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+--- Thread: Sterling Bank grows profit to N8.02b in Q3 (/showthread.php?tid=41116)
Sterling Bank grows profit to N8.02b in Q3 - Edoman - 11-23-2020
Sterling Bank grows profit to N8.02b in Q3
November 23, 2020
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STERLING Bank Plc grew pre-tax profit to N8.02 billion in the third quarter as the commercial bank continued to leverage on operating efficiency to mitigate the disruptions caused by COVID-19 and tough operating environment.
Key extracts of the interim report and accounts of Sterling Bank for the nine-month period ended September 30, 2020 released yesterday at the Nigerian Stock Exchange (NSE) showed that pre-tax profit rose to N8.02 billion in third quarter 2020 as against N7.65 billion recorded in comparable period of 2019.
The bank reported a trading income of N7.1 billion for the third quarter 2020 compared with N1.9 billion for the corresponding period of 2019, representing an increase of 264.7 per cent. Gross earnings stood at N106.07 billion in 20202 as against N109.66 billion in 2019. After taxes, net profit closed third quarter 2020 at N7.37 billion as against N7.58 billion in third quarter 2019.
The third quarter performance came on the background of prevailing uncertainties that characterised the macro-economic environment in the wake of the outbreak of the COVID-19 pandemic and the attendant fiscal reforms by the Federal Government.
Managing Director, Sterling Bank Plc, Mr. Abubakar Suleiman said the bank’s performance continued to reflect positive results of its strategic decisions and investments in focus areas as it continued to record significant improvement in both funding and operational costs.
According to him, with economic activity picking up in the third quarter, following the gradual ease in the nationwide lockdown, the bank had continued to leverage on its existing remote work policy to enhance workforce productivity while ensuring uninterrupted service delivery to both existing and new customers.
He noted that a 26.2 per cent dip in fee income occasioned by the downward review of electronic banking fees, and slower loan origination due to the protracted lock down was moderated by a 264.7 per cent spike in trading income.
He said growth in balance sheet was driven by a 26.5 per cent growth in low cost funds, which saw the bank’s CASA mix improve to 71 per cent from 60 per cent, delivering a 6.6 per cent growth in customer deposits.
“Our cash and short-term balances increased in line with the higher regulatory reserves while interest income also declined by 6.7 per cent, which was offset by a 17.0 per cent decline in interest expense. This delivered a 120 basis points drop in cost of funds and, consequently, a 100 basis points increase in net interest margin,” Suleiman said.
He added that in terms of asset quality, the bank proactively increased its cost of risk by 100 basis points to 1.9 per cent, while recording a marginal increase in non-performing loan (NPL) ratio to 2.9 per cent, well below its target of 5.0 per cent.
He explained that the decline in operating expenses was achieved by moderating administrative expenses despite growth in other operating expenses, including Asset Management Corporation of Nigeria (AMCON) and insurance fees.
He pointed out that the bank was able to maintain a strong capital and liquidity position of 16.1 per cent and 32.5 per cent respectively above regulatory benchmark.