Stanbic IBTC Holdings Jacks Up Interim Dividend
4 Customs Street: 29 Aug 2022
Good Morning 😃
How are you doing?
Welcome to this week’s edition of 4 Customs Street, our weekly newsletter on the stock market.
The newsletter is divided into two:
Green White Green—focused on the Nigerian stock market.
Star-Spangled Banner—focused on the US stock market.
Green White Green Last Week
Stanbic IBTC H1 2022: Good numbers but…
Stanbic IBTC Holdings had an increase in both topline and bottom line.
Gross earnings increased by 44% from N92.8 billion in 2021 to N133.7 billion in 2022. Profit after tax went up by 36.1% from N22.5 billion in 2021 to N30.6 billion in 2022.
The bulk of earnings and profit came from Stanbic IBTC (the bank) and the pension fund manager.
There was a sharp dip in profit after tax year-on-year for the asset management unit. It fell by 61% from N4.1 billion in 2021 to N1.6 billion in 2022.
That is a key point to note because Stanbic IBTC Asset Management is one of top three biggest asset managers in the country by size with N645 billion in assets under management.
We should get a bit more clarity around that during the earnings call taking place tomorrow.
Shareholders should be happy as the company will be paying an interim dividend of N1.50. That's 50% higher than the N1 it paid last year. Stanbic typically pays a bigger interim dividend and a smaller final dividend.
An interim dividend is usually paid before the conclusion of a company’s financial year. A final dividend is paid at the end of a company’s financial year.
Zenith Bank’s N85.1 billion trading gains
While shareholders are disappointed the bank will be paying an interim dividend of 30 kobo (same as last year), gross earnings and profit went up year-on-year.
Gross income increased by 17.1% from N345 billion in 2021 to N404 billion in 2022.
Profit after tax increased at a much slower pace by 5.5% from N106 billion in 2021 to N111 billion in 2022. The key driver behind the single digit rise in profit was the 69.9% jump in taxes paid.
Trading gains went up sharply by 43.7% from N59.2 billion in 2021 to N85.1 billion in 2022. Largely attributable to gain on treasury bills held through fair value through profit and loss (FVTPL).
That simply means that if the assets are worth more than the amount they were bought, the gains should be added to the profit and loss statement. The losses should also reflect in the profit and loss statement when the assets drop below cost price.
5G here we come
MTN Nigeria has begun pilot testing of its 5G services in preparation for commercial launch.
The company intends to launch 5G services in Lagos, Abuja, Port Harcourt, Ibadan, Kano, Owerri and Maiduguri.
Green White Green This Week
Stanbic IBTC Holdings will be taking an analyst call on Tuesday to discuss its H1 2022 earnings.
We will also be on the lookout for UBA, Access Holdings and GTCO H1 2022 earnings. Those should be out anytime from now.
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Star-Spangled Banner Last Week
Jerome Powell, the Federal Reserve chair, poured cold water on stocks on Friday. In his speech, he indicated that the Fed (the equivalent of the Central Bank of Nigeria) will continue to raise interest rates as a means of dealing with the spike in inflation.
Higher interest rates make loans more expensive for companies to raise capital. For growth stocks, the future value of their cash flows tends to be lower (that's why they tend to fall hard whenever there's any news around interest rate hikes).
Companies in the finance space, however, tend to benefit from rate hikes. They earn more interest income from investments like bonds and treasury bills, as well as on the loans they give.
Another split
Tesla’s 3-for-1 stock split took place last week. For every share held by investors, they got two additional shares. Think of a split as cutting a cake into smaller pieces. It changes nothing about its size.
A stock split changes nothing fundamentally about a stock. It only means there are more shares available to trade. It also makes it easier for shareholders to buy whole shares of a company (not all platforms allow the purchase of fractional shares).
This is the second stock split the company will be embarking on in the last two years. In 2020, it had a 5-for-1 split.
Star-Spangled Banner This Week
LuluLemon, Okta, CrowdStrike, Chewy and others will be releasing their latest quarterly results during the week.
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