Sterling Bank posts N5.4 billion profit for Q3 2022

Sterling Bank Plc delivered an N5.4 billion profit for Q3 2022, marking a 43% increase from the N3.8 billion profit reported in the comparable period last year.

The company’s latest earnings report, seen by Nairametrics, shows that net interest income grew by 25% to N21 billion from the N16.7 billion recorded for Q3 2021.

During the period under review, Sterling Bank increased its interest income to N31 billion from N28 billion, thanks to debt instruments at amortized cost as well as loans and advances to customers. The bank also cut down on interest expenses to N10 billion from N11.7 billion.

Net fees and Commission income rose to N5 billion from N4.6 billion. The increase was driven by facility management fees, account maintenance fees, commission & similar income fees and the E-business commission and fees.

Other Operating income for the period recorded N2.9 billion from N1.6 billion, driven by expansion in rental income, other sundry income gains on disposal of property, plant, and equipment as well as cash recoveries on previously written-off accounts. As a result, the overall operating income for the period stood at N31 billion compared t N25.7 billion during the period.

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Sterling Bank increased wages and salaries as well as defined a contribution plan to trigger an increase in personnel expenses for the period.

Similarly, other operating expenses were valued at N6.97 billion compared to N5.5 billion in the previous year. This is a result of the increase in AMCON surcharge, contract services, insurance, and other professional fees.

Sterling Bank’s AMCON surcharge for Q3 stood at N2.29, an increase from N1.85 last year. The amount represents s the Bank’s contribution to a fund established by the Asset Management Corporation of Nigeria (AMCON) Act. Effective 1 January 2013.

Meanwhile, Sterling Bank’s total expenses stood at N23 billion from N12 billion, and the company’s profit before income tax was N5.7 from N3.8 billion.

However, increased costs of sales and other expenses led to a loss for the period to the tune of N3.1 billion, compared to N2.2 billion same time last year. This is a result of a reduction in volume momentum following a strong first half of the year.

The company’s unaudited financial statement for three months ended 30th September shows that International Breweries saw a jump in its cost of sales for the period amid rising inflation.

During the period, the cost of sales was valued at N38 billion, a 17% high from the N33 billion in the same period last year, while the gross profit stood at N10 billion, from N13 billion in the same period last year. Similarly, other expenses grew significantly to N1.3 billion, from N131 million in Q3 last year.

The company, in a statement, however, said its volumes declined in the third quarter of 2022 due to a soft industry and ongoing supply chain constraints.l

Hugo Rocha, the company’s managing director, attributed the development to ongoing supply chain constraints, and the impact of inflation on consumers’ disposable income in the last three months.

He states, “The last three months have been characterized by elevated inflationary pressure, which has had an impact on consumers’ disposable income. The period experienced especially severe weather with a longer rainy season and floods in key markets. However, despite the difficult quarter, we remain focused on our winning commercial strategy. Year-to-date, our brands remain resilient and continue to deliver volume growth. We remain committed to returning to profitability and creating value for our stakeholders.”

Rocha also stated that International Breweries remained resilient during the period, led by the company’s core brands, premium portfolio, and innovation. “As part of our ‘Beyond Beer’ strategy, we launched ‘Flying Fish’ during the quarter to address incremental occasions and consumer needs. This has been well received and continues to gain acceptance in the market,” he said.

Eduardo Caceres, finance director, noted that the brewer’s top line grew by 5.6%, driven by its revenue management initiatives. Gross profit and margins declined on elevated costs largely due to higher energy prices, FX illiquidity, commodity costs headwinds, severe weather, and overall inflationary pressures, maintaining that the company remains EBITDA positive on the back of prudent resource allocation and cost management.

According to Caceres, “Year-to-date, top-line grew by double-digit and revenue management initiatives in the first half of the year. We continue to grow beer volume and gain share driven by our core and premium brands. We remain positive about the industry’s outlook and remain confident in the future growth of our business and will continue to invest and strengthen our brand portfolio across all segments.”