The 39 per cent growth in profit recorded by Sterling Bank Plc in its nine months results was a reflection of bright prospects by the company, writes Goddy Egene
“We will continue to execute the plans to drive efficiency across the business under the three pillars of agility, digitisation and specialization in the new financial year.
“These pillars will propel us toward sustainable growth by enhancing our ability to innovate; solidify our retail funding base; strengthen our enterprise-wide risk management framework and drive excellent service delivery across all channels to enhance customer experience.”
The above were the words of Managing Director/Chief Executive Officer of Sterling Bank Plc, Mr. Abubakar Suleiman to shareholders at the last annual general meeting of the bank in May 2018.
At that meeting, the shareholders received a dividend of two kobo per share. However, there is every reason for the shareholders to be hopeful of higher dividend at the end of the 2018, considering the nine months results of the financial institution.
All the words of assurance given by Suleiman have translated to improved performance for the nine months ended September 30, 2018.
Nine Months Financial Results
The unaudited nine months results that the commercial bank over came 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.
Specifically, gross earnings rose by 21.1 per cent to N114.6 billion in 2018, from 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 percent from N36.9 billion to N39.8 billion. Net operating income improved by 26.3 per cent to N57.2 billion in 2018 as against N45.3 billion in 2017.
Sterling Bank sustained a steady growth in profitability as profit before tax (PBT) grew by N8.5 billion or 29.5 per cent as against N6.5 billion in corresponding period of 2017, while profit after tax (PAT) rose by 39 percent from N5.9 billion to N8.2 billion. Earnings per share thus improved from 21 kobo to 28 kobo, thereby raising prospects of higher dividend payout.
Also, underlying ratios showed improvement in the intrinsic value of the bank. Pre-tax return on average equity improved from 9.6 per cent in 2017 to 10.8 per cent in 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 percent to 0.8 percent.
The balance sheet of the bank equally indicated 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.
Sterling 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.
CEO Explains Performance
Speaking on the results, Suleiman said the bank has been able to sustain its steady growth due to focused implementation of its strategic intent of exceeding customers’ expectations.
According to him, the 31.2 per cent in non-interest income was driven by a growth in trading and transaction banking revenues, as the bank continues to prioritise efficiency of its digital banking platforms to support its retail drive.
Suleinman said: “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.”
He 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 recognised as Tier II capital after the regulatory approval.
Suleiman 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 digitisation drive. This is expected to further intensify the bank’s retail drive,” he said.
Support for Customers
Sterling Bank places high premium on customer service, a fact many of its customers testified to during the celebration of 2018 Customer Service Week.
Speaking on his experience as a customer of Sterling Bank for 14 years, Managing Director and Chief Executive Officer of Suntaal Oil and Gas Limited, Otunba Sunday Tawose, said: “I have been a consistent customer of the bank due to the support I have received over the years to grow my businesses and because of this I have continued to recommend it to my family members and friends as one of the best banks to bank with.”
Tawose, who started out as a transporter moving oil products from Conoil depots in Rivers State to various parts of the state, said he decided to go into business because he was born into a family of entrepreneurs.
“My businesses are doing very well. I have a filling station and an event centre in Port Harcourt in Rivers State. I have been banking with Sterling Bank Plc since 2004 from Equitorial Trust Bank (ETB), one of the banks that merged with NAL Merchant Bank Plc and others to become Sterling Bank,” he explained.
As part of its efforts to enhance customer service, the bank had a campaign called “Senior Management Hour.” The campaign was designed to bridge the gap between senior management and staff across the nation as it provided an opportunity for the bank’s senior management to visit branches, bond with staff, and lead through exemplary customer service by attending to the needs of customers.
According to the bank, the goal was to have a firsthand experience of the daily activities of staff as this would aid in identifying operational and welfare issues that need to be resolved.
The campaigned provided some of the senior management team an opportunity to share words of wisdom with staff while also attending to customers who took advantage of their presence to make demands.
“The initiative brings senior management closer to the bank’s workforce as well as customers. Sterling Bank remains committed to strengthening its relationship with customers in fulfillment of “Your One-Customer” promise.
A customers of the bank, Mr. Mohammed Ibrahim Daura had applauded the initiative as he was surprised to see an executive director in the banking hall serving customers. He said that the executive director’s attention to customer needs gave him more confidence in the bank’s services. Daura, who is the Chairman of M.I. Daura Enterprises Limited, said he lives in the northern part of Nigeria but banks with Sterling Bank because of the quality of its customer service.