Stanbic IBTC Holdings Plc capital adequacy ratio (CAR) dropped to 13.90 percent in 2023 from 16.90 percent the previous year due to the current foreign exchange devaluation and an uptick in risk management assets (RWA), according to research house Chapel Hill Denham Limited.
That raises the concern of a capital raise to bolster the balance sheet so that it can withstand macroeconomic shocks.
The tier 1 CAR dipped by 4.6ppt to 11.1 percent as at December 2023, its lowest in the last five years.
However, Stanbic IBTC’s shareholders funds’ that sits at a comfortable N506.92 billion is significantly above N25 billion, the regulatory requirement for national-licensed banks.
The change in foreign exchange stance and spiraling inflation which has heightened macro-economic risk means lenders are seeing an uptick in impairment on loans that could erode shareholders’ funds.
Stanbic recorded a blowout profit after tax (PAT) that spiked by 74.23 percent to N140.61 billion as at December 2023, from N80.73 billion as at December 2022.
Analysts Chapel Hill Denham expect PAT to improve by 19.70 percent for the full year 2024.
Return on average equity (ROAE) increased to 30.80 percent in December 2023 from 19.90 percent the previous year.
The bank benefitted from a high interest rate environment as net interest margin rose to 5 percent in the period under review from 4 percent the previous year.
Analysts at Chapel Hill Denham have upgraded Stanbic to BUY from HOLD rating, and raised their 12 month target price (TP) to N71.06.
Nigeria’s central bank has urged lenders to recapitalise their balance sheets in the face of high inflation, currency weakness and slow economic growth.
