Sterling profit rises 21% but restated earnings per share decline

Sterling Financial Holdings increased nine-month profit after tax by about 21% to N75.37 billion, but its restated earnings per share declined, showing that the rise in group profit did not translate into a matching improvement for each share. The unaudited results were disclosed through the Nigerian Exchange on 28 October.

For investors, the result contains both an operating gain and an ownership calculation. Net interest earnings expanded strongly, while the comparison for individual shareholders must account for the company's changed share structure and the basis on which prior figures were restated.

Interest income grows faster than funding expense

Sterling's interim group statement shows interest income of N353.78 billion and interest expense of N147.88 billion. Net interest income reached N205.90 billion, against N143.04 billion a year earlier.

BusinessPress calculations put the increase in net interest income at approximately 44%. That is stronger than the roughly 35% growth in interest income because the cost of funding grew more slowly. It is evidence of improved earnings from the spread between income-producing assets and the obligations used to finance them.

This calculation is not the bank's net interest margin, which requires average earning assets and the relevant period adjustment. Confusing the growth rate of net interest income with a margin would overstate what can be inferred from the income statement alone.

Tax absorbs a larger part of pretax growth

Group profit before tax rose to N97.28 billion from N70.96 billion. The tax charge increased to N21.91 billion from N8.66 billion, leaving net profit at N75.37 billion against N62.30 billion.

The figures imply pretax profit growth of about 37%, considerably faster than the increase in profit after tax. They also imply a tax charge equivalent to roughly 22.5% of pretax profit, against about 12.2% in the comparative period.

Those are calculations from the reported totals, rather than a claim that a single tax rate changed. The composition of taxable income and accounting adjustments can affect an effective tax burden. The practical implication is that shareholders should not project pretax growth directly into distributable earnings without considering the tax line.

The share reconstruction needs a like-for-like comparison

Sterling reported basic earnings per share of N11.35, compared with a restated N12.82. Both periods reflect the one-for-ten share reconstruction effective on 8 October, the filing says.

That represents a decline of approximately 11.5% on the stated restated basis. It would be misleading to compare the new figure with an old, unadjusted per-share amount and describe the resulting multiple as growth.

A reconstruction changes the number of shares into which ownership is divided; it does not, by itself, create an equivalent increase in the underlying company's economic value. The separate fact that total profit rose while restated earnings per share fell demonstrates why the number of shares supporting the comparison matters. A shareholder's assessment needs both measures.

Credit quality remains a separate test from earnings

The group disclosed a non-performing loan ratio of 4.6%, against 4.7% at December 2025. Its gross earnings reached N454.94 billion, compared with N341.67 billion in the corresponding nine-month period.

The modest reduction in the loan ratio should not be read as a complete measure of credit risk. The ratio can move because of changes in both impaired loans and the wider loan book. It does not establish that every borrower has improved or that future credit charges will fall.

For businesses seeking finance, higher bank income is also not evidence that borrowing costs have eased. Lending terms depend on funding, borrower quality, collateral and the proposed use of funds. The release establishes group performance, rather than a new offer of cheaper credit.

Group profitability is distinct from the holding company's cash

Sterling's consolidated figures include its subsidiaries, while the parent company's separate accounts describe a different legal entity. Investors assessing future distributions need to consider how profits and cash can move within that structure.

These interim results cover the period to September and do not constitute a new dividend announcement. The useful follow-through is whether wider net interest earnings remain supported by collections and sound asset quality, and whether the growth in aggregate profit produces stronger comparable earnings for shareholders after the effects of the share base and taxation.