BY CHARLES ABUEDE
The N2 per share proposed as final dividend by the board of Stanbic IBTC Bank for full year 2021 may see subdued or modest reactions from market after the financial institution recorded a 12.22 percent year on year decrease in its gross earnings to N205.79 billion from N234.03 billion last year. The proposed dividend is below the N3.60 per share final dividend for full-year 2020 but slightly above the bank’s N1.50 forecast in its dividend per share and implies a yield of 5.9 percent year on year.
Some financial analysts have already noted that the dividend is not compelling enough when compared to the above 10 percent yield on the dividends of its peers such as Guaranty Trust Holding Company (GTCO) and Zenith Bank.
“The proposed dividend implies a yield of 5.9 percent. We expect a subdued to modestly positive reaction from the market following the results. We believe that the market is more likely to focus on the bank’s full-year results. The proposed dividend yield of 5.9 percent is also not compelling enough in comparison to the >10 percent yield on the dividends of other banks such as Zenith and GTCO,” FBNQuest analysts said.
According to the bank in its corporate governance report, the year 2021 saw the bank’s shareholders approve a final dividend of N3.60 per ordinary share of N0.50 kobo each payable to shareholders whose names were in the Register of Members as at 07 April 2021.
In addition, shareholders approved the declaration of bonus shares and authorised that the sum of N925,499,797.50 be set aside out of the company’s general reserve, capitalised and that same be applied in paying in full for 1,850,999,595 Ordinary Shares of 50 kobo each in the capital of the company and such ordinary shares be allotted and credited as fully paid-up and issued to shareholders, who are on the Register of Members as at close of business on Thursday 10 June 2021 in the proportion of one new ordinary share for every six existing ordinary shares held by them in the capital of the company as at close of business on Thursday 10 June 2021. The shares so distributed shall rank pari-passu with the existing ordinary shares in all respects, subject to receipt of all required regulatory approvals.
Stanbic IBTC Plc, in its audited financial statement for the year ended 31 December 2021 filed to the Nigerian Exchange Group (NGX) Limited, recorded a drop in its profit before tax by 30.32 percent to N66 billion and profit after tax decreased by 31.54 percent year on year to N56.97 billion for the year ended 31 December 2021.
The drop was majorly driven by positive surprises in pre-provision profits and loan loss impairments and weaknesses in revenue lines of the company. Also, its total comprehensive income declined 41 percent year on year to N52.30 billion in 2021 from N87.65 billion the previous year.
A further analysis of the financial statement shows that the bank’s full year profit after tax of N56.97 billion implies that the company’s return on asset and equities (ROAE) moderated by 15.4 percent and falls within the forecast or target by management at 15 percent to 20 percent guidance. However, on the downside, the bank’s cost-to-income ratio, excluding the provisions for costs, increased by 400 basis points year on year and 304 basis points quarter on quarter to 57 percent due to a 21 percent year on year rise in operational expenses.
On a quarter on quarter analysis, the bank’s profit before tax increased 16 percent to N21 billion as a result of 19 percent rise in funding income and to a lesser extent net recoveries of N90 million during the quarter, compared with loan loss provisions of N3.8 billion in Q4 of 2020. The robust funding income growth was supported by a 12 percent quarter on quarter increase in customer loans. Further still on the profit and loss, total comprehensive income advanced by 29 percent year on year to N16 billion, due to an 88 percent year on year reduction in the loss on the other comprehensive income line.