Healthy balance sheet drives revenue growth at Stanbic

• Registers 6.5% total revenue growth
• Loans and advances up 18%
• Deposits up 15 percent

“Total revenue posted a healthy growth of 6.5 percent on prior year despite the subdued economic environment in the first half of the year on the back of COVID-19 restrictions,” the bank says in its unaudited financial results for the year ended 31 December 2021. “This growth was driven by a healthy balance sheet growth and increased customer transaction volumes.”

Stanbic’s Consumer and High Net-Worth (CHNW) segment drove the loan book growth as the bank improved its value proposition for the more secure Employee Value Banking (EVB) sub-segment that delivers better margins. Stanbic also registered notable growth in the Corporate and Investment Banking (CIB) book. It says it continues to yield net positive margins because of the focus on margin management as well as focus on driving scale.

Net interest income (NII) grew by 3 percent, despite systemic liquidity pressures and loan-book yield reductions. The muted growth is a subset of an increase in interest expense (1.9 percent cost of funds for the year under review, compared to 1.6 percent in the preceding year), evidencing the resultant liquidity pressures of a post COVID-19 economic landscape.

Stanbic’s non-interest income surged up by 13 percent to P 448 508 mainly driven by fees and commissions income scale. Nominal Interest Rate (NIR) similarly benefited from improved business activity, as well as synergies created by the bank’s digital transformation journey and a Universal Financial Services Organisation (UFSO) client service approach to deliver a 13 percent year-on-year increase.

“The ending of the national State of Emergency and the lifting of travel and trading hour restrictions benefited sectors across the economy, thus delivering a 22 percent increase in net fee and commission income,” says the Stanbic reports.

“This was further supported by key investments in systems (Core Banking system upgrade, plus the launch of the bank’s informal segment, Omni-channel payments and remittances platform, Unayo) and increased point of representation (POR) footprint point of sales (POSs), and automated teller machines (ATMs).

“Foreign exchange (FX) revenue reflected slight growth (6 percent) from improved business activity, boosted by activity in the latter part of the year, new business opportunities and strategic focus in market-differentiating structured solutions.” Stanbic – which is a member of the largest bank by assets in Africa, the Standard Bank Group – reveals in the its unaudited results that profits after tax declined from P302 million in 2020 to P204 million in 2021, translating to a 33 percent decline in profit after tax.

While the COVID-19 pandemic posed a difficult operating environment that required the bank to adapt and respond with agility as well as to make sure clients and partners are supported to stay afloat throughout the year, Stanbic says the interventions that it applied saw it demonstrate growth in its balance sheet and remain profitable. “The bank upgraded and transformed its digital platforms to enable clients to continue operations even throughout the toughest restrictions,” it says in the report.

“Further, the bank quickly deepened its Love Your Customer (LYC) principles in embodying an empathetic role to motivate staff as well as to assist clients largely affected by the COVID-19 pandemic. The bank did this by extending interventions in the credit space that enabled businesses to focus on survival with appropriate moratoria on some credit covenants.”