Sterling Bank grows shareholders’ fund by 22%

By Chioma Obinagwam

Shareholders of Sterling Bank Plc, Nigeria’s leading commercial bank have commended its financial performance and dividend payout for the financial year ended December 31, 2019. They gave the commendation at the 58th Annual General Meeting (AGM) of the bank held virtually by proxy and streamed live from the MUSON Centre in Lagos.

Speaking at the meeting, Mr. Boniface Okezie, President, Progressive Shareholders Association noted that “Our bank’s Annual General Meeting is always a day of celebration; a day to give kudos to the board, management and entire workforce for their hard work. But we are constrained by COVID-19 and cannot roll out the drums to celebrate the achievement of our bank today. All the same, we thank the board and management for the impressive outing in 2019 and the dividend recommendation.

“Looking at performance highlights, the bank has done a lot to grow our assets to N1.182 trillion. Loans and advances have also grown, operating income has grown, and our deposit base should hit N1 trillion by next year. We commend the board for retaining earnings, protecting shareholders’ funds, and ensuring there is no insider abuse as it relates to loans. We are happy that our bank is at the forefront of the fight against COVID-19 and keeping the environment clean through its support for Lagos State Waste Management Agency (LAWMA).

Also speaking, Sir Sunny Nwosu, National Coordinator Emeritus of the Independent Shareholders Association of Nigeria (ISAN) appreciated the increase in the bank’s demand deposit which went up by 47 percent and described it as “quite good.”

As a shareholder who is also a customer of the bank, Sir Nwosu was full of appreciation for the way employees of the bank attend to customers and expressed the hope that this excellent service delivery would continue to differentiate Sterling Bank post-COVID-19.

Mr. Nonah Awoh, a shareholder, commended the bank for its level of financial disclosure. He said, “I don’t think it is out of place to have payments of external assessors stated. I want other companies to learn from Sterling Bank and do the same.”

Also, Mr. Gbenga Idowu, National Coordinator of Shareholders United Front (SUF), commended the bank’s strategic focus on the HEART sectors, affirming the importance of these critical sectors to national growth and development in the wake of COVID-19 pandemic. Mr. Idowu urged the bank to remain committed to these critical sectors, most especially agriculture, which he described as the future of the country. The HEART sectors are Health, Education, Agriculture, Renewable Energy and Transportation.

Mr. Mathew Akinlade, President, Noble Shareholders Association also commended the bank for bringing down its Non-Performing Loans (NPL) ratio from 8.7 percent in 2018 to 2.2 percent in 2019, a development which he described as below the benchmark of five percent prescribed by the Central Bank of Nigeria. He lauded the bank for compliance which reduced penalties for contraventions in 2019 by 73.3 percent compared to 2018.

Addressing the shareholders at the meeting, Chairman of Sterling Bank Plc, Mr. Asue Ighodalo said the bank’s shareholders’ fund grew by 22.2 percent to N119.6 billion because of increase in retained earnings despite the challenging operating environment under which it operated during the financial year ended December 31, 2019.

The Chairman said the recorded growth in total equity was attributable to growth in comprehensive income arising from gains recorded from investments in debt securities. He added that the Board of Directors recognised the importance of dividends to its shareholders and constantly sought to balance this with capital requirements to support the bank’s next wave of growth.

“Accordingly, the Board recommends the payment of three kobo per share as dividend for the year ended December 31, 2019 to reward our loyal and committed shareholders. This affords the bank the required buffer to finance its growth ambitions, and effectively become a first-class, stronger, creative and extremely dependable financial institution,” he said.

Ighodalo said, “A direct contribution of our investments in technology and intelligent automation can be seen in the performance of SPECTA -Nigeria’s fastest digital retail lending platform.”

He said SPECTA, “remained the major source of incremental lending, contributing to the growth of the bank’s core business and offering over N45 billion in loans to individuals and small business owners in 2019 alone. This represents over 200 percent growth in loans given to the bank’s retail and consumer segment compared to 2018.”

The chairman explained that the bank consolidated its efforts in the mobilization of deposits during the review period, thereby recording a 17.4 percent growth in deposit base to N893 billion from N761 billion.

He said the bank, “achieved a higher growth of 19.4 percent in the mobilisation of low-cost current and savings accounts deposits, maintaining a 60 percent (CASA/total deposit) deposit mix during the year,” adding that the development contributed largely to improved cost of funds from 7.4 percent in 2018 to 6.3 percent.

He observed that, although the bank’s earnings grew only marginally by one percent to N150.2 billion, it was able to deliver 12.5 percent growth in profit before tax and 15 percent growth in profit after-tax at N10.6 billion; despite 12 percent increase in operating expenses.

He attributed the growth in operating expenses to increased investments in human capital and technology, reflective of the bank’s transformation journey and desire to further motivate and upskill employees of the bank.

In his comments, Chief Executive Officer (CEO) of Sterling Bank, Mr. Suleiman Abubakar, noted that, “For a bank to succeed in these uncertain times, it must be agile, cautious, innovative, knowledgeable and prepared.”

He added that the bank’s unwavering commitment to a more disciplined deployment of scarce capital and the strength of its retail business contributed to a 15 percent growth in profit after tax to N10.6 billion.

On the future prospect of the bank, he said, “we have laid a sound foundation for 2020 with significant investments in technology to accelerate our digitisation,” adding that the bank will serve customers with empathy and knowledge on their own terms.

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