Sterling Bank posts N4.2bn half year profit

Sterling Bank Plc has announced a profit before tax of N4.2bn for the half year ended June 30, 2010, indicating a great recovery from a loss of N6.9bn in the corresponding period of 2009.

The profit, according to the results which was obtained from the Nigerian Stock Exchange (NSE), was made from gross earnings of N16.3bn, down by 12 per cent from N18.5bn in 2009. However, there was a reduction of 33 per cent in the cost of funds from N8.8bn to 5.9bn.

Also, Sterling Bank’s operating expenses decreased by 8 per cent from N8.4bn to N7.7bN, while cost-to-income ratio fell from 87 to 75 per cent – reflecting progress in the implementation of cost saving strategies and improved efficiency.
Liquidity ratio and Capital Adequacy Ratio were 39.7 and 14.1 per cent respectively, while annualised Return on Average Equity was 34.2 per cent.
Commenting on the results, the MD/CEO, Sterling Bank, Mr. Yemi Adeola, said “We are impressed by these numbers.

Coming from our position last year, Sterling Bank had some ground to recover and we are doing just that. There is still some way to go but overall, we are very pleased to show that the Bank is making excellent progress just as we said we would in our first quarter result.”

He said the bank has sustained the drive of its first quarter performance to make solid recovery in the second quarter.
“These results show a return to positive trends in the bank’s businesses, which were temporarily disrupted by the unique circumstances of 2009. The latest results are proof that the implementation of its strategic and operational review, as a result of last year’s economic downturn, is succeeding. An unrelenting focus on efficiency and asset quality standards underpin the Bank’s performance in the first six months of the year.”
Corroborating Adeola, Executive Director of the bank, Mr. Devendra Puri, said “The second half of the year should reinforce the trend we have seen in the first six months. Internally, we will remain focused on efficiency and keeping our cost-income match within an acceptable range.

“Our results show that the structural improvements we introduced in the bank last year are bearing desired results. Externally, we expect to see growth in net loans and advances as well as a lifting of the pressure on interest margins driven by events in the wider economy with a payoff on earnings and shareholder returns.

“By and large, we are confident that Sterling Bank will continue to consolidate on the gains of the first half of the year.”
Speaking of the economic context of the bank’s performance, Executive Director, Alh. Garba Imam, said that the performance in the second quarter builds on the performance of the first quarter.

He expressed optimism that President Goodluck Jonathan’s assent to the Assets Management Corporation of Nigeria (AMCON) bill will facilitate a resolution of problem loans allowing banks to improve their capital positions as well as clean up balance sheets.

“We expect this to induce some amount of risk taking and consequently move the sector closer to normalized lending conditions” Imam said.