Stanbic IBTC’s quarterly profit rises 80%, helped by elevated lending rates

Stanbic IBTC Holdings, the local operation of Africa’s largest bank, Johannesburg-based Standard Bank Group, turned the high-interest rate environment in Nigeria to its advantage to post a 79.8 per cent profit rise for the last quarter.

Its earnings report, out on Friday, showed interest income at N180.5 billion, more than half the figure it reported a year earlier.

It underscores how the tide of the Central Bank of Nigeria’s prolonged hawkish stance on interest rate is still turning in favour of lenders, even after the regulator paused rate hikes in the middle of February.

Nigeria’s top monetary authority raised the reference rate by 875 basis points last year in continuation of a tightening cycle that started in May 2022 to slow down the high cost of living in Africa’s most populous nation.

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While the move has sharply increased debt-service costs for businesses, it has created a bonanza for banks, allowing them to charge higher interest on loans and advances.

Stanbic IBTC Holdings’ interest on loans and advances to customers for the period under review still grew 27.1 per cent, despite the loans it granted to customers falling by 3.7 per cent.

Net interest income, which measures how much of the earned interest goes to banks after accounting for what they pay out to depositors, leapt to N149.9 billion from N76.9 billion.

Fee and commission revenue accelerated to N63.8 billion from N44.6 billion, thanks to Stanbic IBTC Pension Managers, the group’s asset management division, which contributed nearly half of that sum.

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In contrast to the first quarter of 2024, when the bank holding company hauled in N17.6 billion through trading revenue from fixed income and currencies, it incurred a loss of N7 billion this time around.

Profit before tax was up by 85.6 per cent, while after-tax profit advanced to N82.1 billion from N45.6 billion.

Stanbic IBTC, 86.6 per cent of whose total loans and advances were booked in South-west Nigeria alone as of last year, lends more to the oil & gas and manufacturing industries than to other sectors.