Sterling
Bank Plc, a full service national commercial bank, has reported a trading
income of N7.1 billion for the third quarter ended September 30, 2020 compared
with N1.9 billion for the corresponding period of 2019, representing an
increase of 264.7 percent.
The bank made remarkable financial performance despite the 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.
In
his remarks on the impressive performance, Mr. Abubakar Suleiman, Managing
Director and Chief Executive Officer (MD/CEO) of the bank said, “With economic
activity picking up in the third quarter, following the gradual ease in the
nationwide lockdown, we continued to leverage on our existing remote work
policy to enhance workforce productivity while ensuring uninterrupted service
delivery to both existing and new customers.
Our
performance continues to reflect positive results of strategic decisions and
investments in our focus areas as we continued to record significant
improvement in both funding and operational costs. Overall, we delivered a 7.2
percent increase in operating income and a profit after tax of N7.37 billion
despite prevailing uncertainties around the COVID-19 pandemic and recent fiscal
reforms.”
The
CEO said, a 26.2% 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% spike in trading income. He said growth in
balance sheet was driven by a 26.5 percent growth in low-cost funds, which saw
the bank’s CASA mix improve to 71 percent from 60 percent, delivering a 6.6
percent 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 percent, which was offset by a 17.0 percent decline in interest expense.
This delivered a 120 bps drop in cost of funds and, consequently, a 100-bps
increase in net interest margin.
Suleiman
noted that in terms of asset quality, “We proactively increased our cost of
risk by 100 bps to 1.9%, while recording a marginal increase in NPL ratio to
2.9%, well below our target of 5%”
He
explained that the decline in OPEX was achieved by moderating administrative
expenses despite growth in other operating expenses, including AMCON and
insurance fees.
The
CEO said the bank was able to maintain a strong capital and liquidity position
of 16.1 percent and 32.5 percent respectively above regulatory benchmark,
adding that overall the bank delivered a profit after tax of N7.37 billion for
the 9-month period.
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