Sterling Bank Bucks The Trend On Interest Income, Still Suppressing NPLs

By Emmanuel Aziken, Editor

In a period when several others in the competition including the Tier 1 banks saw a flattening of net interest income, Sterling Bank Plc has bucked the trend with a double-digit rise in net interest income in its nine-month results released on Tuesday.

While the bank alluded to impressive indicators including a fall in Non-Performing Loans to 7.4%, critical stakeholders will nevertheless consider the level of risk as still well above recommended industry average.

In the nine-month period the bank posted net interest income growth of 19.3 per cent to N47.53 billion up from N39.83 billion recorded in the corresponding period of 2018.

The bank in the statement in Lagos said that the double-digit net interest income growth was driven by 200 per cent growth in its retail and consumer loans portfolio.

The astronomic increase in its loan portfolio may have put the bank in the unenviable position of keeping loan delinquency under control, a feat it has managed by bringing NPLs down to 7.4% despite the 200% growth in the loan portfolio.

It attributed the rise in interest income to what it described as “the bank’s innovative digital lending platform, supported this growth with volumes averaging N8 billion per month, reaching over 40,000 individuals as at Q3, 2019.”

Rivals in the industry had in the face of stagnated growth in interest income made advances in commissions and fees.

Commenting on the financial performance, Mr. Abubakar Suleiman, the bank’s Chief Executive Officer, said that the performance was due to strategic decisions and investment in focus areas.

“Our performance continues to reflect positive results of strategic decisions and investments in our focus areas.

“We recorded significant improvement in transaction led revenue and our funding base riding on adoption of digital channels.

“Going into the final quarter, we will continue to take a customer-centric approach to achieving growth and enhance our digital capacity to further support the business, while remaining focused on exceeding our performance in the previous year,” he said.

He said that the bank recorded a 7.7 per cent improvement in operating income of N65.49 billion during the period under review against N60.82 billion in the corresponding period of 2018.

Other financial highlights showed that customer deposit rose to N853.55 billion during the period under review against N760.6 billion in the corresponding period of 2018, an increase of 12.2 per cent.

Loans advanced to customers grew to N635.093 in 2019 from N621.017 billion in 2018, representing a growth of 2.3 percent.

In the same way, shareholders’ funds rose to N109.54 billion during the period under review in 2019 compared to N97.80 billion reported for the corresponding of 2018, representing a growth of 12 per cent.

Operating income after impairment rose by 1.3 per cent to N61.583 billion compared with N60.82 billion in September 2018.

Further analysis also showed that non-performing loans dropped to 7.4 per cent during the review period from 8.7 per cent in the corresponding period of 2018, representing an improvement of 14.6 per cent.

 And For More Nigerian News Visit GWG.NG