Investors & Analysts Presentation Q1 2020
Disclaimer ▪ This presentation has been prepared by Sterling Bank Plc (hereafter refereed to as “Sterling Bank”, “the Bank”, “We”) . It is intended for an audience of professional and institutional investors who are aware of the risks of investing in the shares of publicly traded companies. ▪ The presentation is for information purposes only and should not be construed as an offer or solicitation to acquire, or dispose of any securities or issues mentioned in this presentation. ▪ Certain sections of this presentation reference forward-looking statements which reflect Sterling Bank’s current views with respect to, among other things, the Bank’s operations and financial performance. These forward- looking statements may be identified by the use of words such as ‘outlook’, ‘believes’, ‘expects’, ‘potential’, ‘continues’, ‘may’, ‘will’, ‘should’, ‘seeks’, ‘approximately’, ‘predicts’, ‘intends’, ‘plans’, ‘estimates’, ‘anticipates’ or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. In other cases, they may depend on the approval of the Central Bank of Nigeria, Nigerian Stock Exchange, and the Securities and Exchange Commission. ▪ Accordingly, there are or may be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Sterling Bank believes these factors include but are not limited to those described in its Annual Report for the financial year ended December 31, 2019. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release. ▪ Sterling Bank undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. 2
Content 1. Performance Snapshot (Q1 2020) 2. Operating Performance (Q1 2020) 3. 2020 Guidance 4. Appendix
Financial & Non-Financial Highlights Our performance in the first quarter highlights the strengthening of our financial position on the assets and liabilities sides Financials (N’ millions) Ratings Total Assets Loans & Advances Customer Deposits CASA Deposits 1,232,323 627,122 898,576 578,246 B2 B- 4.1% 1.4% 0.7% 7.5% from FY 2019 from FY 2019 from FY 2019 from FY 2019 Gross Earnings Net Interest Income Total Assets Operating Expense Profit After Tax 32,916 15,449 16,560 2,065 6.7% 3.5% 8.3% 36.3% BBB BBB+ from Q1 2019 from Q1 2019 from Q1 2019 from Q1 2019 Key Ratios Channels NPL Cost of Risk USSD Professional 0.8% 2.0% POS ATM Branches Customers Users Staff LDR Coverage Ratio 69.8% 268.7% Liquidity CAR 32.1% 14.3% Cost of Funds 5.1% 10,667 858 >1.1M 161 >3M 2,401 4
Performance snapshot (1/2) We recorded a 6.7% and 36.3% decline in our top-line and bottom-line earnings due to a decline in interest income and growth in OpEx, in spite of an18.4% drop in interest expense 28,397 5
Performance Snapshot (2/2) Rise in customer deposits and other financial liabilities continue to drive growth in total assets and liabilities during the period 4.1% Total Assets ( N’b ) 1,231 1,183 1,103 1,072 834 627 619 621 598 60 468 51 43 28 269 31 269 256 260 18 181 18 16 17 15 258 225 174 139 161 2016 2017 2018 2019 Q1 2020 Cash & short term investments Fixed Assets Government Securities Other Assets Loans & Advances Total Liabilities & Equity ( N’b ) 1,231 1,183 1,103 1,072 834 919 893 696 761 609 103 98 115 47 38 120 13 86 75 42 45 87 43 213 120 44 15 82 83 79 2016 2017 2018 2019 Q1 2020 Borrowings Debt Securities Other Liabilities Equity Deposits 6
Content 1. Performance Snapshot (Q1 2020) 2. Operating Performance (Q1 2020) 3. 2020 Guidance 4. Appendix
Revenue Evolution We sustained growth in net-interest income despite a decline in interest income, driven by lower funding costs as we continue to ramp up our retail deposits Interest Income Non- Interest Income Gross Earnings ( N’b ) 6.7% Non - Interest Income Q1 2020 0% 13% Interest Income 22% 1% 13% 39.8 23% 9% 35.3 32.9 8 22% 5 28.6 5 25.5 3 64% 6 78% 77% 75% 32 31 28 Q1 2019 25 20 due to Cash & Cash Eqv. Fees and commission income due to Loans & Advances Net trading income due to Investment Securities Other operating income Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020 3.5% Revenue drop driven by a 7.8% decline in interest ▪ Net - Interest Income ( N’b ) income, while non-interest income grew marginally by 0.9%; Growth in non-interest income hindered by a ▪ 15.5 15.0 decline in Fees & Commission income following the 13.5 downward review of electronic banking fees by the 12.4 11.4 CBN however offset by a 126.2% growth in net trading income; Consequently we recorded a 2.9% growth in ▪ operating income. Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020 8
Funding & Liquidity (1/2) Increased traction in the mobilization and retention of low-cost deposits contributed to a 18.4% decline in interest expense, as we continue to drive funding costs down Customer Deposits ( N’bn ) 0.7% Q1 2020 FY 2019 899 892 8% 9% 70 78 761 75 244 284 554 27% 234 47% 32% CASA:64% CASA:60% 49% 79 140 121 90 188 55 438 417 361 16% 14% 233 2017 2018 2019 Q1 2020 Current Savings Term Pedged Total Cost of Funds (%) We continued to improve the quality of our funding ▪ base, with current and savings (CASA) deposits 7.4% 7.4% growing by 7.5% contributing to the growth in customer deposits to reach N898.6bn while we 6.3% 6.3% recorded an improved CASA mix of 64% during the 5.1% quarter; Consequently, cost of funds declined further by 150 ▪ bps to 5.1% as net interest margin improved to 7.7% (7.8% FY 2019); The bank continued to maintain a healthy liquidity ▪ position at 32.1% above minimum regulatory requirement 9 2016 2017 2018 2019 Q1 2020
Funding & Liquidity (2/2) Overall, we maintained a healthy capital position well above regulatory limits Equity ( N’b ) 3.6% 119.8 115.7 101.7 97.8 85.7 56 50 37 44 22 7 6 8 6 43 43 43 43 43 14 14 14 14 14 (3) 2016 2017 2018 2019 Q1 2020 Share capital Share premium Retained earnings Others Items ( N’mn ) Mar. 2020 Dec. 2019 % Growth Shareholders funds declined by 3.6% to N115.6 ▪ Tier 1 capital* 82,829 82,494 0.41% billion (FY 2019: N119.6 billion) driven by decline in Comprehensive Income as a result of losses from Tier 2 capital ** 23,612 27,498 (14.13%) debt and equity instruments; 106,440 109,992 (3.23%) Total regulatory capital Overall, the Bank’s capital adequacy ratio stood ▪ at 14.32% as at March 2020. 743,063 748,119 (0.68%) Risk-weighted assets Tier 1 ratio 11.15% 11.03% 0.12% 3.18% 3.68% (0.50%) Tier 2 ratio Capital adequacy ratio 14.32% 14.70% (0.38%) Notes: *Tier 1 capital includes ordinary share capital, share premium, retained earnings, intangible assets, and other regulatory adjustments relating to items that are included in equity but are treated differently for capital adequacy purposes. **Tier 2 Capital includes qualifying subordinated liabilities, allowances and element of the fair value reserve relating to unrealized gains on equity instruments classified as Fair Value Through Other Comprehensive Income. 10
Loans and Advances by Sector Consumer loans portfolio moderated downwards during the quarter. As the impact of the Covid-19 pandemic increases the risk profile, we maintained cautionary lending to this segment Gross Loans & Advances by Sector Mar-2020 Dec-2019 Growth Sectors N'm % of Total N'm % of Total % Agriculture 49,388 7.7% 50,477 8.0% (2.2%) Communication 15,427 2.4% 15,505 2.5% (0.5%) 40,572 45,932 Consumer 6.3% 7.3% (11.7%) 680 783 Education 0.1% 0.1% (13.2%) Finance and insurance 28,020 4.4% 28,922 4.6% (3.1%) Government 69,224 10.8% 68,078 10.8% 1.7% 5,180 5,754 Manufacturing 0.8% 0.9% (10.0%) Mortgage 3,382 0.5% 4,407 0.7% (23.3%) 57,006 58,998 Oil & Gas – downstream 8.9% 9.3% (3.4%) Oil & Gas – upstream 82,244 12.8% 80,081 12.7% 2.7% 90,880 76,336 Oil & Gas – Services 14.2% 12.1% 19.1% Others 39,605 6.2% 42,349 6.7% (6.5%) 24,519 23,875 Power 3.8% 3.8% 2.7% Real Estate & Construction 67,206 10,5% 70,383 11.1% (4.5%) Transportation 39,211 6.1% 37,777 6.0% 3.8% 28,027 25,038 Non-interest banking 4.4% 4.0% 11.9% TOTAL 640,672 100.0% 631,698 100.0% 1.4% 11
Recommend
More recommend
