Sterling Bank has announced plans to change its current operating structure to a holding company structure.
Asue Ighodalo, Chairman, Sterling Bank Plc, disclosed this at the bank’s annual general meeting held yesterday May 5th in Lagos.
The new holding structure will group the commercial bank and its other subsidiaries under a Holding Company (HoldCo).
In 2010, the Central Bank of Nigeria under the banking regulatory regime repealed the universal banking regime and directed banks to divest from all non-banking business or form a holding company to hold such non-core banking businesses including activities such as insurance, asset management, and capital market operations.
Interestingly, many banks opted to sell or divest from non-core commercial banking businesses while, some banks such as First City Monument Bank (FCMB) Plc, First Bank of Nigeria (FBN) Plc and Stanbic IBTC Bank Plc decided to operate under the Holding Company (HoldCo) structure.
What shareholders stand to gain
Ighodalo said the bank decided to retain its net earnings for the previous business year because of additional capital required to finance the bank’s growth ambition and its proposed holding company structure.
He further revealed that retaining a substantial amount of profit generated to strengthen available capital will be in the long-term best interest of shareholders
The bank in its Q1 2018 financial reports for the year ended 31st March 2018 recorded 39% surge in gross earnings of 39 billion as against 28 billion in the Q1 2017. Profit before tax also grew from 2 billion in Q1 2017 to 3.2 billion in Q1 2018.
The bank in its 2017 financial reports said it would enhance revenue from its digital and electronic banking. Mobile and USSD banking grew 174% year on year while internet banking adoption also grew 96% year on year
Though the bank has reduced its loans to the oil and gas sector slightly, it holds a large amount of these loans exposures in foreign currency hence, making the bank vulnerable in the event of a sharp depreciation in the naira.
The Non-Performing Loan NPL Ratio of the bank as at 31st March 2018 is 5.97% compared to 6.20% in December 2017. Its share price is ₦1.55 as at today on the floor of the Nigerian Stock Exchange.
Sterling Bank Plc, (formerly known as NAL Bank Plc) was the pioneer merchant bank in Nigeria. It was established on 25 November 1960, as a private limited liability company, and was converted to a public limited liability company in April 1992.
The Bank currently has seven segments; Corporate Banking, Retail Banking, Commercial Banking, Institutional Banking, Treasury, Non-interest Banking (NIB) and Sterling SPV which are the Bank’s strategic business units and has 163 branches and cash centers as at 31st March 2018.
