion in 2017 to N88.152billion in 2018. Its gross earnings also surged 4 per cent, an indication that the bank had a good year in 2018.

While profit after tax rose 53.8 per cent from N212.4 billion to N 222.3 billion in 2018, analysts believe the lenders non- interest income and fee and commission income enhanced the lender’s strong performance in a year of weak macro-economic performance.

With the weak economic recovery at the Gross Domestic Product growth at 1.9 in 2018, there were no high expectations for not only the banks, but for other businesses especially those in the real sector. Not many were expected to have savings let alone borrow money for use in business operations.

However, at the close of business year 2018, its operational expenses rose 11 per cent from 2017 to 2018.

Looking critically at the bank’s performance in the last five years would reveal an impressive trend especially in the area of profits and earnings. The bank has in fact, grown its profit before tax by 102.5 per cent from N43.527billion in 2014 to N88.152billion in 2018.

Similarly, its earnings per share grew 122 per cent from 317 kobo in 2014 to 704kobo in 2018. This feat reveals a bank which has deliberately worked to improve in every measurable index, including making its stakeholders, management, shareholders and staff happy.

Boniface Okezie, Progressive Shareholders Association of Nigeria (PSAN) National Coordinator argues that Stanbic IBTC is ranked as one of the best performers in the banking industry.

He said though the dividend of N1.50 was appreciated but he believes the bank can increase its dividend pay out to rank with that of GT Bank and Zenith which have always paid higher packages.

”We hope the bank will be consistent with the payment of dividends”, he said.

It will be recalled that Stanbic IBTC’s parent company, Stanbic IBTC Holdings, had suffered a setback  in September 2018 when it paid a fine of N1.8billion to the Central Bank of Nigeria for breaching extant laws relating to CC1 executed on behalf of MTN.

Stanbic IBTC was one of the four banks that repaid N5.87 billion for allegedly issuing irregular Certificates of Capital Importation (CCIs) on behalf of some MTN offshore investors.

The company says as a member of the Standard Bank Group (SBG) it is committed to conducting business professionally, ethically, with integrity and in accordance with international best practice. To this end, the company subscribes to and adopts risk management standards, policies and procedures that have been adopted by the SBG. The company is also bound by the Nigerian Sustainable Banking Principles (“the Principles”) and the provisions of the Principles are incorporated into policies approved by the Board.

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