Sterling Bank Plc delivered a roundly impressive performance in 2011 as net profit rose by 60 per cent to N6.7 billion, placing the bank as one of the best-performing banks in a period characterised by lower earnings.
Audited report and accounts of Sterling Bank for the year ended December 31, 2011 released at the weekend showed robust growths in incomes and profitability as well as improvements in assets quality and returns.
Gross earnings rode on the back of 110 per cent growth in non-interest income and 23 per cent growth interest-based incomes to N45.2 billion in 2011 as against N30.4 billion in 2010, indicating an increase of 49 per cent. Interest income had increased from N24.5 billion in 2010 to N30.2 billion.
Operating income also grew by 32 per cent to N27.0 billion in 2011 compared with N20.4 billion in 2010. Profit after tax and extra-ordinary income thus jumped by 60 per cent to N6.7 billion in 2011 as against N4.2 billion in 2010.
The bank emerged with a stronger and healthier balance sheet as the proportion of bad loans to total loans and advances surpassed the Central Bank of Nigeria (CBN)’s industry target of 5.0 per cent at 4.8 per cent. Non-performing loans had stood at 10.7 per cent of gross loans in 2010.
Sterling Bank’s total balance sheet nearly doubled from N259.6 billion in 2010 to N504.4 billion in 2011. Total deposits doubled by 104 per cent to N406.5 billion as against N199.3 billion while the bank expanded its risks assets as net loans and advances rose by 60 per cent to N163.5 billion from N101.9 billion in 2010.
Market analysts said the performance demonstrated the thoroughness and success of the bank’s acquisition of Equitorial Trust Bank (ETB). Nearly all other banks that had undertaken mergers and acquisitions during the period ended with decline in profit or outright losses.
Several banks, which were not involved in business combinations also witnessed declines in net earnings or outright losses due to provisions for bad loans.
A cleaner balance sheet and impressive growth in net profit set Sterling Bank apart from banks’ results so far. Further analysis showed a robust performance outlook. Return on average equity increased from 17 per cent in 2010 to 20 per cent. Liquidity ratio improved from 47 per cent to 64 per cent while capital adequacy ratio improved from 13 per cent to 17 per cent.
The sterling performance has impacted positively on payouts to shareholders with the board recommending distribution of about N1.6 billion as cash dividends to shareholders, representing a dividend per share of 10 kobo.
With opening market consideration of N1.20 at the weekend, the dividend per share of 10 kobo represents a dividend yield of 8.3 per cent, a strong attraction that has since triggered upward rally for Sterling Bank since Thursday when the dividend recommendation filtered into the stock market.