Sterling Bank Posts N11.24 Billion Profit in FY2020
Sterling Bank Plc posts N11.24 billion profit after income tax for financial year 2020 amidst pandemic-induced economic stress, rising from N10.602 billion recorded in 2019.
Following its improved profitability, the bank Board of Directors proposed to pay 3 kobo on shares outstanding.
Falling by 7.5%, lender’s gross earnings performance underperformed analysts expectation having printed at N138.9 billion in the financial year ended December 2020 from N150.2 billion in the comparable period in 2019.
Reduction in gross earnings came as net interest income decline year on year due to low interest rate environment, both interest income and related expenses fell in 2020.
The bank earnings from interest yielding assets fell to N111.452 billion in 2020 from N127.291 billion in 2019. As expected, interest payment to providers of funds also nosedived N49.305 billion from N62.592 billion – reflecting low interest rate environment.
The audited financial statement showed that lender’s operating income from the year expanded N89.592 billion from N87.603 billion a year ago. This was helped by reduced payment to funds provider as lender reprice terms deposit.
Due to the pandemic, impairment on credit losses expanded to N7.906 billion from N5.838 billion in the prior year, raising the bank cost of risk by 10 basis points to 1%.
But despite lockdown, the bank’s personnel expenses stayed up at about N15 billion. Financial statement detailed a miniscule drop from N14.912 billion for full activities in 2019 to N14.841 billion at the time banking halls were closed for two quarters.
Surprisingly, other operating expenses jerked up to N21 billion from N18.075 billion in 2019, though general administrative expenses dropped off N3 billion.
The reduction along this income statement line item was driven by reduced administrative, office and advertisement expenses.
Commenting on the results, the bank’s Chief Executive Officer (CEO), Abubakar Suleiman said: “2020 was an extraordinary defined by the global pandemic. COVID-19 disrupted society and severely impacted economic activities.
“And during the year, we channeled our resources towards empowering our stakeholders to respond to the unprecedented disruption while supporting them to adapt to new banking methods through novel platforms like OneBank and Pay with Specta.”
Reflecting market dynamics influenced by the pandemic, the managing director said Sterling Bank’s NIBSS Instant Payments and transaction volume grew by 89.4% compared to the previous year on the back of investments in digital platforms.
“As a result, the bank achieved a 6.0% growth in profit after taxes to reach N11.2 billion, a development that underpins a 13.5% growth in shareholders’ funds in a pandemic year.
“The bank’s gross earnings moderated by a 12.4% decline in interest income as yields trended low. Interest expense declined by 21.3%, resulting in a 160 basis points drop in the cost of funds; this was driven by a 39.5% year-on-year growth in low-cost customer deposits.
“The bank also ensured that the cost-to-income ratio declined year-on-year to 77.4% as it recorded a 2.5% drop in operating expenses despite rising inflationary pressures.”
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Sterling Bank Posts N11.24 Billion Profit in FY2020
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