Sterling Bank to raise N35b new capital in H2

The management of Sterling Bank Plc at the weekend said the commercial lender is concluding arrangements to raise N35 billion tier 2 capital in the second half of this year.

Sterling Bank had recently backed down from acquiring Keystone Bank Limited, citing lack of strategic fit.

But management of Sterling Bank at the weekend said the bank would focus on concluding a N35 billion capital raising in the next five months.

Managing Director, Sterling Bank Plc, Yemi Adeola, said the bank remained committed to its plan to conclude its N35 billion tier 2 capital raising.

The capital raising comes on the background of the first half results of the bank, which showed improvements in assets quality and cost efficiency. But the top-line and bottom-line contracted due to industry and operating headwinds.

Read also: Skye Bank receives N100bn lifeline from CBN

The report for the period ended June 30, 2016 showed that gross earnings dropped to N50.06 billion in first half 2016 as against N55.04 billion in comparable period of 2015. Profit before tax dropped to N4.4 billion  as against N6.1 billion while profit after tax declined from N5.4 billion to N4.0 billion.

Adeola said the bank would in the second half of the year continue to prioritize operating efficiency and ensure moderate loan growth; while continuing to diversify funding sources as our retail banking strategy gains traction.

As the Nigerian economy and the banking industry struggled with fiscal and monetary challenges that saw inflation and foreign exchange at their worst in many years, Adeola pointed out that the bank has remained irrepressible as demonstrated by the strength of its core business.

According to him, the bank prioritized improvement in asset quality which was reflected by a 70 basis point decline in the non-performing loans and a 100 basis point reduction in cost of risk. Cost of funds also declined by 120 basis points to 4.7%. This was in spite of the foreign exchange liberalization policy, the attendant liquidity squeeze and the rising inflation rate which peaked at 16.5 per cent in June 2016.

“Although, some of the macroeconomic challenges witnessed during the first half of the year will persist, we expect improvements in the Nigerian economy, driven by the implementation of the budget and other fiscal palliatives introduced by the Federal Government,” Adeola assured.

 

 

 

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