Introduction
For the 2008 review year, Stanbic IBTC Bank Plc operated well beyond its potential, as shown by the relationship between actual growth and sustainable growth.
Actual growth (which refers to growth of income) was 113.7 per cent, meaning that the company grew rather commendably and almost faster than it has done in recent years. Meanwhile, its sustainable growth (the rate as which it needed to grow for 2008 in order to remain profitable) was only 6.7 per cent.
A comparison of 113.7 per cent actual growth rate and 6.7 per cent sustainable growth shows that Stanbic IBTC more than attained the mark in 2008, just like it did in the two preceding years. It is also worthy of note that the bank did well in profit retention.

Profit generation
For the 2008 operational year, the income statement of the bank showed a commendable level of growth, and proved to be a consolidation on the preceding year’s result. First the bank grew the level of its business (both core-banking and non-banking activities) to an all time high of N61.2 billion in 2008 from N28.6 billion in the preceding year, translating into a 113.7 per cent growth. This 113.7 per cent growth in gross earnings is as compared to a 153.8 per cent growth in the erstwhile year. It is worthy of note that this laudable growth in gross earnings was mostly contributed by a step-up in the bank’s core banking operations.
For the year, the bank made a N5.0 billion provision for bad loans, rather than the N2.04 billion it did in 2007, translating into a growth rate of 145.6 per cent.
On its own, growth in operating income was 57.4 per cent (to N20.3 billion), better than the 45.3 per cent growth that was recorded in the erstwhile year.
Despite the fact that operating expenses for the year were collectively higher than that of the preceding year, pre-tax profit was yet very healthy. At a growth rate of 33.1 per cent, pre-tax profit grew to N14.6 billion in 2008. This growth rate however was not only not as good as that of turnover, it was also lower than the growth recorded in pre-tax profit in 2007.
The tax obligations of the bank declined rather than grow in 2008, as the amount paid to tax authorities was N2.6 billion, 16.2 per cent lower than the N3.14 billion remitted in the preceding year.
Perhaps because of paying lower taxes, the bank’s after-tax profit for 2008 was much better than that of 2007, advancing by as much as 52.8 per cent to N11.99 billion. As was the case in the prior year, the bank did not have a minority interest, so after-tax profit was the same as distributable profit.
Out of the N11.99 billion distributable profit, the bank paid a total dividend of N7.5 billion to its shareholders, ploughing back N4.49 billion into its business activities.

Assets use
The balance sheet position of the bank closely mirrored that of its income statement, as it was a consolidation over the preceding year’s levels. For example, assets not easily disposable within a year grew by as much as 78.2 per cent to N15.4 billion during the course of the year. Current assets also followed the same pattern, growing by 9.6 per cent to N335.8 billion during the course of the year. All in all, total assets advanced by 11.5 per cent to N351.2 billion in 2008. This is as compared to a 178.3 per cent growth in the erstwhile year.
Short-term debt of the bank grew by 21.8 per cent to N257.7 billion in 2008, as against the 185.0 per cent growth recorded in the erstwhile year. Analysis shows that despite this growth, the bank was careful to maintain a sensible current ratio by not allowing its short-term debts to completely overwhelm its current assets.
All in all, total liabilities (inclusive of both current and long term liabilities) grew by 12.9 per cent to N269.9 billion in 2008 from N239.1 billion in the prior year.
In 2007, the bank recorded a 116.5 per cent growth in the resources of the owners of the bank. In 2008, growth in equity was 7.0 per cent. Stanbic IBTC’s shareholders funds now stands well in excess of N81 billion.

Performance ratios
The bank made more turnover and more profit in 2008 than it did in 2007. The interaction of these two growths however did not ensure that the bank’s profit margin for the year was better than that of the preceding year. Profit margin for the year was 23.9 per cent, meaning that of every N100 income made by the bank in 2008, N23.90 accrued to it as profit, as compared to N38.40 in 2007. This profit margin however compares favourably with industry standards.
In 2006 and 2007, the bank dedicated part of its distributable profit to shareholders, in 2006 giving 60 per cent of distributable profits to shareholders, and keeping 40 per cent for expansion purposes. In 2007, the bank also gave out 60 per cent and retained 40 per cent.
In 2008 also, the bank continued this trend, choosing to retain 40 per cent of such profit in its business, giving 60 per cent to shareholders as reward for the employment of their resources.
Asset turnover for the year improved to 0.2 times, meaning that the bank made an income of N20.00 from every N100 worth of assets employed, up from N10 in the two preceding years.

Outlook
In 2006, the actual growth of the bank (growth of income) was 74.1 per cent, higher than sustainable growth which was 6.4 per cent. Analysis shows that the bank was at this point operating at activity points higher than its potential.
In 2007, the bank’s actual growth, at 153.8 per cent, still overshot its sustainable growth (5.8 per cent), suggesting that the company still operated at activity points higher than its potential.
In 2008, sustainable growth improved to 6.7 per cent, and this was yet lower than actual growth which stood at 113.7 per cent. Analysis shows that the bank at this point operated at activity points higher than its potential.