Stanbic IBTC: H1 2017 Result Presentation - August 2017

Transcription

1. Stanbic IBTC Holdings PLC (“Stanbic IBTC”) H1 2017 Result Presentation August 2017 Stanbic IBTC Presentation / page 1 /
2. Contents Section Stanbic IBTC Presentation / page 2 / Page 1. Stanbic IBTC and its operating environment 3 2. Financial results – H1:2017 9 3. Business unit results 24 4. Outlook for H2: 2017 36 5. Appendix 40
3. Stanbic IBTC and its operating environment Yinka Sanni Chief Executive , Stanbic IBTC Holdings PLC
4. About Stanbic IBTC Holdings PLC  Stanbic IBTC is a financial Institution in Nigeria that offers end-to-end financial services through a three-pronged structure; Corporate and investment banking, Personal and business banking and wealth management.  Stanbic IBTC is 53.2% owned by Standard Bank Group and draws on the deep resources within the Standard Bank Group. 1989 2001 Obtained Universal Banking Licence in Nigeria  Stanbic IBTC is the leading investment banking franchise in Nigeria with excellent capabilities in advisory and capital markets and is the only local bank with a Fitch AAA rating 2007 2005 Listed on The NSE on 25 April 2005 Merged with Chartered Bank & Regent Bank and changed name to IBTC Chartered Bank Plc  Stanbic IBTC emerged from the merger of Stanbic Bank Nigeria Limited with IBTC Chartered Bank Plc in 2007. Merged with Stanbic Nigeria and Standard Bank gained control of the combined entity in a US$1bn transaction Incorporated as Investment Banking & Trust Company Limited and commenced operations as a Merchant bank Holding Company Structure was adopted. Stanbic IBTC Holdings PLC 99.9% 99.9% 99.9% Stanbic IBTC Stockbrokers Ltd Stanbic IBTC Asset Management Ltd 75% Stanbic IBTC Insurance Brokers Ltd 88.24% Stanbic IBTC Capital Ltd Stanbic IBTC Investments Ltd 99.9% 99.9% Stanbic IBTC Bank PLC Stanbic IBTC Ventures Ltd 99.9% Stanbic IBTC Trustees Ltd 99.9% Stanbic IBTC Pension Managers Ltd 99.9% Stanbic IBTC Presentation / page 4 / 2012 Stanbic IBTC Nominees Nigeria Ltd 99.9% Stanbic IBTC Bureau De Change Ltd
5. Strategic Objectives Customer Service : deliver exceptional service and delight our customers Vision To be the leading end-toend financial solutions provider in Nigeria through innovative and customer focused people. Operating Platform: ensure our processes and infrastructure are scalable and customer-focused Volumes/ Cost: achieve volumes while managing costs Strategic Objectives People: ensure our people are accountable, passionate and engaged. End-to-end selling: ensure we provide end to end solutions to our customers. Brand: establish a differentiated and well recognized brand in Nigeria Stanbic IBTC Presentation / page 5 / Mission Committed to solutions that drive your progress.
6. 2017 key focus areas Faster decision making and better communication Digitization Customer Centricity Collaboration What are we doing ? What are we doing? What are we doing? What are we doing? Identify various processes  within the businesses that have impact on timing of response to customers  Review those processes and streamline action points. Customer centricity Monitor these processes through customer feedback and net promoter score results   What do we expect?  Improved turnaround time on customer requests.  Elimination of ambiguity in  approval process  Reduction in delay in getting needed approvals  Stanbic IBTC Presentation / page 6 / Digitization   Collaboration Faster decision making and better communication Increased customer satisfaction and loyalty  Significant reduction in customer complaints  Reduced rework and printing/stationery cost We will adopt an approach that will enable us defend our traditional sources of revenue, differentiate on our products & services and disrupt to achieve market leadership  Set up committees with  senior management team members to drive customer centricity in the organization.  Create a staff culture that embodies SIBTC core values and brings the eight values of the group to prominence Reviewing current systems and processes to assess the required investment in  infrastructure A fully digital branch has been launched allowing customer carryout self service transaction with deposit and payment teller machines A pilot phase of online account opening is also being tested in the digital branch We want to ensure that our products and services, by the use of technology, are enabled (always on, anywhere, anytime, contextually relevant)  Adopted an ecosystem model to onboard distributors, suppliers and employees of our top CIB customers into our PBB business.  Set cross sell targets for staff members to ensure staff across all business imbibe sales culture and are able to sell the group’s products What do we expect?  Improved ranking in the 2016 KPMG Banking Industry Customer Satisfaction Survey (BICSS) with the aim of remaining in top 3 over the long term  Increased share of customer wallet and businesses  Significant reduction in customer complaints What do we expect?  Revamped the Customer Contact Centre (CCC) and expand alternative banking channels Strengthening collaboration among operating entities which fully exploits opportunities within the universal banking strategy. What do we expect?  Sustainable growth in profit  Increased share of customer wallet and businesses  Greater efficiency in managing operations  Lower cost of operations
7. Moderately improving operating environment Movement in external reserves External Foreign Exchange (“FX”) reserves remained broadly unchanged during the course of the first half of the year, despite the Central Bank stepping up its FX interventions. This was as a result of a combination of relatively higher oil prices and improving production volumes. FX reserves remained around the USD30.0bn mark as at the end of June 2017. Crude oil prices initially dropped below USD48 pbl on the back of oversupply concerns. However, during the course of the first half of the year, prices have risen steadily to above USD52 pbl due to efforts taken by both OPEC and non-OPEC members to limit supply. US$ US$ 32.0 60.0 30.0 50.0 28.0 40.0 26.0 30.0 24.0 20.0 22.0 10.0 20.0 - Headline inflation % 19.0 18.3 18.5 18.0 17.0 18.5 18.6 18.7 17.9 17.8 17.6 17.5 We expect that headline inflation will moderate slowly around 15% y/y by year end, after falling to 16.1% y/y in June, from 16.3% y/y in May. Crude oil price movement (monthly average) 17.3 17.1 17.2 16.5 16.5 16.3 16.1 May-17 Jun-17 16.0 15.5 15.0 14.5 Stanbic IBTC Presentation / page 7 / Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17
8. Challenging operating environment The yield curve is inverted at the short end, with the 5-y bond yielding 16.3% compared with the 22.6% 1-y T-bill yield, and we see no imminent easing of the policy stance by the CBN. In fact, we expect that the CBN will continue to sterilize NGN via a combination of Open Market Operations (OMOs) as well as requiring pre-funding for bids at the CBN’s retail and wholesale SMIS window. The tight monetary stance is not expected to change until inflation subsides further. Exchange rate movement 600 NGN / USD rate The Investors’ & Exporters’ Foreign Exchange (“IEFX”) window remains the most liquid segment of the FX market, with around USD6.0bn traded as at June 2017. Most market participants, including portfolio flows, payments for services, dividend payments as well as demand for the imports of finished goods continue to transact in the window. Rates ranged between 320 and 375 within this window. 500 400 300 200 100 May-14 Nov-14 CBN May-15 Nov-15 Parallel market May-16 NIFEX Nov-16 NAFEX May-17 I&E FX Window Interest rate movement 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Jun-16 Jul-16 Aug-16 Average inter-bank call rate Stanbic IBTC Presentation / page 8 / Sep-16 Oct-16 Tbills - 91 days Nov-16 Dec-16 Jan-17 Tbills - 182 days Feb-17 Mar-17 Tbills - 1 year Apr-17 May-17 Jun-17 Bond - 3 year
9. Financial Result H1 :2017 Victor Yeboah-Manu Chief Financial Officer, Stanbic IBTC Holdings PLC
10. Summary of H1 2017 performance Customer loans (net) increased slightly by 4% to N368bn PAT up >100% to N24.1bn Gross Earnings up 36% to N97.2bn Net Interest Income grew by 80% to N41.0bn Balance Sheet Profitability PBT up 86% to N29.2bn Non Interest Revenue up 18% to N40.3bn Stanbic IBTC Presentation / page 10 / Credit impairment charges increased by 65% to N13.95bn Shareholders’ fund increased by 16% to N159.5 bn. Trading assets grew by over 100% to N85.8bn Total assets up 21% to N1.27 trn in H1:17 (FY 2016: N1.05 trn) Capital Customer deposits grew by 13% to N632.8 bn Total CAR Group 22.9% (FY 2016: 22.8%), Bank: 20.2% in H1:17(FY 2016: 21.0%)
11. Key ratios • PAT increase was driven by significant growth in interest income and non-interest revenue thereby causing our annualized ROaE to improve significantly. • The 81% trading revenue growth was largely impacted by increased FX availability following the continued CBN intervention and the IEFX window which subsequently led to trading asset growth. • Credit impairment charges increased as we continued our clean-up of the risk asset portfolio. • Cost to income ratio improved as a result of improved operational efficiencies and the excellent growth recorded in total income. • Customer loans (net) increased as we began to increase lending though cautiously as business activities gradually improves. • Customer deposits growth was driven by a continued effort at raising Current-AccountSavings-Account (“CASA”) (which is 60.1% of total customer deposit) to replace expensive term deposits . • Total assets increased following a significant growth in trading assets. Net Interest Margin 7.2% Cost to Income Ratio 4.4% 57.7% Liquidity Return on Assets 7.3% Return on Average Equity 4.3% Basic EPS (Bank) 31.3% 15.0% NPL Ratio 4.3% 90.4% 230 kobo 7.8% 2.2% 86.5% 95 kobo 6.9% H1 2017 Stanbic IBTC Presentation / page 11 / 47.0% Credit Loss Ratio H1 2016
12. Overview of income statement in H1 2017 Drivers of group income statement Nmillion 90 000 80 000 70 000 (13,953) Income Statement (38,202) (15,693) 60 000 40,289 50 000 29,169 40 000 Balance sheet 30 000 (5,057) 24,112 Taxes Profit after taxation 56,728 20 000 10 000 0 Key ratios Interest income Interest expense Stanbic IBTC Presentation / page 12 / Non-interest revenue Credit impairment charges Operating expenses Profit before taxation
13. Income statement - NII Evolution of net interest income  Net interest income was up by 80% as interest income increased by 55% to N56.7 billion (H1 2016: N36.7 billion) largely due to growth in income from investment securities despite a 13% growth in interest expense. Nmillion 7.2% 50,000 40,000 5.6% 4.9% 4.5% 30,000 17,937 - 2.9% 22,135 22,977 H1 2013 Net interest income 41,035 0.0% H1 2014 H1 2015 H1 2016 H1 2017 Net interest margin before impairment charges Net interest margin after impairment charges Breakdown of interest income Drivers of net interest income 8.0 6.4 100% 80% 5.6 5.2 3% 25% 7.2 6% 32% 4% 1% 26% 27% 2% 48% 60% 5.6 4.9 2.2 H1 2013 Stanbic IBTC Presentation / page 13 / 2.0% 2.8% 22,849 7.2  Cost of funds increased slightly on account of growth in interest expense resulting from an Key ratios increase in customer deposits. 4.0% 4.8% 4.2% 10,000  Consequently, net interest margin improved as a result of increase in asset yields. Increase in asset yield was on the back of higher yields on investment securities which contributed to the growth in Balance sheet interest income. 6.0% 4.4% 5.3% 20,000 8.0% 4.5 40% 4.4 H1 2014 Asset yield H1 2015 Cost of funds 62% 72% 70% 49% 20% 2.7 1.8 72% 1.7 2.0 H1 2016 H1 2017 0% Net interest margin H1 2013 H1 2014 Loans and advances H1 2015 H1 2016 Investment securities H1 2017 Placements
14. Income statement - NIR Non-interest revenue grew by 18% driven by an 81% increase in trading income and an over 100% growth in other income. Growth in trading revenue was driven by increased income from foreign exchange transactions and fixed income, both growing by over 100% following the CBN’s continued introduction of initiatives to increase FX liquidity and customer activity. Evolution of non-interest revenue 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 - 100% 80% 60% 57% 24,068 54% 27,517 26,346 60% 50% 40% 20% 34,218 40,289 0% H1 2013 H1 2014 H1 2015 Non-interest revenue H1 2016 H1 2017 % of total income Breakdown of non-interest revenue by type H1: 2017 Trading revenue, 19% Trading revenue, 30% H1: 2016 Other revenue, 1% Other revenue, 1% Fees & comm, 69% Stanbic IBTC Presentation / page 14 / 54% Fees & comm, 80%
15. Income statement - credit impairment Credit impairment charges trend Credit impairment charges increased by 65% to N13.95 billion from N8.45 billion in H1 2016 as a result of additional provisioning for bad & doubtful loans. % N’million 20,000 6.5 15,000 3.7 10,000 5,000 0 1,875 493 1.0 1,883 445 4.5 3,515 2,374 5,525 0.8 5,175 2.5 16,688 0.8 H1 2013 H1 2014 Credit impairment charge on non-performing loans H1 2016 (1.5) H1 2017 Credit impairment charge on performing loans Credit loss ratio Movement in credit impairment charges Specific credit impairment charges Provision for performing loans Total impairment charges Recoveries Credit impairment charges Stanbic IBTC Presentation / page 15 / H1 2015 0.5 (1,796) (5,000) Credit loss ratio worsened to 7.3% as additional credit impairment charges were raised in line with efforts to accelerate the write-off of delinquent facilities. 8.5 7.3 change % >100 >(100) 71 >100 65 H1 2017 Nmillion 16,688 (1,796) 14,892 (939) 13,953 H1 2016 Nmillion 5,175 3,515 8,690 (238) 8,452
16. Income statement – operating expenses Operating expenses and cost-to-income ratio  Operating expenses increased by 16% from H1 2016. N'million 50,000 100.0% 40,000  Staff cost was up 15% due to increase in accrued performance reward and increase in staff salaries to adjust for inflation. Average headcount also increased to ensure adequate manpower to drive our strategy. 63.1% 64.0% 57.7% 30,000 80.0% 57.7% 47.0% 60.0% 20,000 40.0% 10,000 20.0% -  Other operating expenses increased by 17% mainly as a result of growth in AMCON expenses and deposit insurance premium following the growth in customers deposits. 20,768 23,640 31,045 32,935 38,202 H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 Operating expenses 0.0% Cost-to -income ratio Taxation and effective tax rate  Cost to income ratio improved to 47.0% from 57.7% recorded in prior year as we continue to maintain a higher growth in total income compared to cost growth. Nmillion 6,000 5,000 4,000  Effective tax rate declined to 17.3% from 27.8% in H1 2016 although the tax payable increased YoY as profit grew. 25.0% 18.9% 17.3% 22.2% 3,000 1,000 20.0% 15.0% 2,000 - 10.0% -1.7% 2,909 3,762 4,365 5,057 (158) (1,000) H1 2013 Stanbic IBTC Presentation / page 16 / 30.0% 27.8% H1 2014 H1 2015 H1 2016 Taxation Effective tax rate 5.0% 0.0% -5.0% H1 2017
17. Balance sheet - Total assets Total assets mix 100 % Total assets and ROA trend 18% 20% 22% 60% 40% 38% 32% 40% 11% 17% 22% 80% 20% 31% 12% 22% 34% 29% 1,400 4.3% 1,200 24% 24% 25% 24% 30% 26% FY 2015 H1 2016 FY 2016 H1 2017 Cash & loans to banks Financial investments Loans & advances to customers Others 800 2.9% 3.0% 2.5% 1.7% 600 2.0% 400 200 - 1.0% 763 2013 945 938 1,054 2014 2015 2016 Total assets Return on assets 1,274 H1:2017 Breakdown of total assets Nmillion 1,400,000 327,621 1,200,000 1,273,960 1,000,000 112,302 28,938 800,000 302,056 600,000 367,956 400,000 111,880 200,000 23,095 0 Total Assets Stanbic IBTC Presentation / page 17 / Cash & loans to bank Trading and derivative assets Pledged assets 5.0% 4.0% 3.7% 1,000 0% H1 2015 N'billion Financial investments Loans & advances to customers Other assets Intangible assets, property & equipment 0.0%
18. Balance sheet – Loans and advances Loans and advances trend Gross loans and advances by currency LCY Nbillion Gross loans portfolio increased by 5% in H1 2017 from FY 2016 due to renewed lending. 500.0 N'million 400.0 Personal & Business Banking 300.0 200.0 Installment sales, finance leases and mortgage loans declined as a result of maturities in the year. Increase in overdraft and term loans was due to a review of risk appetite considering the current economic situation. 100.0 431.5 379.4 407.1 375.3 393.7 H1 2015 FY 2015 H1 2016 FY 2016 H1 2017 - Contribution to loans and advances by product 375,316 (1,716) 2,313 N'million N'million 115,567 23,524 139,092 8,370 - 8,370 16,644 774 17,418 Overdrafts 19,042 2,086 21,128 Term loans 71,512 20,665 92,176 127,841 126,756 254,597 Term loans 97,767 126,756 224,523 Overdrafts Instalment sale and finance lease 28,653 - 28,653 1,420 - 1,420 243,408 150,280 62% 38% 393,688 100% 18,260 393,688 Gross loans Mortgage Installment Overdrafts Term loans Gross loans and lending sales and and advances finance advances FY 2016 leases H1 2017 Stanbic IBTC Presentation / page 18 / Total loans Mortgage Instalment sale & finance leases Corporate & Investment Banking (485) FCY Total loans % of loans
19. Balance sheet – Loans and advances Breakdown of loans by sector FY 2016 H1 2017 Upstream Oil & Gas 8% Oil & gas services 2% Agriculture 7% Transportation & communication 8% Construction and real estate 11% Consumer credit 12% Manufacturing 33% Downstream Oil & Gas General 6% commerce, Finance & Insurance 10% Government 3% Stanbic IBTC Presentation / page 19 / Upstream Oil & Gas 8% Oil & gas services 2% Agriculture 8% Transportation & communication 9% Construction and real estate 10% Consumer credit 14% Manufacturing 27% Government 4% General commerce, Finance & Insurance 10% Downstream Oil & Gas 8%
20. Balance sheet – Loan performance Non-performing loans and NPL ratio The non-performing loans increased to N30.885 billion (2016:N18.675billion) The main driver of the increase in NPL was the classification of a major corporate client in the oil & gas sector whose operations were disrupted by militancy action. With calm restored in the region, we expect the loan to return to performing. Consequently, NPL ratio increased to 7.8% (FY:2016 5.0%) Stanbic IBTC Presentation / page 20 / Non-performing loans ratio by sector Nbillion 35.0 10.0% 30.0 7.8% 7.1% 8.0% 25.0 20.0 6.0% 5.0% 4.4% 15.0 4.0% 4.3% 10.0 2.0% 5.0 - 13.4 18.0 27.0 18.7 30.9 2013 2014 2015 2016 H1:17 Non-performing loans 0.0% NPL/ total loans Non-performing loans by currency (N’million) Local currency Foreign currency Total NPLs H1:17 % of total NPLs 17 248 56% 13 638 44% 30 885 100% 2016 % of total NPLs 16 096 76% 2 579 24% 18 675 100% Sector Agriculture Construction and real estate Consumer credit H1 2017 FY 2016 % of Total NPL ratio % of Total NPL ratio NPL (%) NPL (%) 3.3% 3.9% 16.7% 10.6% 2.0% 1.4% 1.7% 0.8% 15.4% 10.0% 23.1% 8.2% Government 0.6% 1.4% 0.6% 0.8% Electricity & other utilities 0.0% 0.0% 0.0% 0.0% 10.5% 2.4% 9.2% 1.7% Downstream Oil & Gas 7.3% 9.2% 1.9% 1.2% Oil & gas services 1.8% 8.8% 9.4% 21.9% Upstream oil & gas 43.6% 43.6% 0.0% 0.0% General commerce 5.7% 4.5% 13.0% 6.4% 10.0% 10.2% 24.2% 13.1% 100.0% 7.8% 100.0% 5.0% Manufacturing Transportation & communication Grand Total