Stanbic IBTC reports strong performance in H1 2025, with gross earnings expanding by 34.4%

Stanbic IBTC Holdings (STANBIC) reported a strong top-line performance in H1 2025, with gross earnings expanding by 34.4% y/y benefiting from robust growth in funded income. Interest income expanded by 56.3% y/y to N384.8bn (H1 2024: N246.1bn), reflecting stronger asset yields (+50bps to 17.6% y/y) and balance sheet expansion (+17.5% year-to-date), particularly from increased securities holdings which rose by 28.5% year-to-date to N2.15trn. At the same time, the bank
managed funding costs more efficiently, with cost of funds improving to 3.4% (vs. 4.3% in H1 2024). This drove a 4.3% y/y reduction in interest expense to N68.8bn, despite a 12.0% increase in interest bearing liabilities.

Consequently, net interest income rose by 81.3% y/y to N316.0bn, pushing net interest margin up 235bps to 14.5%. Non-interest income presented a mixed picture in the period. Fees and commissions grew 37.8% y/y to N114.3bn, supported by higher foreign currency service fees, stronger asset management contributions, and advisory fees. However, trading revenues swung to a net loss of N856mn (vs. N39.7bn gain in H1 2024), as naira stability curbed FX revaluation and fixed income trading activity gains. Other income also declined by 31.8% y/y to N4.5bn, partly due to one-off items recognized in the prior year.

Overall, the contribution of nonfunded income to gross earnings weakened considerably, leaving funded income as the main driver of growth. For the rest of 2025, we expect earnings growth to remain anchored on funded income, supported by balance sheet expansion, increased securities holdings, and an improved cost of funds. Fee and commission income is also expected to remain resilient, driven by asset management and advisory fees as well as an increase in customer deposits. However, trading income is expected to stay weak in the absence of FX volatility. We project gross earnings will reach between N816.0bn – N901.2bn by the FY

On the cost front, operating expenses increased by 37.9% y/y to N179.1bn, reflecting higher personnel expenses, and general inflationary pressures across operations. Nonetheless, strong revenue growth provided an efficiency cushion, as the cost-to income ratio improved to 41.1% (H1 2024: 42.7%). Importantly, impairment charges fell by 58.2% y/y to N11.1bn (H1 2024: N26.5bn), reflecting better recoveries and cautious loan growth. This sharp drop translated to a decline in cost of risk to 0.9% (H1 2024: 2.4%). As a result of these dynamics, pre-provision operating profit rose 46.8% y/y to N254.8bn, while pre-tax profit surged 65.8% y/y to N243.7bn. The higher tax burden (+129.4% y/y to N70.3bn) partly offset some of this earnings momentum, but net profit still grew 49.7% y/y to N171.4bn (H1 2024: N114.5bn). This performance translated into an improvement in return ratios, with ROAE rising to 43.4% (H1 2024: 42.6%) and ROAA improving to 4.6% (H1 2024: 4.1%).

Operating expenses are projected to rise moderately, driven by persistent inflationary pressures, regulatory levies, and higher personnel costs, while impairment charges may edge up slightly in line with the uptick in the NPL ratio to 5.8%. Taking these factors into account, we forecast FY 2025 net profit to come in within the range of N243.6bn to N269.3bn.

Stanbic IBTC Holdings Interim Dividend

In line with its earnings performance, the Group declared an interim dividend of N2.50 per share (vs. N2.00 in H1 2024), representing a 25.0% increase y/y. This payout implies a healthy dividend yield of 2.6% relative to the stock’s closing price of N98.00 as of 23 September 2025.

Stanbic IBTC Holdings Balance sheet and Asset Quality

On the balance sheet, the Group maintained moderate growth momentum, with total assets expanding 17.5% year-to-date to N8.12trn (FY 2024: N6.91trn). This growth was underpinned by securities (+28.5% year-to-date to N2.15trn) and interbank placements (+221.1% year-to-date to N166.5bn). Customer deposits also grew strongly by 13.9% year-to-date to N3.43trn, reinforcing the Group’s solid funding profile. However, net loans contracted marginally by 0.8% year-to-date to N2.33trn, signaling a more restrictive credit risk appetite. Despite this, the NPL ratio increased to 5.8% based on our estimates (H1 2024: 4.2%), moving above the regulatory benchmark of 5.0% and pointing to some asset quality concerns.

Recommendation

We have revised our fair value estimate for the ticker upward to N106.77 (previously N71.50), following adjustments to our blended valuation (FCFE, DDM, and Relative Valuation). This revision implies an upside potential of 9.0% from the stock’s closing price of N98.00 as of 23 September 2025, therefore we maintain a HOLD rating on the stock. SOURCE: CORONATION ASSET MANAGEMENT LIMITED

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