GCR affirms Sterling Bank’s BBB rating

Global Credit Ratings (GCR), an international rating agency at the weekend, affirmed Sterling Bank Plc’s national long term and short term ratings of BBB (NG) and A3 (NG) respectively, with the outlook accorded as stable.

This rating which is valid until July 2017, comes after another global ratings agency, Moody’s Investors Service, affirmed the Bank’s local and foreign currency issuer ratings of B2 with stable outlook.

Moody’s had described Sterling Bank as a stable financial institution with solid asset quality, robust Information Technology and risk management processes, and high liquidity buffers. The Agency also assigned a Counterparty Risk Assessment (CRA) of B1(cr)/Not Prime(cr) to the Bank with stable outlook.

GCR in a report made available to newsmen by Sterling Bank in Lagos at the weekend attributed the Bank’s rating to its strong performance and resilience amidst challenging operating conditions.

Part of the GCR Report reads, “Sterling’s total assets amounted to N796.4 billion (representing a market share of 2.8 per cent) at FYE15. The bank’s capital base grew 12.2 per cent in FYE15, solely through internal capital generation, with the risk weighted capital adequacy ratio (“RWCAR”) improving to 17.5 per cent at FYE15 (FYE14: 14.0 per cent). To further strengthen its capital base and support asset growth, the bank is in the process of raising up to N35 billion Tier II capital expected to be concluded in the third quarter of FYE 16”.

Notwithstanding the 100 basis points contraction recorded in net interest margin, Sterling Bank, according to the agency, reported a Net Profit After Tax (NPAT) of N10.3 billion for FYE15, an improvement of 14.4 per cent over F14. “Performance was supported by non-interest income which grew 13.8 per cent to N29.3bn (buoyed by growth in trading securities). Further, total operating expense line declined 1.9 per cent to N49.7 billion, resulting in a reduction of the cost ratio to 72.2 per cent from 73.6 per cent in FYE14.” According to the Agency, the Bank’s gross NPL ratio ended at 4.8 per cent in F15, which was below peer average of 6.1 per cent and regulatory limit of five per cent.

While commending Sterling Bank for composing its Board of Directors in line with the provisions of the Central Bank of Nigeria’s Code of Corporate Governance for Banks in Nigeria and the Securities and Exchange Commission’s (SEC), code for publicly quoted companies, GCR also lauded the Bank for maintaining  a diversified funding base, consisting mainly of customer deposits (both retail and corporate).

GCR also noted that Sterling Bank has continued to improve on its service delivery to customers through various strategic initiatives.