Sterling Bank Anticipates N3bn Profit First Three Months in 2022
As the financial year 2021 winds down, Sterling bank Plc has estimated gross earnings of N43.015 billion for the first quarter of 2022, with its profit available for distribution a little more than 7%.
Sterling Bank Plc has forecasted a profit after tax of N3.066 billion for the first quarter of the financial year 2022, according to the latest regulatory filing.
In a report obtained from the Nigerian Exchange, the bank recently obtained approval in principle to separate its non-interest banking business from conventional banking operations.
With the move to properly integrate the Islamic banking services as a separate unit under the bank’s holding structure, Sterling bank ranks among financial services operators to watch in the future.
Detail of the tier-2 lender earnings forecast obtained by MarketForces Africa shows that the bank is expecting gross earnings to print at N43.015 billion in the first three months in the coming years.
Based on projected profit for the period over its gross earnings, the bank would see returns of 7.13%.
The tier-2 lender is expecting interest income to print at N32.391 billion in the period, while disbursements to fund providers is expected to settle at N13.881 billion.
According to the estimate, Sterling bank plans to book a sizeable impairment charge on its weak credit asset. In the first quarter, the bank sees an impairment charge at N2.680 billion.
With an expectation that other income lines would contribute N10 billion to the bank’s gross earnings, Sterling bank sees net operating income for the period at about N26.5 billion in the first quarter of 2022.
For the period, pre-tax profit for the bank is estimated at N3.33 billion. Moody’s said its affirmation of Sterling’s B2 long-term deposit ratings reflects the affirmation of the bank’s b3 BCA, an expectation of a high probability of government support, leading to one of uplift from the BCA, according to rating agency note.
It said Sterling’s b3 BCA reflects the bank’s stable deposit-based funding, modest capitalization (relative to local peers) and high local currency liquidity.
However, the firm noted that these strengths are moderated by the challenging operating environment in Nigeria, combined with the bank having high credit concentrations and foreign currency loans, modest profitability and relatively low foreign currency liquidity, according to Moody’s latest rating, with a stable outlook.
Moody’s said the bank also has a large exposure to government debt securities at 151% of its tangible common equity as of June 2021. In September, Fitch said the Tier-2 lender has a fairly small franchise, representing 3% of domestic banking-system assets at end of the financial year 2020.
Its single-borrower concentration was noted to be on the high side, with the 20-largest customer loans representing 53% of gross loans at end of the first half of 2021.
Sterling bank oil and gas exposure has reduced in recent years but remains material, representing 26% of gross loans in the first half of 2021, according to the rating note,
And this exposure is concentrated in the upstream and services segments, posing a significant risk to asset quality in the event of a prolonged period of low oil prices and production cuts, Fitch said. # Sterling Bank Anticipates N3bn Profit First Three Months in 2022
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