Sterling Bank rode on the back of increased market share and robust credit risk management to double its profit from core operations, a feat that trickled down to equal the increase in cash payout to shareholders.
Audited report and accounts of the bank for the year ended December 31, 2012 showed a well-rounded performance with significant growth in income, profitability and assets.
The audited report, prepared in line with the International Financial Reporting Standards (IFRS) and approved by all financial services regulatory agencies, was presented to the investing public at the Nigerian Stock Exchange (NSE) last week.
Key extracts of the report showed that the bank consolidated its growth and seamlessly harnessed the synergies from its recent acquisition with both outward and underlying performance indicators indicating marked improvements.
While gross earnings grew by 51 per cent, profit from core operations (excluding the effect of one-off disposal of subsidiaries in 2011) increased by 108 per cent; while the proportion of non-performing loans to total loans portfolio improved considerably to 3.8 per cent, as against 4.8 per cent in the previous year. Net interest margin improved from 5.0 per cent to 5.2 per cent underlying increasing profitability of the bank’s core banking operations in spite of the tough operating environment.
Gross earnings stood at N68.9 billion in 2012 as against N45.7 billion in 2011. The top-line was driven substantially by improving core banking operations and larger market share as net interest income rose by 43 per cent from N16.7 billion to N23.9 billion. Non-interest income also increased to N15.3 billion as against N13.4 billion in the previous year. Net operating income after impairment loss rose by 51 per cent to N39.5 billion as against N26.1 billion. Adjusted for income from discontinued operations, profit before tax grew by 108 per cent to N7.5 billion in 2012 as against N3.6 billion in 2011.
With a net profit after tax of N6.95 billion in 2012, the board of directors has recommended a 100 per cent increase in cash dividends to shareholders from 10 kobo paid for the 2011 business year to 20 kobo in 2012. In spite of the doubling in cash payouts, the strong growth in net earnings would still see the bank ploughing about 55 per cent of net earnings into reserves for business growth. At current market price, the recommended dividend represents a dividend yield of 7.3 per cent, the highest by any bank so far.
Beyond the profit and loss accounts, the bank’s balance sheet size and structure improved remarkably during the year. Total assets increased from N504 billion to N580.2 billion. Customer deposits increased by 18 per cent to N463.7 billion as against N392.0 billion while net loans and advances grew by 42 per cent from N162.1 billion to N229.4 billion. Shareholders’ funds increased by 14 per cent to N46.6 billion compared with N41.1 billion in the previous year.
Commenting on the performance, the managing director of Sterling Bank Plc, Yemi Adeola said the 2012 results reflect the enhanced capacity of the bank following the business combination with Equitorial Trust Bank (ETB).
Noting the key growth highlights, Adeola said it was delightful that the growth was driven by a marked improvement in core banking operations whilst the bank maintained a tight grip on asset quality, with non-performing loans dropping to its lowest rate of 3.8 per cent despite a 42 per cent growth in loans to N229.4 billion.
“Going into 2013, our goal is to reduce our cost of funds, enhance our brand presence in our target markets and improve operating efficiency,” Adeola said.
He outlined that in furtherance of its medium to long term strategic growth plan, the bank plans to raise supplementary equity funds of up to N32 billion, about $200 million, through the issuance of equity instruments.
