Sterling Bank, one of the commercial banks in Nigeria, has reported a modest improvement in its earnings for the first quarter of 2019. The Bank’s Profit After Tax was up 4.5 percent to N3.2 billion, driven by net interest income growth of 20.5 percent in the period.
Abubakar Suleiman, chief executive of Sterling Bank, in a note to investors commented that the results showed the bank’s effective funding optimisation and drive for efficiency in the face of headwinds in the economy.
In the quarter, net interest income increased to N14.93 billion compared to N12.39 billion posted in the corresponding period of 2018 and was supported by an 18.3 percent decline in interest expense, resulting in a net interest margin of 7.4 percent vs. 6.2 percent in the preceding year.
“Our performance in the first quarter reflects the resilience of our business model,’’ Suleiman said. ‘’Despite the slow growth environment owing to election activities, we delivered a strong base for growth in 2019.”
Analysis of the bank’s financials shows a 1.39 percent uptick in other income to N20.63 billion in the review period.
A 29.44 percent surge in fees and commission income to N4.7 billion in the period to March 31, 2019, as against N3.63 billion in the same quarter of 2018, was offset by a significant decline in both net trading income and other operating income which pressured downwards Sterling’s operating income.
Sterling was, however, able to reduce its impairments by 32.78 percent and maintain its performance in the three-month period as net operating income after impairments grew 3.63 percent to N19.79 billion.
“(We) maintained a cautious stance to lending, even as we prioritise reallocation of our loan book to the HEART sectors,” the bank said, highlighting the 4.5 percent growth in its balance sheet as increased retained earnings in Q1 2019 shored up shareholders fund by 10.45 percent.
Sterling HEART refers to the bank’s lending tailored for Health, Education, Agriculture, Renewable Energy and Transportation sectors.
Total expense for Sterling was 3.7 percent more than the N15.92 billion incurred in the first quarter of 2018, but the bank was able to deliver a 3.09 percent increase in its profit before tax which was N3.27 billion for Q1 2019.
Similarly, profit after tax improved by 4.52 percent as tax expense was 56 percent lower in the recent quarter at N33 million compared to N75 million incurred in the same period last year.
Earnings per share remained unchanged at 11 kobo from Q1 2018.
For the review period, Sterling’s institutional banking segment was its most profitable, contributing about N2.66 billion or N57 percent to N4.66 billion gain across all its profitable segments before adjustment to a loss in corporate and investment banking arm which pared total profit to N3.27 billion.
Retail banking segment, the second most profitable in Q1 2019, grew at 79 percent year on year from Q1 2018 to contribute N1.35 billion earnings to Sterling, while commercial banking turned the corner in Q1 2019 to post N296 million profit as against significant loss in Q1 2018.
At the close of trading on Wednesday, Sterling remained flat at N2.70 per share, 1.5 percent shy of its 52-week high of N2.74 established on April 16, 2019. Sterling is up 42 percent, outperforming the All Share Index (-4.87 percent) and Banking Index (-2.72 percent) on Year-to-Date as at Wednesday.
Sterling Bank at the start of the new year unveiled its new ‘’rising sun’’ identity which it says symbolises a transitioning from the old school banking to a new and agile force that delivers forward-moving disruptive financial solutions. The full-service commercial bank grew its profit by 15 percent in 2018 full-year.
