By Modupe Gbadeyanka
Nigerian rating agency, Global Credit Ratings (GCR), has affirmed the national scale ratings assigned to Stanbic IBTC Bank PLC of AA-(NG) and A1+(NG) in the long and short term respectively; with the outlook accorded as Stable.
A statement issued by GCR last Friday said explained that the ratings were assigned to Stanbic IBTC Bank Plc because the lender has continued to show it can survive any storm.
The rating firm noted that Stanbic Bank has maintained a high liquidity profile in FY16, with the regulatory liquidity ratio ranging between 65.5% and 95.5% and averaging 78.9%, well above the required minimum of 30%. Average liquidity ratio for 1H FY17 was 86.7%.
Stanbic IBTC Bank Plc is a wholly owned subsidiary of Stanbic IBTC Holdings Plc, which is a member of the Standard Bank Group.
While the bank competes favourably with other mid-sized banks in Nigeria, relatively maintaining a market share of 3.1% in terms of total industry assets at FY16 (FY15: 3.2%), a key rating strength is the implied financial, risk management and technical support from its ultimate parent, SBG. SBG is the largest banking group in Africa, in terms of total assets and earnings.
Capitalisation is considered strong for the current risk level, with the bank reporting a regulatory risk weighted capital adequacy ratio of 20.2% and 21.0% at 1H FY17 and FY16 respectively, against the required minimum of 10% for national licensed banks. While shareholder’s funds continued to rise year-on year to N109.3bn at FY16 as a result of strong internal capital generating capacity, capitalisation is further enhanced by subordinated debt securities amounting to N28bn at FY16.
The gross non-performing loan (NPL) ratio declined to 5.0% at FY16 (FY15: 7.1%), following a loan portfolio clean up.
The bank took advantage of CBN waiver which allowed banks to write-off fully provisioned loans in FY16.
Notwithstanding this, continued asset quality pressure saw the bank’s gross NPL ratio rise to 7.8% at 1H FY17. Specific provision covered 46.1% of gross NPLs at 1H FY17 (FY16: 59.9%).
The bank reported a pre-tax profit of N14.9bn for FY16, which was up 232.8% from FY15. A positive earnings trend was also reflected at 1H FY17, with pre-tax profit of N14.3bn.
While net interest income was largely supported by improved investment yields and funding costs, non-interest income was driven by increase in net fees and commission income at FY16 and then by trading activities at 1H FY17. The cost to income ratio decreased to 61.9% in FY16 and further to 53.3% at 1H FY17 (FY15: 71.9%). As such, profitability indicators improved significantly during the review period, with the ROaE and ROaA rising to 14.7% (FY15: 6.8%) and 1.6% (FY15: 0.7%) in FY16 respectively.
Maintaining strong financial metrics in terms of profitability, asset quality and capitalisation, and a further strengthening of the bank’s competitive position in the domestic market, would be favourably considered.
However, the ratings are sensitive to a sharp deterioration in key asset quality indicators, earnings, capital adequacy and liquidity, as well as a reduction in the assessment of shareholder support.
Dipo Olowookere 
Aduragbemi Omiyale