By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-Nigerian mid-tier lender, Sterling Bank Plc is awaiting the approval of the Securities and Exchange Commission (SEC) to raise N20 billion fresh capital via private placement (PP).
Abubakar Suleiman, chief financial officer (CFO) of the bank disclosed this Friday to InvestAdvocate at an analyst/investor presentation for the first quarter (Q1) of 2014 to business editors in Lagos Nigeria.
Suleiman said if the bank gets SEC’s approval as planned; it will commence the placement by July and close September 2014.
‘’We are expecting the approval of the private placement by SEC and if all things works according to plans, we will open the placement in July and close September 2014,’’ he said.
Similarly, the Sterling Bank’s CFO said there are also plans to issue $200 million of “multi-currency subordinated debt” by June this year.
He affirmed that the fresh funds would enable the bank grow capacity in its area of operations, provide credit facility to businessmen, open 40 new branches and employ 800 new staff to help drive growth in the bank.
However, the analyst/investor presentation for Q1 of 2014 made available to InvestAdvocate shows the bank in its financial year 2014 expects to grow deposits to 29 percent, while its loan growth is to increase 25 percent during the 2014 financial year.
Sterling Bank is projecting a cost-to-income ratio of 68 percent, a double-digit growth in earnings of 20 percent, and return on average earnings (ROAE) increase by 20 percent as well.
The Bank in the presentation said it currently has a stronger capital base of N71 billion, a growing active customer base of one million (1.0 million) and already in a strong growth phase of three percent market share by assets.
Other key highlights of the bank in its analyst/investor presentation for Q1 2014 is excellent asset quality by 1.8 percent non-performing loan (NPL) ratio, expanding retail foot print which consists of 168 branches, 300 ATMs and 5,000 POS.
Sterling Bank said its key strategic initiatives for 2014 financial year include completion of its capital raising exercise, upgrade of its physical infrastructure to reflect the retail look and feel, rolling out conventional and alternative channels to deepen market penetration of its products, and the commencement of private banking business targeted at high net worth individuals.
Others are rolling out its agency banking model to drive financial inclusion, the launch of one-education initiative targeted at the education sector value chain, deployment of a new core banking application to fully enhance service delivery to its customers and strengthening of performance management system for sales and back-office workforce to improve staff productivity.
A performance review of the Nigerian mid-tier lender Q1 2014 report showed that post tax profit grew 15 percent to N3.137 billion in Q1 2014 from N2.723 billion in the same period of 2013.
Pre tax profit also climbed up 17 percent to N3.542 billion in the review period of 2014 from N3.020 billion in the corresponding period of 2013.
While, gross earnings rose 24 percent to N24.621 billion in the Q1 of 2014 from N19.844 billion in the Q1 period of 2013.
Sterling bank said in the analyst/investor presentation for the Q1 of 2014 that earnings was driven by interest income, which rose by 31 percent and accounted for 76 percent on the back of an increase in lending activities.
It also said that net interest margin improved by 240 basis points (BPs) to 7.6 percent from 5.2 percent in Q1 2013 driven mainly by 210 basis points increase in yield on earnings assets.
Suleiman further affirmed that operating income rose 34 percent to N16.2 billion from N12 billion in Q1 2013 due to a 58 percent increase in net interest income.
“Growth in net interest income was boosted by a 31 percent growth in interest income relative to a modest increase of eight percent in interest expense. Increase in operating expenses was driven by ongoing investments in branch refits and expansion in addition to an increase in AMCON surcharge,’’ he said.
