Sterling Bank Plc’s gross earnings stand at N133.50 billion as at December 2017, the highest in five years amid a tough and unpredictable macroeconomic environment.
This impressive performance by Sterling Bank is commendable because mid-sized and small banks have been beleaguered by deteriorating asset quality and rising bad debt that has eroded margins.
The Nigerian lender’s total asset has crossed the trillion Naira mark.
Sterling Bank is the second Tier 2 lender after Stanbic IBTC Holdings Plc to record a double digit growth in profit to end 2017 financial year, based on data compiled by BusinessDay.
For the year ended December 2017, profit after tax spiked by 65.11 percent to N8.52 billion from N5.16 billion the previous year.
This compares with First City Monument Bank (FCMB) Plc’s, and Wema Bank Plc’s 34.41 percent and 11 percent drop in net income to N2.26 billion and N9.41 billion respectively to end 2017 financial year, according to data compiled by BusinessDay.
Sterling Bank’s interest income increased by 11.30 percent to N110.31 billion in the period under review, from N91.74 billion recorded as at December 2013 since BusinessDay started gathering data.
The growth was largely driven by interest income on loans and advances and interest on pared loans of N4.85 billion in the period under review.
Also, Sterling’s Bank’s ability to curtail costs amid a high inflationary environment and spiralling energy costs help underpin bottom line growth (profit).
Operating expenses increased by 3.61 percent to N52.48 billion in December 2017 from N50.61 billion as at December 2016. The 3.61 growth in operating expenses is lower than the 13.34 percent March inflation figure.
Operating income grew by 7.32 percent to N73.35 billion in December 2017 from N68.32 billion; driven largely by an 85.02 percent increase in non-interest income to N22.80 billion in the period under review.
Sterling Bank has been able to turn each Naira invested in revenue in generating higher profit for shareholders.
Net margins increased to 6.38 percent in the period under review from 4.63 percent as at December 2016.
Analyst say the gradual economic recovery is beginning to show face in the numbers of Sterling Bank as evidenced in its double digit growth in earnings.
The gross domestic product of Africa’s largest oil producer expanded for three straight quarters last year after a 1.6 percent contraction in 2016, with year-on-year growth reaching 1.9 percent in the final three months of 2017. An increase in crude prices and the introduction of a new foreign-exchange system that ended a crippling shortage of dollars helped attract more investment flows into the country, while improving liquidity for the lender.
Experts say an improvement in unpaid loans, higher interest income from holding government debt and a rise in profit will help Sterling Bank bolster its capital buffers.
Sterling Bank has put on the tap on lending in an environment where most lenders have not been lending due to easy money from income from short term government securities.
Loans and advances spiked by 27.72 percent to N598.07 billion in December 2017 from N468.25 billion as at December 2016.
Deposits from customers grew by 17.11 percent to N684.83 billion in December 2017 from N584.73 billion the previous year. Total assets were up 28.28 percent to N1.07 trillion in the period under review from N834.19 million as at December 2016.
Sterling Bank has decided to reward owners of the business as it declared a dividend of N0.02 on every N0.50 ordinary shares held. This translates to total dividend of N578 million.
Sterling Bank’s shares closed at N1.70 as at close of trading on April 16, valuing it at N48.94 billion.
BALA AUGIE
