STERLNBANK Grows Non-Interest Income by 13.7%as OPEX Decreases by 1.9% in Q4;15 Results


Tuesday, March 22, 2016 10:27AM /Sterling Bank Plc

Sterling Bank Plc, a full service national commercial bank releases its audited results for the year ended December 31, 2015. In his remarks, Yemi Adeola, the Managing Director/ Chief Executive stated:

I am pleased to report that we sustained our performance from the previous year driven by an improvement in operating efficiency. Cost-to-Income Ratio improved by 140 basis points to 72.2%, Capital Adequacy Ratio stood at a record high of 17.5%, while liquidity buffers remained strong as the Bank grew its After Tax Profit by 14.3%. Clearly, our 2015 performance offered a clear validation of the underlying resilience of our business model.

The very challenging operating environment notwithstanding, we managed and continue to maintain a delicate balance between delivering on near term goals and laying the foundation for the future that we see – one where our customers enjoy the experiences that we create together, which in turn becomes the basis for our long term profitability.

Asset quality remained resilient with Non-Performing Loans (NPL) below the maximum regulatory threshold of 5% despite a significant reduction in the loan book, arising from the replacement of state government loans with federal government bonds.

We also maintained a very liquid balance sheet position despite the implementation of the Treasury Single Account (TSA) by the FGN. This outcome reflects some initial progress with the retail funding strategy and further supports the material investments that we are making in this area.

Financial Highlights
Income Statement


         Net interest income declined by 8.1% N39.5 billion (FY 2014: N43.0 billion) driven by an 18.5% increase in interest expense resulting in a 630 basis points reduction in net interest margin to 48.9%;

         Non-interest income grew by 13.7% to N29.3 billion (FY 2014: N25.7 billion) largely due to a 57.4% increase in trading income;

         Net operating income declined marginally by 1.1% to N60.7 billion (FY 2014: N61.4 billion) arising from a 10.3% increase in impairment charge to N8.2 billion;

         Operating expenses decreased by 1.9% to N49.7 billion (FY 2014: N50.6 billion) driven by improvements in operating efficiency;

         Profit before tax rose by 2.5% to N11.0 billion, while profit after tax rose by 14.3% to N10.3 billion due to a higher retention of organic capital compared to the previous period.

Statement of Financial Position

         Net loans & advances decreased by 8.8% to N338.7 billion (Dec. 2014: N371.2 billion) driven primarily by the liquidation of State Government loans;

         Customer deposits decreased by 9.9% to N590.9 billion (Dec. 2014: N655.9 billion) resulting from the implementation of the Treasury Single Account (TSA) policy and the strategic focus on funding cost optimization;

         Shareholders’ funds increased by 12.8% to N95.6 billion (Dec. 2014: N84.7 billion) arising from organic profit accretion;

Overall, total assets excluding contingent liabilities decreased by 3.0% to N799.5 billion (Dec. 2014: N824.5 billion).



Commenting on the outlook for the 2016, Yemi Adeola observed as follows:  We are of the view that the current macro-economic challenges present their own opportunities for agile and dynamic operators. We recognize that re-structuring of the sort that the current Federal Administration is pursuing takes time but like many other Nigerian businesses, we view the pursuit of economic self-reliance as commendable.

Consequently, we remain optimistic for the future but are not under any illusion that the near term operating environment would be more favorable as we expect some policy volatility in the course of the year. There is clearly ‘a new normal’ and the future will belong to those who can develop new competences even while retaining the core strengths that have led them to success in the past. Our desire is to make Sterling Bank one of those.

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