Sterling Bank makes N5b profit

Sterling Bank Plc has announced a post-tax profit of N5billion for the year ended December 31, 2010. This is against the previous year’s N7.2 billion loss.

The bank, according to the results, which has been approved by the Nigerian Stock Exchange (NSE), sustained its profitability achieved in the third quarter driven by improved margins and control in operating costs. “At 21 per cent, the bank’s Return on Average Equity is in the first rank percentile among all banks,” the bank said in a statement.

Speaking on the bank’s results, Group Managing Director, Yemi Adeola, said: “I am glad to report our full year performance, which was in line with our expectations and consistent with broad sector performance and wider economic trends.

‘’A stronger balance sheet position arising from the clean up in 2009, reduced funding costs, and supportive government policies, in particular, the take-off of the Asset Management Company of Nigeria (AMCON) served to re-ignite confidence in the banking sector.

“We were able to grow our loans by 25 per cent and reduce non-performing loans by 44 per cent through a combination of loan recovery and sale of impaired assets to AMCON.

“Sterling Bank’s business fundamentals provide reassurance on the validity of our business model and execution capabilities on the strategy, albeit tempered by exogenous factors including low interest rates and lower asset yields.

“Refining our strategy and strengthening our capital position through the infusion of long-term debt were also major items on our management agenda in 2010. Leveraging that improved capital position as a basis for supporting institutional profitability is a key priority for our management team in the coming months and we expect to see the payoff in 2011.”

Other highlights of the results indicated that balance sheet size total assets grew 25 per cent to N277.1 billion from N221.3 billion, spurred by slightly improved economic conditions

Similarly, deposits grew 26 per cent to N203.1 billion from N161.3 billion in 2009, reflecting slight market share gains, while net loans and advances (including advances under finance lease) grew 25 per cent to N103.8 billion from N82.9 billion in 2009.

Gross earnings, however, declined by eight per cent to N34.3 billion from N37.4 billion in 2009 (annualised) as a result of the low interest rate regime that obtained for the greater part of the year.

Funding costs also declined 33 per cent to N11.1 billion from N16.5 billion in 2009 (annualised) feeding through a 32 per cent improvement in net interest margins.

It is the same for operating expenses, which reduced by 11per cent to N15.8 billion from N17.7 billion in 2009 (annualised) – reflecting progress in the bank s cost discipline and efficiency programmes introduced in 2009.

Non-performing loans reduced by 44 per cent from N22.8 billion in 2009 to N12.9 billion, resulting from progress in loan recovery and the transfer of delinquent assets to AMCON.

Cost-to-Income ratio (including allowances for risk assets) was 76 per cent (211per cent in 2009), while earnings per share rose to 40kobo from a loss per share of 72kobo in 2009.

Also, net interest margin rose to 56percent (39per cent in 2009); return on average equity, which was 27per cent in 2009 stood at 21per cent last year, while liquidity ratio stood at 47 per cent as against 50per cent in 2009.

Capital Adequacy Ratio also improved from 12 per cent in 2009 to 13 per cent last year.

e previous year’s N7.2 billion loss.

source : The Nation