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Stanbic Holdings bank reported that its net profit after tax for the fiscal year 2019 increased to KSh6.4 billion on revenue growth.
Revenue grew by 12 percent to hit KSh24.8 billion, compared to KSh22.1 billion recorded the previous year.
Profitability was also driven by net interest income, which grew by 10 percent, driven by improved margins within personal and business banking and a decrease in the cost of funds.
Analysts from Genghis Research in the firm’s Earnings Note said the 1.6% y/y increase in earnings per share to Ksh16.14 was against their expectation of a 15.5% y/y growth. “The disparity is largely attributed to one-off reorganization costs, coupled with a one-time guarantee payment (Operating expenses grew 25.6% y/y to Ksh 13.9 billion while credit impairment charges were up 52.6% y/y to Ksh 3.2Bn).”
The bank offered a voluntary retirement plan to its staff that saw costs escalate during the second half period, and consequently, operating expenses rose 25.6% y/y to Ksh 13.9 billion.
The bank’s Non-interest Revenue (NIR) grew 14.7% y/y to Ksh 11.4 billion. Net Interest Income (NII) grew 10.0% y/y to Ksh 13.3 billion.
The balance sheet grew 4.5% y/y driven by a 9.3% y/y rise in the loan book to Ksh 191.2 billion.
Shareholders will earn a final dividend of KSh5.80 after an interim dividend of KSh1.25 for each ordinary share of KSh5 is paid.
This brings the total dividend to KSh7.05 representing a 22 percent increase from last year.
“Despite the one-off restructuring costs, efficiency levels are expected to be boosted in 2020, as evidenced by the muted growth in staff costs at the bank level. We maintain our HOLD recommendation on SBIC with a target price of KES 106.18, representing a potential downside of 5.2%,” says Genghis Capital.
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