CfC Stanbic best performing banking stock in first quarter

Money Markets

CFC Stanbic Bank CEO Greg Brackenridge (left) with CFC Stanbic Holdings boss Kitili Mbathi at a recent event. Photo/DIANA NGILA  

By George Ngigi

In Summary

• CFC’s share price has gained 20.4 per cent since January, closing at Sh106 per unit in Thursday’s trading.
• The lender recorded a 70.3 per cent growth in after tax profits to Sh5.1 billion last year. In 2012 the bank grew by 50.6 per cent.

CFC Stanbic was the best performing banking stock at the Nairobi Securities Exchange in the first quarter of the year, buoyed by having the fastest profit growth among listed lenders.

CFC’s share price has gained 20.4 per cent since January, closing at Sh106 per unit in Thursday’s trading. The lender recorded a 70.3 per cent growth in after tax profits to Sh5.1 billion last year. In 2012 the bank grew by 50.6 per cent.

“In our view, CFC now stands out as one of the leading franchises in the financial services space,” said Standard Investment Bank in a research note.

The bank has spent four years integrating operations and leveraging on its corporate banking experience to introduce products for the middle income retail market and SMEs.

The bank’s steady growth has seen it become the sixth most profitable lender, up from position 12 two years ago.

CFC Stanbic has attributed its growth in profitability to non-reliance on interest income. The bank’s non-interest revenue constituted 53 per cent of its total income against an industry average of 41 per cent last year.

READ: CfC Stanbic triples shareholders’ payout as profit hits Sh5bn

CFC Stanbic has also improved its income utilisation with its cost to income ratio dropping to 50.7 per cent from 63 per cent a year earlier.

The bank declared a final dividend of Sh1.52 per share in addition to an interim offer of Sh0.63, pushing the total payout to Sh2.15, a threefold growth from the Sh0.73 per per share it paid in 2012. The bank did not pay dividends in 2011.

The lender has been able to secure large ticket loans that include $200 million (Sh17 billion) to Kwale International Sugar Company Limited (Kiscol), $147 million (Sh12.5 billion) to Triumph Power Generation Limited and 84 million euro (Sh9.2 billion) to Gulf Power Limited.