Sterling Financial Holdings Company Plc commenced the 2025 fiscal year with a robust financial performance in the first quarter, demonstrating significant growth and profitability. The company reported a profit after tax of N17.2 billion for the three months ended March 31, 2025, representing a remarkable increase of more than double the N7.5 billion recorded in the same period of the previous year. This impressive performance was primarily driven by a substantial surge in interest income, a key indicator of the company’s core business activities, which underscores the effectiveness of its lending and investment strategies. The increase in profitability also reflects the company’s ability to manage its expenses despite a challenging economic environment, thereby solidifying its position within the financial services sector.
A closer examination of Sterling Financial’s financial results reveals the key drivers behind its strong performance. The company’s interest income experienced a substantial rise of 42%, climbing from N55.3 billion in Q1 2024 to N78.4 billion in Q1 2025. This significant increase in interest income directly translated to a surge in net interest income, which reached N47.4 billion, a substantial improvement from N27.2 billion in the prior year. This upswing in net interest income highlights the efficacy of the company’s lending operations and its ability to effectively manage the spread between interest earned on assets and interest paid on liabilities. Furthermore, the company’s overall operating income saw a marked increase to N64.3 billion compared to N42.9 billion in the previous year, further solidifying the positive trajectory of its financial performance.
Contributing to the growth in operating income were notable increases in net fees and commission income, as well as other operating income streams. Net fees and commission income rose to N10.1 billion from N7.1 billion in Q1 2024, indicating an expansion in the company’s fee-based services and its ability to capitalize on non-interest income opportunities. Other operating income also contributed positively to the overall financial results, increasing to N3.9 billion from N1.6 billion, further diversifying the company’s revenue base and enhancing its financial resilience. These positive developments in non-interest income streams underscore the company’s strategic focus on diversifying its revenue sources and reducing reliance on traditional lending activities.
While revenue streams experienced significant growth, Sterling Financial also faced increasing operating costs, reflecting the challenges of a dynamic operating environment. Total operating costs rose by 32% to N43.6 billion in Q1 2025, up from N33.0 billion in Q1 2024. Key contributors to this increase were personnel expenses, which climbed to N10.6 billion from N6.6 billion, and general and administrative expenses, which rose to N14.4 billion from N11.1 billion. The rise in these expense categories likely reflects investments in human capital, expansion of operations, and inflationary pressures impacting general business costs. Managing these expenses effectively will be crucial for maintaining profitability in future quarters.
Despite the increase in operating costs, the impact on the bottom line was mitigated by the robust growth in revenues and a relatively stable level of credit loss expenses. Credit loss expenses on financial assets, an important indicator of asset quality and risk management, experienced a modest increase to N2.4 billion from N1.8 billion in the corresponding period of the previous year. However, this increase was not significant enough to offset the positive impact of the revenue growth, allowing the company to achieve substantial profit growth. This indicates a relatively stable credit portfolio and effective risk management practices within Sterling Financial.
The overall positive performance of Sterling Financial was reflected in key profitability metrics. Earnings per share, both basic and diluted, improved significantly to 38 kobo from 26 kobo a year earlier. This increase in EPS signifies enhanced shareholder value and underscores the company’s ability to generate returns for its investors. Furthermore, the growth in earnings per share aligns with the overall narrative of strong financial performance observed across the company’s income statement. This robust performance positions Sterling Financial well for future growth and reinforces its commitment to delivering value to its shareholders. However, the company will need to continue monitoring and managing its operating expenses to ensure sustained profitability in the coming quarters.
Furthermore, a review of Sterling Financial’s balance sheet reveals a picture of steady growth and a strong capital position. Total assets increased modestly to N3.64 trillion as of March 31, 2025, from N3.54 trillion at the end of 2024. This growth in total assets indicates an expansion in the company’s overall business activities, particularly in its lending and investment portfolios. Loans and advances to customers, a key driver of interest income, rose to N1.15 trillion, signifying increased lending activity and contribution to the company’s revenue growth. Simultaneously, customer deposits, a crucial source of funding for the company, increased to N2.58 trillion, reflecting growing customer confidence and a strong deposit base.
Cash and balances with the Central Bank of Nigeria stood at N864 billion, only slightly lower than the N867 billion recorded at the end of 2024. This maintains a healthy liquidity position for Sterling Financial, providing the company with the financial flexibility to manage its operations and pursue growth opportunities. Moreover, the company’s equity base strengthened to N321.4 billion as of March 31, 2025, up from N305.2 billion at the end of the previous year. This increase in equity further solidifies Sterling Financial’s capital position and provides a strong foundation for future growth and expansion.
Analyzing Sterling Financial’s cash flow statement provides further insights into the company’s financial activities during the quarter. The company experienced a net cash outflow from operating activities of N157.4 billion, a significant change from the net inflow of N126.9 billion in Q1 2024. Sterling Financial attributed this change to variations in operating assets and liabilities, indicating shifts in working capital management and potentially increased investments in its core business operations. A deeper dive into the specifics of these changes would provide a clearer understanding of the underlying drivers.
Investing activities resulted in a net cash outflow of N103.9 billion, primarily due to increased purchases of debt instruments and other investments. This suggests a strategic allocation of capital towards potentially higher-yielding investments, aligning with the company’s objective of maximizing returns for its shareholders. Monitoring the performance of these investments will be crucial for evaluating the effectiveness of this strategy. Finally, financing activities saw a net cash outflow of N69.1 billion for the quarter, mainly driven by repayments of borrowed funds. This reflects prudent financial management and a focus on reducing debt obligations, which strengthens the company’s overall financial stability.
In conclusion, Sterling Financial’s first-quarter results for 2025 showcase robust financial performance driven by substantial growth in interest income and other operating income streams. While the company faced increased operating expenses, its strong revenue growth and effective management of credit risk resulted in a significant increase in profit after tax. The company’s balance sheet indicates a healthy financial position with growth in assets, loans, and customer deposits, while its strengthened equity base provides a solid platform for future growth. The cash flow statement provides a detailed view into the company’s operational, investment, and financing activities, highlighting key shifts in cash flows compared to the previous year. Overall, Sterling Financial’s Q1 2025 performance reflects a positive start to the fiscal year and positions the company well for continued success in the dynamic financial services landscape. However, continued attention to cost management and effective capital allocation will be crucial for maintaining this positive momentum. Moreover, further analysis of the drivers behind changes in operating cash flow and the performance of new investments will provide a more comprehensive understanding of the company’s financial health and prospects for the future.
