By Goddy Egene
The Managing Director/Chief Executive Officer of Sterling Bank Plc, Mr. Yemi Adeola has said the bank would conclude its N35billion tier 2 capital raising exercise in the second half of the year, prioritise operating efficiency and ensure moderate loan growth going forward.
Speaking against the background of the performance of for the bank for the first half (HI) year ended June 30, 2016, Adeola said while some of the macroeconomic challenges witnessed during the H1 will persist, improvements in the Nigerian economy are being expected, driven by the implementation of the budget and other fiscal palliatives introduced by the federal government. Hence, the bank is being positioned to take advantage of the improvements and create better value for all stakeholders. According to him, Sterling Bank showed stable and improved the intrinsic fundamentals of its businesses in H1 of 2016 despite the challenging operating environment.
The bank’s performance showed that net interest income increased by 31.9 per cent to N25.6 billion in H1 2016 as against N19.4 billion in corresponding period of 2015. This was driven by a 22 per cent decrease in interest expense resulting in a 1240 basis point improvement in net interest margin to 61.7 per cent. Non-interest income, however reduced from N15.2billion in 2015 to N8.5billion in 2016. The bank ended the period with profit after tax of N4 billion in 2016, as against N5.426 billion in 2015.
Net loans and advances increased by 36.5 per cent to N462.3billion largely driven by foreign exchange revaluation. Also, customer deposits increased to N627.9 billion from N590.9 billion. Total assets, excluding contingent liabilities, increased by 20 per cent N959.2 billion by June 2016 as against N799.5billion recorded by December 2015.
According to Adeola, the bank prioritised improvement in asset quality which was reflected by a 70 basis point decline in the non-performing loans and a 100 basis point reduction in cost of risk. Cost of funds also declined by 120 basis points to 4.7 per cent. This was in spite of the foreign exchange liberalisation policy, the attendant liquidity squeeze and the rising inflation rate which peaked at 16.5 per cent in June 2016.
“The bank showed deeper pliability through the re-affirmation of its investment grade ratings at a time when corporate and sovereign ratings were under downward ratings pressure. I am pleased to report that we have successfully migrated to a world-class CORE banking application, which will enable us to better manage a significant uptick in customer base and ensure the required flexibility to deliver unique services across business segments,” Adeola said.
He added that the bank has taken steps to improve staff productivity by introducing a flexible work environment to achieve its goal of building a great workplace and reduce operating expenses.
