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Sterling Bank could only achieve  6.9 per cent  profit after tax during the first half (H1) ending June 30, 2015  despite gross earnings growth of 11.45 per cent to N55 billion from N49.4 billion in H1 2014 due to declining efficiency among other.

Specifically, while the bank’s profit before tax inched up by 1.43 per cent from N5.97 billion to N6.06 billion, and profit after tax rose by 6.9 per cent to N5.4 billion in H1 2015 as against N5.1 billion in H1 2014, its basic earnings per share was in a decline at 19.8 per cent to 19 kobo from 23 kobo recorded in H1 2014.

The analysis revealed that the gross earnings growth was driven by a 33.2 per cent increase in investment and other operating income at N15.2 billion from N11.4 billion in H1 2014.

The bank’s Statement of financial position showed that deposit appreciated 15 per cent to N638.3 billion from N556.3 billion in 2014. Total Assets increased 14.1 per cent to N834.0 billion as against N731.1 billion in the same period of 2014, as shareholders’ funds rose 39 per cent from N63.8 billion to N88.4 billion in 2015.

Even though net assets increased 12 per cent to N745.6 billion from N667.3 billion, the bank’s asset performance via its return on assets showed a reduction to 0.7 per cent from 0.8 per cent realized for half year 2014.

Reduced efficiency in operations was also evident in the group’s 11 per cent decline in net-interest income, from N21.8 billion to N19.4 billion as a slight growth of 0.43 per cent witnessed in the bank’s operating expenses from N24.1 billion to N24.2 billion led to a decrease in cost –to-income ratio from 72 per cent in 2014 to 70 per cent in the period under review.

Despite improved profit for the bank, its return on equity too dropped to 6.14 per cent from 8.7 per cent recorded in 2014, whereas loan to deposit ratio which measures lending institution’s ability to cover withdrawals made by its customers, rose to 60 per cent in 2015 from 58 per cent in H1 2014.

The bank’s capital adequacy ratio at 15 per cent is well above the minimum requirement by the Central Bank of Nigeria.

The bank registered on the Main Board of the Nigerian Stock Exchange under the financial services sector has market capitalization of N61.3 billion and 28.7 billion shares outstanding. Its share price recorded no change during the last trading session at N2.13.

By Pita Ochai


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