Sterling Holdings’ Pre-Tax Profit Soars By 97% In 2024

Sterling Financial Holdings Company Plc has reported an outstanding performance in 2024, with pre-tax profit surging by 97.21 percent to N44.753 billion, driven by a 67.09 percent increase in net interest income.

This growth was primarily fuelled by higher interest income from loans and advances to customers, which accounted for 68 percent of total interest income.

Gross earnings rose by 54.21 percent to N328.349 billion, with interest income contributing 79 percent of this figure, highlighting the company’s strong reliance on its core lending business.

However, the bank is also diversifying its income streams, as evidenced by a 128 percent surge in interest income from securities, which now represents 27 percent of total interest income.

The bank’s loan portfolio expanded by 23.22 percent to N1.104 trillion, reflecting robust lending activity. At the same time, asset quality improved significantly, with loan impairments declining by 33.36 percent to N8.028 billion, indicating better risk management and a healthier credit environment. This combination of loan growth and reduced impairments bodes well for future profitability.

On the funding side, customer deposits grew by 39.37 percent to N2.568 trillion, reflecting strong liquidity. However, interest expenses on these deposits rose by 74 percent, highlighting rising funding costs.

This trend, coupled with a 403 percent surge in interest expenses on bank deposits, suggests that Sterling is facing increased competition for funds and higher interest rates. While the bank has managed to maintain profitability, investors should monitor net interest margins (NIMs) to ensure that rising funding costs do not erode earnings over time.

Operating expenses increased by 38.05 percent to N145.194 billion, consuming 76 percent of net operating income after impairments. This indicates elevated cost pressures, which could challenge profitability if not managed effectively.

Despite this, the bank achieved a 73.84 percent increase in profit after tax to N37.522 billion, with earnings per share (EPS) rising by 72 percent to N1.29.

Shareholders’ funds also grew by 55.67 percent to N285.814 billion, supported by a 129.24 percent increase in share capital and share premium. Retained earnings surged by 69 percent to N71.76 billion, providing flexibility for future dividend payouts or reinvestment in growth opportunities.

In terms of market performance, Sterling’s stock delivered a 30.54 percent return in 2024, following a stellar 206 percent return in 2023. However, the stock has shown slower momentum in early 2025, with a 3.57 percent return as of January’s close. Investors should assess whether the bank’s growth trajectory can be sustained amid changing market conditions, particularly in light of rising funding costs and competitive pressures.

Sterling Financial Holdings demonstrated strong revenue growth, improved asset quality, and robust profitability in 2024. However, rising funding costs and operational expenses warrant close attention. The bank’s ability to manage these challenges while capitalising on its lending and investment activities will be critical to maintaining its growth momentum and delivering value to shareholders.