Stanbic IBTC Holdings Plc’s 40.1 percent growth in half-year profit was driven by a sharp turnaround in trading income, which offset weaker net interest earnings, rising operating costs and pressure on underlying operating efficiency.
Stanbic IBTC Holdings Plc’s pre-tax profit rose to N341.6 billion in the first half of 2026, but a N126.4 billion trading gain accounted for more than the entire increase in earnings, exposing the extent to which the group’s headline performance depended on market-related income.
The financial services group reported profit before tax of N341.6 billion for the six months ended June 2026, up from N243.7 billion in the corresponding period of 2025. However, its trading line swung from a loss of N0.9 billion to a gain of N126.4 billion, representing a N127.2 billion improvement.
An analysis of the results by BusinessDay shows that excluding trading income from both periods would leave profit before tax at approximately N215.2 billion, down 12 percent from N244.6 billion a year earlier.
This suggests that the reported profit surge masks a deterioration in earnings from the group’s other operations, raising questions about whether the performance can be sustained in the second half of the year.
The trading gain was also equivalent to about 23 percent of operating income and nearly three times the group’s previous six-year half-year peak of N44.7 billion, recorded in 2023.
Weaker interest income offsets fee growth
The pressure on Stanbic IBTC’s underlying earnings was particularly evident in its net interest income, which declined 14.3 percent to N266.3 billion from the previous year.
The decline represented a reduction of N44.6 billion, despite an expansion in the group’s balance sheet and a 35.1 percent increase in customer deposits to N4.63 trillion.
Net fee and commission income offered some relief, increasing 27.1 percent during the period, indicating stronger contributions from fee-generating activities.
However, operating expenses rose 9.1 percent to N195.4 billion, an increase of N16.3 billion, putting additional pressure on the group’s earnings before the contribution from trading income.
Lower credit impairment charges provided another source of support. Impairment charges fell 33.8 percent to N7.4 billion, adding to profitability through reduced credit-related expenses.
Nevertheless, the combination of declining net interest income and rising operating costs suggests that the group’s core earnings engine remained under pressure during the half-year.
Trading gain flatters cost efficiency
Stanbic IBTC’s reported cost-to-income ratio improved to 35.9 percent from 41.3 percent in the first half of 2025, a development that would ordinarily indicate improved operating efficiency.
However, the improvement becomes less pronounced when the trading gain is excluded.
Based on the operating income figures, the cost-to-income ratio would have increased to approximately 46.7 percent from 41.2 percent without trading income, indicating that underlying income growth was insufficient to absorb the increase in operating expenses.
Operating income excluding trading fell 3.9 percent to N417.9 billion, while costs continued to rise.
The figures suggest that the reported efficiency improvement was driven substantially by the expansion in income rather than a reduction in the cost base.
This distinction matters because trading income can fluctuate with market conditions, while staff costs, technology spending, infrastructure and other operating expenses are more persistent components of the bank’s cost structure.
A sustained improvement in efficiency would therefore require the group to grow recurring income or moderate expense growth, rather than rely on another unusually large trading gain.
Read also: Stanbic IBTC deploys N469.5bn to finance Nigeria’s sustainable growth
Bank deposits drive funding expansion
The group’s balance sheet also expanded significantly during the period, although lending growth lagged behind the increase in deposits and trading assets.
Customer deposits rose 35.1 percent year on year to N4.63 trillion, while net customer loans increased 11 percent to N2.59 trillion.
Consequently, the loan-to-deposit ratio declined to 55.8 percent from 67.9 percent a year earlier, extending a three-year downward trend from 101.1 percent in the first half of 2023.
Deposits from other banks increased more than fourfold to N1.10 trillion from N269 billion, contributing approximately N834 billion to the increase in deposit funding.
Other banks accounted for about 41 percent of the N2.04 trillion increase in total deposit funding, compared with customers.
The shift in the funding mix is notable because interest expense increased 35 percent to N92.8 billion, even as current and savings accounts rose to 79.3 percent of customer deposits from 62.6 percent at December 2025.
The financial statements reviewed do not separately disclose the cost of interbank funding, making it difficult to determine how much the additional deposits contributed to the increase in interest expense.
The composition and pricing of this funding will be important in assessing whether Stanbic IBTC can convert its expanding balance sheet into sustainable earnings.
Falling bad loans raise provisioning questions
Stanbic IBTC also reported an improvement in its headline asset-quality indicators, with Stage 3 loans declining 37.2 percent to N73 billion.
The non-performing loan ratio fell to 2.73 percent from 4.70 percent in the corresponding period of 2025.
However, the allowance held against Stage 3 loans declined by N43.4 billion to N56.5 billion, almost matching the N43.2 billion reduction in the stock of Stage 3 loans.
Combined with an impairment charge of N7.4 billion for the period, the figures raise questions about the extent to which the improvement reflected loan repayments, recoveries, restructurings, or write-offs.
The available figures do not establish the contribution of each factor, making further clarification from management necessary to determine whether the decline in bad loans reflects a sustained improvement in borrowers’ repayment capacity.
The level of provisions held against remaining problem loans will also be important in assessing the resilience of the group’s asset quality if economic conditions deteriorate.
Higher dividend raises the sustainability question
Despite the mixed signals beneath its headline earnings, Stanbic IBTC’s board recommended an interim dividend of N4.50 per share, up 80 percent from N2.50 a year earlier.
The proposed payout amounts to approximately N71.6 billion, equivalent to about 30 percent of profit attributable to shareholders, compared with 23 percent in the previous year.
Return on equity was broadly stable at 36.9 percent, up from 36.4 percent on a closing-equity basis, while equity attributable to owners rose 36.4 percent to N1.29 trillion after the previous year’s rights issue.
The higher dividend signals confidence in the group’s financial position, but it also places greater emphasis on the quality and consistency of earnings supporting shareholder distributions.
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