August 17, 2026/CSL Report
Sterling Financial Holdings Company Plc delivered a strong performance in H1 2026, with strong growth in both Interest and Non-Interest Income. However, the impact was partly offset by a significant increase in impairment charge. Interest Income grew by 33.7% y/y to ₦223.6 billion (bn), from ₦167.1bn in H1 2025, supported by continued balance sheet expansion and asset repricing. Net Interest Income (NII) grew even faster, rising 41.0% y/y to ₦137.4bn from ₦97.4bn, reflecting improved net interest margins.
Non-Interest Income also performed well, with Net Fee and Commission Income up 21.8% y/y to ₦26.9bn, supported by growth in facility management, account maintenance, and e-business income. We forecast full-year Net Fee and Commission Income of ₦53.7bn, up from ₦43.7bn in FY 2025. Total Operating Expenses grew by 23.8% y/y to ₦114.0bn, comfortably below the 35.4% y/y growth in Operating Income, resulting in an improvement in the Cost-to-Income Ratio to 59.0% from 64.5% in H1 2025.
However, asset quality weakened materially, as Credit Loss Expense surged 357.5% y/y to ₦23.9bn, resulting in a sharp increase in annualised Cost of Risk to 3.0%, from 0.9% in H1 2025. At its current P/B multiple of 0.96x, Sterling trades at a marginal discount to the peer median P/B of 0.98x (Wema Bank: 1.74x, Fidelity Bank: 0.98x, FCMB: 0.69x). We place a Hold recommendation on the stock and set our target price at ₦7.31 per share, implying a potential downside of 5.0% from the current market price of ₦7.70 per share.
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