Sterling Financial Holding Company Plc reported a 20.4% year-on-year growth in net profit for the first half of 2026, as expanding interest-earning assets and wider interest margins offset a sharp increase in credit loss provisions.
Profit after tax reached ₦50.3 billion for the six months through June 30, supported by a 41.0% increase in Net Interest Income (NII) to ₦137.4 billion. Total interest income surged 33.7% year-on-year to ₦223.6 billion, driven by a 26.4% expansion in interest-earning assets and a 100-basis-point yield expansion to 17.9%.
Gross customer loans grew 31.8% year-on-year to ₦1.6 trillion, generating ₦153.6 billion in interest revenue—representing 68.7% of total interest income.
Cost of Funds Rises on Investment Account Returns
Interest expenses expanded 23.6% year-on-year to ₦86.2 billion. While interest paid on customer deposits remained the primary cost component—up 13.8% to ₦59.3 billion—funding costs were predominantly driven upward by a 2.1x surge in payout distributions to investment account holders, which reached ₦12.8 billion.
Consequently, the overall cost of funds increased to 4.6% compared to 4.2% in H1 2025. Despite the elevated funding costs, Net Interest Margin (NIM) widened by 110 basis points to 11.0%.
Non-interest revenue (NIR) grew 23.3% year-on-year to ₦56.0 billion:
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Commodity Trading: Revenue from direct commodity trading more than doubled to ₦12.1 billion from ₦5.6 billion in H1 2025.
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Fee Income: Net fee and commission income rose 21.8% year-on-year.
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Trading Income: Net trading income contracted to ₦7.0 billion from ₦13.0 billion recorded in the prior-year period.
Impairment Spike and Capital Dilution
Group operating efficiency improved during the period, with the cost-to-income ratio (CIR) falling 5.5 percentage points to 59.0% as operating income growth outpaced a 23.8% rise in overheads (₦114.0 billion).
However, credit risk metrics deteriorated markedly. Driven by a 59.2% quarter-on-quarter increase in provisions during Q2 2026, total loan loss charges for H1 2026 jumped 357.5% year-on-year to ₦23.9 billion. This pushed the group’s cost of risk (CoR) to 3.1%, up from 1.0% in H1 2025.
Annualized Return on Average Assets (ROAA) edged up to 2.3% (from 2.2%). Conversely, annualized Return on Average Equity (ROAE) moderated to 20.6% (from 24.6% in H1 2025) as capital expansion from recapitalization enlarged the equity base at a faster rate than net earnings growth.
Earnings per share (EPS) declined 13.5% to ₦0.77 due to a 39.7% increase in the weighted average number of outstanding shares.
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