Lagos, October 28, 2016 – Sterling Bank Plc (NSE: STERLNBANK / Reuters: STERLNB.LG /Bloomberg: STERLNBA: NL) – the ‘Bank’ – a full service national commercial bank releases its unaudited results for the quarter ended September 30, 2016.
In his remarks, Yemi Adeola, the Managing Director/ Chief Executive, stated:
The domestic economy continued to be characterized by foreign exchange supply shortages, rising inflation and negative economic growth in the third quarter. This recessionary environment sustained downward pressure on core earnings in the industry. In the face of these macroeconomic challenges, Sterling Bank remained resolute on building a sustainable business anchored on effective risk management and a robust retail drive. Consequently, net interest income increased by 37.7%, largely due to a 12.0% reduction in interest expense, while net interest margin improved by 60 basis points to 8.5%. In addition, there was a marked improvement in asset quality resulting in a 230 basis point reduction in the ratio of non-performing loans to gross loans from 4.8% in December 2015 to 2.5%.
Sterling Bank has grown its active customer base by over 40% year-to-date with improved penetration across all digital channels. The non-interest banking business has also witnessed significant growth in deposits and profitability by 87% and 415% respectively. This gives fillip to our resolve to diversify our business significantly over the coming years.
We will continue to prioritize operating efficiency and aggressively drive retail funding. These priorities will guide the way we do business in the final quarter of the year and serve as the fulcrum for 2017.
Although macroeconomic conditions could witness some modest improvements, the operating environment would continue to be challenging and business confidence somewhat subdued. Nonetheless, Sterling Bank remains committed to building a sustainable business anchored on efficiency.
Financial Highlights
Income Statement
· Net interest income increased by 37.6% to N41.5 billion (Q3 2015: N30.2billion) feeding from a 12.4% increase in interest income and a 12.0% reduction in interest expense;
· Non-interest incomereduced by 47.6% to N10.8 billion (Q3 2015: N20.5 billion) largely due to a 34.2% decline in fees and commission;
· Net operating income declined marginally by 0.8% to N45.1 billion (Q3 2015: N45.5 billion) arising from a 37.4% increase in impairment charges;
· Total expensesincreased by 5.0% to N39.0 billion (Q3 2015: N37.1billion) driven by inflationary pressures but moderated by our strategic cost control measures;
· Profit before taxdeclined by 26.9% to N6.1 billion, while profit after tax also declined by 26.6% to N 5.5 billion.
Statement of Financial Position
. Net loans & advancesincreased by 46.2% to N495.3 billion (Dec. 2015: N338.7 billion) driven primarily by foreign
exchangerevaluation;
.
Customer deposits increased marginally by 0.7% to N595.1 billion (Dec. 2015: N590.9 billion);
. Total assets excluding contingent liabilities increased by 11.4% to N890.3 billion (Dec. 2015: N799.5 billion);
. Overall,shareholders’ funds closed at N82.3 billion arising from fair value adjustment on available for sale investments and organic accretion of profit.
Financial Ratios
| Indicator | Q3 2016 | Q3 2015 |
| Pre Tax Return on Average Equity | 9.1% | 12.8% |
| Post Tax Return on Average Equity | 8.3% | 11.6% |
| Return on Average Assets | 1.0% | 1.4% |
| Earnings per Share | 19k | 26k |
| Yield on Earning Assets | 13.8% | 14.1% |
| Cost of Funds | 5.3% | 6.2% |
| Net Interest Margin | 8.5% | 7.9% |
| Cost-to-income Ratio | 74.6% | 73.3% |
| Indicator | Q3 2016 | FY 2015 |
| Non-performing Loan Ratio | 2.5% | 4.8% |
| Cost of Risk | 1.8% | 2.3% |
| Capital Adequacy Ratio (Basel 2) | 10.7% | 17.5% |
| Loan to Deposit Ratio (Net) | 83.2% | 57.3% |
CONTACTS
Primary Contacts:
Chimaobi Nwaokoma
M: +234 803 406 6104
E: [email protected]
Investor Relations Team
E: [email protected]
W: https://sterling.ng/about/investors/
Twitter: Sterling_Bankng
