Q3’2018: Sterling Bank grows net profit by 39 per cent

Sterling BankSTERLING Bank Plc has announced its third-quarter 2018 results revealing strong top-line growth and increasingly efficient credit risks and cost management practices to deliver a healthy 39 per cent growth in net profit during the period.

Unaudited report and accounts of the bank for the nine-month period ended September 30, 2018, released at the Nigerian Stock Exchange (NSE) showed that the commercial bank bucked the pervasive low growth in the banking sector with 21 per cent and 39 per cent growths in gross earnings and profit after tax respectively.

All major performance indices recorded double-digit growth, indicating growing market share in retail banking.

ALSO READ: Q3:2017: Sterling Bank grows earnings by 19%

Gross earnings rose by 21.1 per cent to N114.6 billion in the third quarter of 2018 compared with N94.6 billion recorded in comparable period of 2017. The top-line performance was driven by growths in both interest and non-interest incomes as non-interest income rose by 31.2 per cent from N16 billion to N21 billion while net interest income increased by 7.8 per cent from N36.9 billion to N39.8 billion

Net operating income thus improved by 26.3 per cent to N57.2 billion in the third quarter of 2018 as against N45.3 billion in the third quarter of 2017.

The bank sustained a steady growth in profitability as profit before tax grew by N8.5 billion or 29.5 per cent as against N6.5 billion in the corresponding period of 2017. After taxes, net profit rose by 39 percent from N5.9 billion to N8.2 billion. Earnings per share thus improved from 21 kobo to 28 kobo.

Chief Executive Officer, Sterling Bank Plc, Mr Abubakar Suleiman said the bank has been able to sustain its steady growth due to focused implementation of its strategic intent of exceeding customers’ expectations.

He noted that the robust growth of 31.2 percent in non-interest income was driven by a growth in trading and transaction banking revenues, as the bank continues to prioritize efficiency of its digital banking platforms to support its retail drive.

“Our strategic intent to be more customer-focused has continued to yield results. One of such recorded in the last quarter is the increase in the volume of transactions processed through our various electronic platforms since the start of the year. We achieved over one million monthly NIBBS Instant Payment transactions as at July 2018, a 73 percent increase from the start of the year and expect to see continuing traction in this regard,” Suleiman said.

Underlying ratios showed improvement in the intrinsic value of the bank. Pre-tax return on average equity improved from 9.6 per cent in third quarter 2017 to 10.8 per cent in third quarter 2018. Post-tax return on average equity also increased from 8.6 per cent to 10.4 per cent. Return on average assets was steady at 1.0 per cent while cost of risk improved from 1.8 per cent to 0.8 per cent.

The balance sheet spread also showed increasing acceptance of the bank’s brand and continuing supports of the bank to the growth of the national economy. Customer deposits increased to N723.2 billion by September 2018 from N685.0 billion in December 2017.

The bank’s net loans and advances increased by 10.7 per cent to N662.0 billion from N598.0 billion in December 2017. Total assets improved to N1.08 trillion as against N1.07 trillion recorded at the beginning of the year while shareholders’ funds increased from N102.9 billion in December 2017 to N106.2 billion in September 2018.

The bank’s Liquidity Ratio (LR) improved from 30.5 per cent in December 2017 to 34.4 per cent in September 2018 while Capital Adequacy Ratio (CAR) stood at 11.4 per cent.

Non-Performing Loan Ratio (NPLR) improved considerably from 6.2 per cent to 5.4 per cent.

Sterling Bank CEO however disclosed that the bank’s Series 2 Notes issuance of N19.7 billion under its N39 billion debt issuance programme was oversubscribed. He added that the net proceeds from the issuance would be recognized as Tier II capital after the regulatory approval.

He said the buffer provided by the additional capital would give room for business expansion across the bank’s focus growth areas including health, education, agriculture, renewable energy and transportation sectors.

“Going into the final quarter of the year, we aim to complete the ongoing implementation of a number of digital-led initiatives in line with our digitization drive. This is expected to further intensify the bank’s retail drive,” Suleiman said.

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