WITH a major focus on three key market segments: small and medium scale businesses (lending and deposit products and financial advisory services), public sector (collections and ancillary services and mid-cap infrastructure finance), and consumer banking (asset-based and personal finance), Sterling Bank PLC, the one-customer bank, is committed to becoming one of the sectoral leaders in the years ahead as current industry indicators manifest. Sterling Bank’s Managing Director and Chief Executive Officer, Mr. Yemi Adeola, worked in Citibank, Nigeria, for about 15 years and was an Executive Director, Commercial Banking, Public Sector & Infrastructure, from April 1999 to June 2003. His robust profile at this prefatory point will stamp an inalienability of authority on this rather unique profiling-cum-recognition in profundity of journalistic rarity.
In addition to running commercial banking, he handled many cross-border transactions in Public Sector & Infrastructure, focusing mainly on structured deals and project finance. He was also at different times the Chief Legal Counsel/Company Secretary, Head of Compliance and Head of Public & External Affairs. Prior to joining Citibank, Mr. Adeola worked for a year at Price Waterhouse as a consultant and was a lecturer in Business and Contract Law in both University of Benin and Lagos State University, my MBA alma mater. Mr. Adeola obtained his LLB Hons. in 1982 and was the best Final Year Student. He subsequently got his LL.M in 1985, focusing on the Law of Secured Credit Transactions and International Economic Law. He was called to the Nigerian Bar in 1983. This unassuming banker was instrumental to the development of the valucard project in Nigeria.
He joined Trust Bank of Africa Limited as the Deputy Managing Director in June 2003, a position he held until he was appointed an Executive Director in Sterling Bank in January 2006.
This merger and acquisition master-strategist, who, conversely speaking, presides over a consortium of six unified banks, is happily married and has children. For Yemi (in accordance with first-name tradition in Sterling Bank), there are no limitations to achieving goals. You may rightly ask, which bank is humble and taciturn Yemi going to acquire next? AMCON and time will tell! If you meet Yemi, without being told, you will never know that this is the country’s most successful financial institutions “polygamist”. It speaks volumes of his noble simplicity, humility, warmth and, of course, brilliance.
Sterling Bank PLC, a merger of five banks in 2005, has always been driven by a passionate vision to be a major player on the Nigerian banking landscape. This goal has been achieved today due to dogged determination rather than by chance.
Right from inception, the audacious goal of attaining the top five positions in terms of deposit size, asset size, profitability and revenue base in the Nigerian financial services industry by 2010 was set and this has driven the bank’s business since 2005. Sterling Bank has metamorphosed from being a marginal player to a Tier II bank worthy of reckoning in the industry. This achievement is a product of careful planning and deliberate steps driven by a well-articulated vision.
This bank has remained true to its initial vision and has made significant strides in strengthening weak areas while exploiting unforeseen opportunistic events. Every business segment has its areas of strengths and weaknesses, which have continually been reviewed over the years to ensure better profitability. However, based on its evaluation of its strengths and weaknesses, the bank’s focus has been on efficiency and profitability. In the last two years, scale and asset quality has been imperative for increased efficiency and profitability in the Nigerian banking industry. Sterling Bank has recorded significant progress in these areas with one of the best returns on equity.
A notable area being reviewed however is efficiency, which has made it embark on automation of its processes, and to exploit the Central Bank of Nigeria shared services initiative to improve relative efficiency. Furthermore, efforts are being intensified to grow the bank’s retail base in order to reduce funding cost given the current high interest rate environment. Initiatives aimed at sustaining its achievements and improving on areas needing attention are continuously being made in line with the bank’s strategy to guarantee maximum returns for all stakeholders.
In Nigeria, public trust for the industry has been fickle over time due to mismanagement of some banks over the years. While the 2005 bank recapitalization provided increased economies of scale and better synergies across complementary financial services business lines, it exposed the industry to systemic risks among others.
Sterling Bank has always believed in and acted professionally by adhering to regulatory dictates and provisions, which is why it could be certified healthy during the 2009 CBN stress tests. This one-customer bank upholds all moral standards and its staff have always conducted themselves in line with best banking practices, both locally and globally.
Its way of doing business since the establishment of new prudential guidelines following the crisis has not radically changed. However, the bank’s risk management framework is more robust and has been further strengthened in the wake of the crisis. This helped it better achieve its objective of being the bank of choice when it comes to professionalism and ethical conduct.
I believe other banks like Sterling would have also strengthened their risk management framework in line with new regulatory requirements and to avoid a repeat of the 2009 crisis. For structural changes, the requirement for divestment from non-core banking subsidiaries has also necessitated a change in the structure of a number of banks. The CBN has approved a mono-line commercial banking licence for Sterling Bank and the bank has divested from all its subsidiaries as required by the CBN regulation. This provides it an opportunity to focus on its area of core competence and achieve better results.
Furthermore, it has been part of the bank’s strategy to increase scale as that is expected to be a game changer in the nation’s banking terrain. This, among other factors, was responsible for the acquisition and merger with former Equitorial Trust Bank (ETB) Limited.
Regarding growth, there are economic cycles and return to that point of experiencing double-digit growth rate may occur in the next five, 10 or 15 years. Notwithstanding, one fact is that there is a commendable development in the Nigerian banking industry with better strengthened risk management frameworks and non-performing loans at record low levels (less than 5%) while a gradual increase in lending to the private sector is being recorded. The banking sector has been positioned to record high growth rates, even as Yemi may not be able to ascertain if it will reach high double-digit growth recorded in the last decade shortly.
To aid the achievement of its five-year goals, the top three priorities of the bank over the next one year are to ensure increased cost efficiency with a commendable cost-to-income ratio, to achieve acceptable returns on equity and to deliver unparalleled service. Sterling Bank is professional in its operations and adheres strictly to regulatory provisions. Its risk management team is very experienced and corporate governance is upheld in every facet of the bank. All these have been intensified with higher expectations in view of the prudential guidelines released in May 2010. Its enterprise Risk Management Unit has been made more robust and staffed with the highest quality of human resource armed with the required experience and expertise.
Given the outlook for a tight monetary stance by the CBN in view of various inflationary pressures, Yemi does not foresee a drop in lending rates, which may negatively affect some businesses.
Unfortunately, some businesses may have to close down due to high operational cost, some may get more creative and devise new sources of profitability in business while the latter may limit operations to available fund, which may rub off on growth projections and expected profitability.