Increase in loan provisions jerk up Sterling Bank NPL to 8.7% – MD

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The Managing Director, Sterling Bank Plc, Mr. Abubakar Suleiman has said the lender increased provisions on stressed loans jerk up its Non-Performing Loan (NPL) to 8.7per cent in 2018.

The bank had reported 6.2per cent NPL ratio in 2017, which is above the Central Bank of Nigeria (CBN) five per cent threshold.

According to him, with economy recover, the bank is expected to recover the bad loans in coming years.

Responding to Nigerian NewsDirect enquire via text message during the weekend, the MD of the bank said, “Regarding NPL, Sterling Bank has increased its provisions on stressed loans and hope to recover most of it in the coming years as the economy improves.”

Findings by Nigerian NewsDirect revealed that the bank in 2018 financial year reported negative retained earnings of about N3.2 billion as against N6.99 billion reported in 2017.

Despite reporting 2.9 per cent increase in total assets to N1.10 trillion in 2018, the bank’s negative retained earnings dragged the bank’s total equity to N97.8 billion in 2018 from N101.6 billion in 2017.

Responding on negative retained earnings, he said, “The adjustment in retained earnings is due to the implementation of International Financial Reporting Standards (IFRS9) which became effective in 2018 as well as increased provisions.”

He however explained further that,   “The repayment of deposit from other bank is a result of significant growth in retail deposits, enabling the bank to repay expensive wholesale deposits while increasing its liquidity ratio to more than 40per cent.”

On this, the Bank reported no deposit from other financial institutions in 2018 as against N11.05 billion reported in 2017, while liquidity ratio moved from 35.3 per cent in 2017 to 42.2 per cent in 2018.