Background
Sterling Bank Plc is a full-service national commercial bank. The Bank, formerly known as NAL Bank Plc, was incorporated in 1960 as Nigerian Acceptances Limited. In 1969, it became the first Nigerian Bank to be licensed as a merchant bank.
The Bank became a universal bank in 2001 to reflect its wide product/service offering. In 2005, NAL Bank merged with the erstwhile Indo-Nigerian Bank, Magnum Trust Bank, NBM Bank, and Trust Bank of Africa to form Sterling Bank Plc.
Buoyed by a commitment to corporate governance principles the Bank has demonstrated resilience in the competitive landscape, while remaining true to its strong ethical leaning.
In 2011, Sterling Bank Plc acquired the franchise of the erstwhile Equatorial Trust Bank to emerge as a stronger institution and is now better positioned to offer a robust bouquet of products and services through a network of over 165 branches spread across major cities in Nigeria.
Sterling bank has 21.60 billion shares outstanding, with net assets of N635.45 billion at the end of March 2014.
The pressure of surging operating expenses, unpredictable and harsh economic environment did not hinder Sterling Bank from recording impressive Q1 2014 results.
The bank avoided plethora of funds, and also was able to minimize operating risk which culminated in the stellar performance at both top and bottom line level.
For the three months through March 2014, Sterling bank recorded a 24.07 percent growth in gross earnings to N24.62 billion from N19.84 billion same period of prior year (1Q13).
Profit before tax in the review period surged by 17.28 percent y/y to N3.54 billion as against N3.02 billion in 1Q13.
Interest income spiked by 30.57 percent to N18.66 billion in 3M14 compared to N14.29 billion in 3M13, while interest expense grew minimally by 7.65 percent to N8.39 billion in 1Q13.
The ability of the bank to keep interest expense to the barest minimum has impacted positively on the net interest income as it spurt by 58.12 percent to N10.26 billion as from N6.49 billion in 2013.
The result shows that the bank is at the fulcrum of success and on the right trajectory to growth.
The bank did not allowed itself get swallowed or have it operational performance dampened by the CBN tightening stance which has been eating deep into the profits of banks.
The Nigeria Apex bank hiked the CRR on public sector funds to 75 percent, while monetary policy rate (MPR) has been kept at 12 percent to help stabilize the naira and keep inflation under control.
Net margin reduced by 100 basis points to 12.71 percent in the review period while net interest income margin surged to 41.67 percent same period.
Earnings per share EPS fell by 11.76 percent to 15k from 17k in 1Q14.
Operating expenses in the review period grew by 33.96 percent y/y to N11.64 billion in 1Q14 from N8.68 billion in 1Q13, while Opex margin jumped to 47.27 percent in 2014 as against 43.74 percent in 2013.
Sterling bank’s total assets fell slightly by 0.83 percent y/y to N701.89 billion in 1Q14 compared to N707.79 billion as at FY13.
Loans and advances to customers were up marginally by 4.80 percent y/y to N337.18 billion in 3M14 from N321.74 billion in 12M13.
Total deposits to customers reduced by 5.35 percent y/y to N540.01 billion in Q1’14 as against N570.51 billion in year ended December 2013.
The Return on Average Equity ROaE declined to 0.49 percent from 0.46 percent for Q1 2013, while Return on Average Assets ROaA slid to 0.44 percent from 0.42 percent for Q1 2013.
Share performance and Outlook
The share price of sterling bank on the 23rd of April 2014 closed at N2.20 on the floor of the Nigeria Stock Exchange (NSE)
Current Price Earnings Ratio (P/E ratio) and estimated Price earnings Ratio were 4.38x and 5.84 respectively.
The bank had market capitalization of N49.23 billion on the same day.
BALA AUGIE
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
