Stakeholders express concern as Stanbic IBTC again, pays N159m penalties for regulatory infractions

*Stakeholders in Stanbic IBTC Holdings Plc have reportedly expressed concern over the financial institution’s ‘habit of incurring regulatory infraction penalties’, and for using the investors’ funds to settle such breaches

*The development is ‘unfortunate and worrying,’ says shareholders’ group

Isola Moses | ConsumerConnect

For breaching regulatory guidelines in the immediate past financial year, the Central Bank of Nigeria (CBN), National Pension Commission (PenCom), National Insurance Commission (NAICOM), Securities and Exchange Commission (SEC) and the Federal Inland Revenue Service (FIRS) have slammed total penalties in the sum of N159 million on Stanbic IBTC Holdings Plc.

It was learnt the financial institution paid the penalties as a punishment for its subsidiaries’ breaching several regulatory guidelines in the 2022 financial year.

The penalties were imposed by the Central Bank of Nigeria (CBN), National Pension Commission (PenCom), National Insurance Commission (NAICOM), Securities and Exchange Commission (SEC) and the Federal Inland Revenue Service (FIRS).

The penalties the bank paid for regulatory breaches were 32 percent less than the N233 million collectively slammed on the Group 2021 for similar infractions, according to report.

Concerns over use of investors’ funds to settle penalties

In view of this  development in the Stanbic IBTC Holdings Plc, stakeholders have reportedly expressed concern over the financial institution’s “habit of incurring regulatory infraction penalties” by the financial services institution, and using investors’ funds to settle them.

Data gathered from the 2022 audited financial statements of Stanbic IBTC Group indicated that its pension subsidiary, Stanbic IBTC Pension Managers Limited, incurred the highest penalties totalling N79.6 million fine by PenCom.

The Group also disclosed in its 2022 audited financial statement that “PenCom imposed a penalty of N69,600,000 on Stanbic IBTC Pension Managers Limited for contravening the provisions of the Revised Registration Guidelines.

PenCom imposed a fine of N10,000,000 on Stanbic IBTC Pension Managers Limited as an administrative sanction for the publication of an unapproved advert by Stanbic IBTC Group.”

Likewise, for failing to report export proceeds and Certificate of Capital Importation to CBN and NFIU, amid Nigeria’s efforts at boosting non-oil export revenue, the CBN also punished Stanbic IBTC Bank with a penalty of N44,850,000.

The Bankers’ Bank further imposed a N5,000,000 fine on the financial services institution for late rendition of daily returns.

The regulatory hammer of SEC fell on Stanbic IBTC Trustees Limited for outright misinformation of the income earned on the investment of Bond sinking funds on the year 2020 returns.

The subsidiary as well paid N8,205,000 fine to settle this penalty during the year, Stanbic IBTC noted.

According to the financial statement, “the SEC imposed a fine of N500,161.25 on Stanbic IBTC Capital Limited for not depositing all the proceeds of the Stanbic Infrastructure Fund issue in an interest-yielding account with the custodian.”

During the last financial year, NAICOM also “imposed a fine of N15,250,000 on Stanbic IBTC Insurance Brokers Limited for alleged failure to avail an on-site inspector with the full representation of KYC/CDD documents conducted on customers.”

The insurance regulator also imposed a fine of N250,161.25 on Stanbic IBTC Insurance Limited for late upload of online real-time data of policies booked.

NAICOM further slammed the bank’s subsidiary “with a fine of N250,161.25 on Stanbic IBTC Insurance Limited for late upload of online real-time data of policies booked.”

The Group’s audited performance report also revealed that the financial services institution breached the tax regulation of the country which earned it a N50,000 fine by the FIRS for late filing and remittance of Value Added Tax (VAT).

A 2022 report also indicated that Stanbic IBTC Group paid a total of N2.76 billion for penalties imposed on it by the authorities for contravening various industry regulation within five years (2017-2021).

Among the major penalties the bank paid in 2021 was N200 million for flouting the CBN directive on Cryptocurrency, a sanction the bank said it would press for reversal.

In 2020, the financial services institution as well paid a “Penalty on Involvement in Textile Importation Using FX sourced from the Nigerian Market.

According to the company, the CBN then, imposed a penalty of N152 million on the banking group, following the investigation conducted on Foreign Exchange (Forex) used to import textiles for the period of 02 and 15 October 2019.”

Moreover, the highest penalty of N1.9 billion the bank paid during the 5-year period related to capital importation documentation which earned it the CBN’s hammer.

It stated: “Penalty arising from CBN investigation on ‘irregular’ Certificates of Capital Importation (“CCI’s”) issued to MTN Nigeria Communications Limited (MTN Nigeria), between 2007 and 2015 – N1,885,852,847.46.”

Shareholders speak on development

In her reaction to the development as noted the bank’s financial statements, Mrs. Bisi Bakare, Chairperson, Pragmatic Shareholders’ Association of Nigeria, was Saud to have described the development as “unfortunate and worrying”, though it not peculiar with Stanbic IBTC Bank.

Mrs. Bakare averred that said some of the penalties are avoidable, if the banks can be more proactive, report said.

She also stated in a note to The Will, that “it is not peculiar with (to) Stanbic IBTC Bank; other banks pay penalties.

“My candid advice to the management is to be proactive in their dealings.”

Flip side of bank’s 2022 financial statements

In spite of the challenging environment in Nigeria, Stanbic IBTC Holdings Plc in the 2022 audited financial statements for the period ended December 31, 2022, reported significant improvement in key financial parameters to maintain its position as one of the leading Tier-2 banks in the country.

The banking group also announced a significant increase in balance sheet position that impacted on its bottom-line.

The Stanbic IBTC total assets hit N3.03trillion 2022, an increase of 10 percent from N2.74trillion in 2021, driven majorly by growth in gross Loans & Advances and Customer Deposits.

The Group’s gross Loans & Advances was up by 31 percent to N1.24 trillion in 2022 from N946.26 billion in 2021, while customer deposits increased by 11 percent to N1.25 trillion in 2022 from N1.13 billion achieved in 2021.

In his comment on the financial results, Dr. Demola Sogunle, Chief Executive of Stanbic IBTC Holdings, in a statement said: “2022 was a peculiar year for us as a financial services provider within the Nigerian operating environment.

“Despite the volatile macro-economic indicators, coupled with varying regulatory burdens, we made substantial progress towards achieving our set financial goals based on our guidance for the year.”

Sogunle noted:

“We recorded growth in our profit metrics, Loans and Advances, and Deposits during the year.

“The Group’s profit after tax increased by 42 percent to N80.81billion, being the second highest PAT in the history of the organisation.

“This was largely attributable to significant increase in net interest income and growth in non-interest revenue.”

He further stated: “The 50 percent YoY increase in net interest income resulted from growth in the volume and average yield on cumulative risk assets while growing our loan book.

“In addition, non-interest revenue was driven by growth in trading revenue following an improvement in trading activities as well as 9 percent growth in fees and commissions compared to the prior year.

“The improvement in our earnings led to an increase in our return on equity to 20.4 percent from 14.7 percent in 2021, well above our target range. Increased focus on our cost savings initiatives led to a moderation in our cost-to-income ratio to 53.9percent from 62.3 percent in 2021, which is in line with our target of at most 55percent for the year.”

Sogunle said: “We particularly exceeded our guidance for loan growth as gross customer loans increased by 31 percent to N1.24 trillion, attaining the one-trillion-mark as we continue to support our clients in achieving their financial goals.

“The non-performing loan ratio moved up to 2.4per cent, still within the acceptable limit of five per cent, as the total non-performing loans increased YoY due to proactive recognition of increased credit risks in specific clients.”

He affirmed that the banking group “will continue to extend loans in a responsible manner and in line with our established credit risk management practices.

“The increase in our loan book was funded by a 11 percent YoY growth in customer deposits.”

Sogunle added: “We demonstrated our commitment towards promoting sustainable finance and climate action during the year as 32 bank branches and seven pension locations now run on solar powered energy solutions.”

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