Sterling Bank plc’s profit climbs in the first quarter (Q1) of the year as the Nigeria lender curbed increases in expenses. For the first three months through March 2015, its net income climbed by 24.71 percent to N3.91 billion from N3.13 billion the same period of the corresponding year (Q1) 2014.
The impressive growth at the bottomline is attributed to the lender’s ability in keeping costs to the barest minimum as operating expenses increased by 3 percent and loan loss expense fell by 10.42 percent.
These cost control mechanism installed by the management of the bank also help drive efficiency as cost-to-income ratio fell to 71 percent in 2015 from 72 percent in 2014. The higher the ratio, the less efficient a bank and the lower the ratio, the more efficient using technology in cutting costs while boosting profit.
The bank will have to improve on its interest income from loans and advances and treasury bills as interest income increased by 3 percent to N19.23 billion from N18.65 billion in 2014.
Additionally, the lender succumbed to the CBN tightening stance as its interest expense were up by 20.13 percent, culminating in a 10.84 percent in net interest income.
In November 2014, the CBN increased CRR on private sector funds from 15 percent to 20 percent while the monetary policy rate (MPR) was moved from 12 percent to 13 percent. CRR for public sector funds remained at 75 percent.
The country’s apex bank applied rules and restrictions to stabilise the naira after it declined to a record low in February as the price of oil, the nation’s major foreign-exchange earner, fell by a half in the second half of last year.
Sterling Bank is aggressive about lending as its loans-to-deposit ratio increased to 63.06 percent in 2014 compared with 56.06 percent in 2013.
However, loans and advances to customers moved by a single digit 5.15 percent to N392.40 billion as against N655.94 billion in 2014, while deposit to customers were down by 5.15 percent to N622.18 billion. Total assets were up by 2.11 percent to N841.90 billion in 2015 as against N824.54 billion as of March 2014.
Lenders in Africa largest economy Nigeria will have to look inwards and also seek high interest yielding assets as a way of maximising the value of shareholders.
Sterling Bank’s share price closed at N2.25 on the floor of the exchange, while market capitalisation was N64.77 billion.
BALA AUGIE
