Sterling Bank Earnings Release for FY 2014


Grows Top line Earnings by 13% to N103.7 Billion

Lagos, March 25, 2015 – Sterling Bank Plc (NSE: STERLNBANK / Reuters: STERLNB.LG /Bloomberg: STERLNBA:NL) – the ‘Bank’ – a full service national commercial bank releases its audited results for the year ended December 31, 2014.

In his remarks, Yemi Adeola, the Managing Director / Chief Executive, stated:

2014 was a difficult year in many respects for the Nigerian banking industry. The multiple challenges arising from a weaker macroeconomic environment and the various regulatory responses to them put significant pressure on the margins of banks. Despite these pressures, we achieved double-digit earnings growth to N103.7 billion in line with our medium-term strategic objectives. This was driven by an increase in lending activities supported by an enhanced capital position following the successful completion of a US$120 million (N19.1 billion) private placement representing the second stage of our multi-year capital program.  Net interest margin rose by 80 basis points to 8.9% arising from an 80 basis points reduction in funding costs, while profit before tax grew by 15% to N10.7 billion. This performance underscores the commitment of the entire team to our corporate goals and the resilience of our business model.

During the year, we initiated the upgrade of our technology infrastructure and the re-engineering, centralization and automation of processes to improve the customer experience. In recognition of the critical role that human capital plays in successfully driving strategy and its execution, we continued to invest substantially in employee training, talent retention, and the creation of an environment that fosters continuous learning and development.”

Financial Highlights
Income Statement
• Net interest income rose by 20.1% to N43.0 billion (FY 2013: N35.8 billion) feeding from an 11.4% growth in interest income to N77.9 billion which far outweighed the 2.2% increase in funding costs to N34.9 billion
• Non-interest income also grew by 18.3% to N25.7 billion (FY 2013: N21.8 billion) driven by an 82.2% growth in net trading income to N6.8 billion
• Net operating income rose by 24.4% to N61.4 billion (FY 2013: N49.3 billion) on the back of growth in net interest income and a 10.5% reduction in impairment charges
• Operating expenses increased by 26.5% to N50.6 billion (FY 2013: N40.0 billion) driven by on-going investments in branch refits and expansion and rollout of alternative channels as well as regulation induced cost
• Profit before tax rose by 15.4% to N10.7 billion, while profit after tax rose by 8.8% to N9.0 billion due to a 68.4% increase in income tax expense

Statement of Financial Position
• Net loans & advances increased by 15.4% to N371.2 billion (Dec. 2013: N321.7 billion) supported by an enhanced capital position
Customer deposits increased by 15.0% to N655.9 billion (Dec. 2013: N570.5 billion) due to enhanced network
Shareholders’ funds increased by 33.5% to N84.7 billion(Dec. 2013: N63.5 billion) driven by private placement proceeds and profit accretion
• Overall, total assets excluding contingent liabilities rose by 16.5% to N824.5 billion (Dec. 2013: N707.8 billion)
Financial Ratios

Indicator FY 2014 FY 2013
Pre Tax Return on Average Equity (annualized)* 16.6% 19.0%
Post Tax Return on Average Equity (annualized)* 13.9% 16.9%
Return on Average Assets (annualized) 1.4% 1.4%
Earnings per Share 42k 52k
Yield on Earning Assets 14.2% 14.2%
Cost of Funds 5.3% 6.1%
Net Interest Margin 8.9% 8.1%
Cost-to-income Ratio** 73.6% 69.5%
NPL Ratio 3.1% 2.1%
Capital Adequacy Ratio (Basel 2) 14.0% 14.0%
Liquidity Ratio 33.6% 43.2%
Loan to Deposit Ratio (Net) 56.6% 56.4%
*Adjusted for the Private Placement proceeds received in December 2014
** Excluding cost of risk


Commenting on the plans for the current financial year, Yemi Adeola said: 
While the economic landscape may be challenging, I strongly believe that the Bank is on a sound footing, given its stronger capital position, outstanding asset quality and a dedicated workforce to advance its growth plans. Our capital plan remains on track as we advance to the last phase of the capital raising programme, a multicurrency subordinated debt tranche of US$200 million.