`

DataPro Limited 6th Floor, Ashakun House

13-15 Lake Street Off Broad Street, Lagos. G. P. O. Box 1189, Marina

Lagos – Nigeria. (234-1-4542803, 709-811-9962

È234-803-309-1467 Email:info@datapronigeria.net

dataprong@gmail.com Website:www.datapronigeria.net

June, 2015

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DataPro

Sterling Bank Plc

Sterling Rating Report

2015Rating Report

Sterling Bank Plc

This report is provided by DataPro subject to the terms & condition stipulated in our Terms of Engagement

CORPORATE CREDIT RATING

References Abiodun Adeseyoju, FCA. Abimbola Adeseyoju Oladele Adeoye

EVALUATION VALID TILL: June 30, 2016

Long Term Rating: BBB+

Short Term Rating: A2 Previous Rating: BBB+

Rating Outlook: Stable Trend: Up Currency: Naira

FINANCIAL HIGHLIGHTS

2014 2013 2012 2011 2010 N’000 N’000 N’000 N’000 N’000

Gross Earnings 103,679,220 91,742,770 68,856,815 45,698,415 30,386,957

Profit Before Tax 10,747,985 9,310,198 7,449,651 5,640,306 3,688,251

Shareholders'Funds 84,715,285 63,457,896 46,642,394 41,057,336 27,523,641

Deposit Liabs 655,944,127 570,511,097 463,726,325 392,049,881 160,964,394

Loans & Advances 371,246,273 321,748,748 229,420,874 162,063,156 102,820,980

Total Assets 824,539,426 707,797,181 580,225,940 504,048,213 260,693,282

RATING EXPLANATION

The Short term rating of A2 indicates Fair Credit Quality and adequate capacity for timely payment of financial commitments.

The long term rating of BBB+ indicates Slight Risk. It shows fair financial strength, operating performance and business profile when compared to the standards established by DataPro. This bank, in our opinion, has the ability to meet its ongoing obligations, but its financial strength is vulnerable to adverse changes in economic conditions. …………………………………………………………………………………………………………………………….. This report does not represent an offer to trade in securities. It is a reference source and not a substitute for your own judgment. As far as we are aware, this report is based on reliable data and information, but we have not verified this or obtained an independent verification to this effect. We provide no guarantee with respect to accuracy or completeness of the data relied upon, and therefore the conclusions derived from the data. This report has been prepared at the request of, and for the purpose of, our client only and neither we nor any of our employees accept any responsibility on any ground whatsoever, including liability in negligence, to any other person. Finally, DataPro and its employees accept no liability whatsoever for any direct or consequential loss of any kind arising from the use of this document in any way whatsoever.

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Sterling Bank Plc

Sterling Rating Report

2015Rating Report

RATING SYNOPSIS

The ratings took into consideration all relevant qualitative and quantitative factors to arrive at the assigned risk indicator. The qualitative information used was based on industry and market intelligence including public perception. The quantitative information was obtained from the company’s audited and management accounts. The risk factors were assessed using the company’s capitalization, earnings profile, liquidity, quality of assets and sustainability of subject’s current healthy profile in the medium to long term period. Overall, the following were observed: Strengths • Stable Management

• Good Capitalization

• Strong Asset Quality

Weakness • Concentration risk in

loan portfolio

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Sterling Bank Plc

Sterling Rating Report

2015Rating Report

BACKGROUND

The Bank began operation in 1960 as the pioneer Merchant Bank in Nigeria under the name Nigeria Acceptance Limited (NAL) Bank. It went public and became listed on the Nigerian Stock Exchange in the year 1992. Following the recapitalization directive of CBN in the year 2004, NAL Bank combined it business with four (4) other banks namely: Indo-Nigerian Bank (INMB), Magnum Trust Bank, NBM Bank and Trust Bank of Africa to form Sterling Bank Plc. Sterling Bank divested from its non-core business following the repeal of Universal Banking practice by Central Bank of Nigeria (CBN) in 2010. The Bank however, acquired Equitorial Trust Bank Limited in the year 2011 to enhance its business spread. The services of the Bank include; consumer banking, trade, corporate and investment banking. It also provides wholesale banking which includes granting loans and advances, letters of credit transactions, equipment leasing, money market operations, electronics banking products and other banking activities. The bank increased its retail service channels during the year under review. These channels are 174 branches, 630 ATMs and 3,200 POS terminals. The shareholding structure of the bank increased from 86,727 (Yr. 2013) to 87,119 (Yr. 2014). As at December 2014, foreign participation in the bank’s shareholding was 34% through State Bank of India & Silverlake Investments Ltd. The shareholding structure is as presented:

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Sterling Bank Plc

Sterling Rating Report

2015Rating Report

Analysis of Shareholding Structure State Bank of

India 9%

Dr. Mike Adenuga

6%

Si lverlake Investment

25%

Es say Investment Ltd

5%

STB Bui lding Soci ety

4%SNNL/AMCON6%

Others 46%

Source: Sterling Bank Plc

KEY FINANCIAL INDICATORS

Item

Year

Gross Earning

N’M

PBT N’M

Equity N’M

Deposit Labs N’M

Loan & Advances

N’M

Total Assets

N’M

2014 103,679 10,748 84,715 655,944 371,246 824,539

2013 91,743 9,310 63,458 570,511 321,744 707,797

2012 68,857 7,500 46,642 463,726 229,421 580,226

2011 45,698 5,640 41,057 392,050 162,063 504,048

2010 30,387 3,688 27,524 160,964 102,821 260,693

Source: Sterling Bank Audited Accounts

Sterling Bank recorded growth in all its key financial indicators for the year 2014. Gross Earnings, Profit Before Tax and Equity grew by 13%, 15% and 34% respectively. Also, Deposit Liabilities and Loans & Advances went up by15% each while total assets increased by 17%. The growth achieved during the year was due to the improvements in its retail business supported by successful capitalization program during the year 2013 and 2014. The bank raised N19.1b capital through private placement during the year 2014. This is in addition to the N12.9b raised in the year 2013. Sterling Bank maintained stable management team with slight changes to its board membership during the year. The board

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2015Rating Report

comprises of individuals with considerable experience in banking and other related businesses. The following served on the board during the year 2014; Mr. Asue Ighodalo - Chairman, Mr. Yemi Adeola – Managing Director/CEO, Mr. Aderemi Rasheed Kolarinwa, Ms. Olufunmilola Osunsade, Omolara Akanji, Tamarakare Yekwe, Raghavan Karthikeyan, Olaitan Kajero, Tairat Tijanni, Mr. Adeyinka Abdulwaheed Adeola, Mr. Lanre Adesanya, Kayode Lawal and Abubakar Suleiman.

►Mr. Asue Ighodalo- Chairman Mr. Asue Ighodalo is a Partner in Banwo & Ighodalo, a leading corporate and commercial law firm in Nigeria, which he founded in partnership in 1991. His core practice areas are corporate finance, capital markets, mergers and acquisitions, banking & securities, foreign investments & divestments, energy & natural resources, privatization and project finance. Mr. Asue obtained a Bachelor of Science Degree (BSc) in Economics from University of Ibadan in 1971, LL.B in 1984 from London School of Economics and a BL in 1985 from the Nigerian Law School. A member of several professional associations, He sits on the Board of several public and private companies. He was appointed a Non-Executive Director of Sterling Bank in May, 2014, and subsequently as Chairman in July, 2014. ► Mr. Yemi Adeola - Managing Director/CEO Mr. Yemi Adeola has over 25 years professional experience spanning banking, finance, law, corporate consulting and academia. He worked in various executive management capacities in Citibank Nigeria and Trust Bank of Africa Ltd. He also served as Executive Director, Corporate and Commercial Banking between 2006 and 2007.

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►Mr. Lanre Adesanya - Executive Director Mr. Lanre Adesanya currently serves as an Executive Director at Sterling Bank, a position he has held since January 2006. Prior to this, he served in various senior management capacities at NBM Bank Limited (formerly Nigbel Merchant Bank Ltd (NBML) during the 1990s, rising to the position of Managing Director/CEO in 2005. He obtained a BSc and MSc in Economics, both from the University of Lagos, Nigeria. Mr. Adesanya is an alumnus of Lagos Business School, Harvard Business School, Stanford Business School and Wharton School, University of Pennsylvania. ►Kayode Lawal - Executive Director Mr. Kayode Lawal started his career with NBM Bank where he worked from 1987 till 2005. During this period, he excelled in various marketing roles and was subsequently appointed as the bank’s Treasurer. Following the consolidation exercise and the emergence of Sterling Bank in 2006, he was again assigned to Marketing, to head various regions in Lagos, a testament to the confidence placed in his abilities on the field. He is a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and has professional qualifications from the Chartered Institute of Taxation of Nigeria (CITN) and Chartered Institute of Bankers of Nigeria (CIBN).He is also an alumnus of the Lagos Business School, Columbia University Graduate School of Business and University of Oxford.

►Abubakar Suleiman - Executive Director Mr. Abubakar Suleiman started his banking career as a Management Associate in MBC International Bank (now part of First Bank Plc) in 1998. In 2000, he moved to Citibank Nigeria where he worked in roles covering Asset & Liability Management and Market Risk Management. Between 2003 and 2011, he served in Trust Bank and subsequently, Sterling Bank

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2015Rating Report

as Treasurer, Chief Financial Officer and Integration Director. He holds a B.Sc. in Economics from the University of Abuja and an M.Sc. in Major Programmes Management from Said Business School, Oxford University. He is also an alumnus of Arthur Andersen (KPMG Nigeria) and Wharton School, University of Pennsylvania.

►Tairat Tijani– Non-Executive Director Mrs. Tijani graduated from Lancaster University with Honours in Accounting, Finance and Economics. She also graduated with a distinction in MBA, International Business from the University of Birmingham. She is a member of the Association of Chartered Certified Accountants (ACCA) and the Institute of Chartered Secretaries and Administrators of Nigeria. Mrs. Tijani has garnered significant experience as an operator in the capital market, participating in several landmark transactions which have contributed immensely towards the development of the Nigerian Capital Market. She was formerly the Head, Capital Markets Division of FBN Capitals (a subsidiary of FBN Holdings Plc, formerly First Bank of Nigeria Plc) where she had oversight responsibility for deal origination and transaction execution. She was appointed a Non-Executive Director of Sterling Bank in November 2014 ► Olaitan Kajero – Non- Executive Director Mr. Kajero started his career as Finance and Admin Manager at Communication Associates of Nigeria Limited in 1997. He went on to serve as General Manager and Group Chief Operating Officer in Aircom Nigeria Limited between 2001 and 2006, where he was responsible for General Business Development and managing the day-to-day activities of the company. He is presently the Managing Director of STB Building Society Limited, a position he has held since 2006

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Sterling Bank Plc

Sterling Rating Report

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He holds a Bachelor of Science degree in chemistry from the University of Lagos and an MBA in Finance from Olabisi Onabanjo University, Ago Iwoye in Ogun State. He was appointed a Non-Executive Director of Sterling Bank in August 2014. ► Mr. Yinka Adeola – Non Executive Director

Mr. Yinka Adeola started his finance career as an Assistant Manager at the Central Bank of Nigeria in 1985, after which he joined Pacific Merchant Bank in 1990, where he specialized in Corporate Finance. He went on to serve as Managing Director of Trust Bank of Africa Limited, a position he held from 2003 until 2005. He is presently the Managing Director of Safetrust Savings & Loans Limited. He holds a B.Sc. in Economics from the University of Ibadan and an M.Sc. in Economics from the University of Jos, both in Nigeria. ►Mr. Rasheed Aderemi Kolarinwa– Non Executive Director Mr. Rasheed Kolarinwa banking career started in 1981 with International Merchant Bank Nigeria Ltd, after which he moved to Chartered Bank Plc in 1989. He assumed various senior management roles and thereafter moved into Executive positions between 2005 and 2007 as an Executive Director and later as Deputy Managing Director. He is presently the Chairman of Capiflex Management Ltd. Mr. Kolarinwa holds a BA in Economics from the University of Toronto, Canada. He also earned an M.Sc. in Business Administration with concentration in Finance and International Business from the Schulich School of Business, York University, Canada.

► Ms. Olufunmilola Osunsade - Non-Executive Director Ms. Osunsade holds a Bachelor of Science Degree in Business Administration from the University of Lagos and an MBA, Finance from Enugu State University of Science & Technology.

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She has garnered over 24 years of experience in senior capacities in various industries including Manufacturing, Marketing, Sales, Finance and Banking. ►Tamarakare Yekwe (MON)- Independent Director Ms. Tamarakare Yekwe is currently the Principal Partner, 'Kare Yekwe & Co. (Legal Practitioners & Consultants). Prior to this, she was a member of the Governing Council, Nigerian Institute of International Affairs (NIIA) and the Presidential Technical Committee on Housing and Urban Development. In addition to being the pioneer Attorney General and Commissioner for Justice, Bayelsa State, Ms. Yekwe served as a Director in a number of institutions including the Federal Savings Bank of Nigeria, Continental Merchant Bank of Nigeria Plc, International Merchant Bank Plc and the Federal Mortgage Bank of Nigeria. She holds a Bachelor of Laws (LL.B) Degree from the University of Lagos. She was called to the Nigerian Bar in 1981. ►Omolara Akanji - Independent Director Dr. (Mrs.) O. Akanji is currently a member of the Petroleum Revenue Special Task Force. Her early career started with the Central Bank of Nigeria (CBN) in 1978 as an Assistant Economist. She rose through the ranks and retired in December 2007 as Director, Trade and Exchange Department. She also served as a Consultant to the CBN between 2008 and 2011. She holds a B.Sc. in Agricultural Economics from the University of Ibadan, an M.Sc. in Agricultural Economics from the University of Reading, a Diploma in Statistics from the University of Kent, Mathematical Institute, and a PhD. Finance from the European-American University, Commonwealth of Dominica. ►Raghavan Karthikeyan - Non-Executive Director Mr. Raghavan Karthikeyan is presently the Chief General Manager, International Banking in State Bank of India (SBI)

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Mumbai and is a Certified Associate of the Indian Institute of Bankers (CAIIB). He joined SBI in 1980 and has worked in various capacities across several aspects of banking. Before assuming his current role, he was the Chief General Manager, Corporate, Strategy and New Businesses. He holds a Bachelor of Arts from St. John’s College, Tirunelveli, India and a Master of Arts from Madurai University, India.

CAPITAL ADEQUACY

Item Year

2014 N’M

2013 N’M

2012 N’M

Shareholders’ Funds 84,715 63,458 46,642

Total Assets

824,539 707,797 580,225

Fixed Assets

13,952 9,069 7,793

Loans & Adv.

371,246 321,744 229,421

Equity/Total Assets (%)

10.27 8.97 8.04

Equity/Loan & Adv. (%)

22.24 19.31 19.75

Fixed Assets/Equity (%)

16.47 14.29 16.71

Source: Sterling Bank Audited Accounts Sterling Bank grew its share capital through private placement from N10.8b (Yr. 13) to N14.4b (Yr. 14). This resulted in increase of share premium from N27.8b (Yr. 13) to N42.8b (Yr.14). Transfers to regulatory reserve and dividend payment reduced retained earnings to N5.8b (Yr. 14) down from N7.8b (Yr. 13). In all, equity went up from N63.5b (Yr. 13) to N84.7b (Yr. 14). The growth in Total assets slowed down compared to equity. Total assets increased by 16% (Yr. 14) as against 34% (Yr. 14) growth in equity. All components of the bank’s total assets recorded considerable growth rates except due from other banks.

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Component of Total Assets

Item

2014 N’M

%

2013 N’M

%

Liquid Assets

203, 968 25 196,769 28

Investments

213,443 26 163,325 23

Net Loans & Advances

371,246 45 321,744 45

Fixed Assets

13,952 2 9,069 1

Other Assets 21,930 3 16,890 2

TOTAL ASSETS 824,539 100 707,797 100

Source: Sterling Bank Audited Accounts

The risk outlook of the Bank’s asset composition remained same in the year 2013 and 2014. Net loans and advances represented 45% of the total assets in the year 2013 and 2014

Comparison of Shareholders’ Funds

84.7

63.5

46.6

10.27

8.978.04

0

2

4

6

8

10

12

0

10

20

30

40

50

60

70

80

90

2014 2013 2012

Equity Equity/Total Assets

The Bank grew its fixed assets by 54% (Yr. 14) to N14.0b (Yr. 14). Fixed asset as a proportion of total assets remained marginal at 2% (Yr. 14) as against 1% (Yr. 13). The bank tied down 16% (Yr. 14) of its capital to fixed assets as against 14% (Yr. 13). Coverage provided for total asset and Net loans & advances improved from 9% (Yr. 13) and 19% (Yr.

% N’b

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13) to 10% (Yr. 14) and 22% (Yr. 14) respectively. Capital adequacy ratio of the bank remained 14% for the year 2013 and 2014. This is above regulatory requirement of 10% for the same period.

ASSET QUALITY

Item Year

2014 N M

2013 N M

2012 N M

Gross Loan & Adv.

380,924 328,665 236,131

Classified Loan

11,941 6,871 9,043

Provisions

9,678 6,916 6,710

Classified Loans Prov. /Classified Loans (%)

81.05 100.65 74.21

Classified Loans/Equity (%)

11.42 10.83 19.39

Classified Loans/Gross Loans (%)

2.34 2.09 3.83

Source: Sterling Bank’s Audited Accounts

Gross loans & advances increased by 16% (Yr. 14) to N380.9b (Yr. 14) from N328.7b (Yr. 13). The bank advanced credit more to corporate entities and organizations than individuals. Loans & Advances to individual customers wereN23b (Yr. 14). This is a decline of 19% compared to N28b worth of credit extended to individual customers in the year 2013. The bank distributed its loans & advances among seventeen (17) sectors as shown:

Composition of Loan Port Folio

4%

35%

0%

0%4%

4%21%4%

9%

0%3%

3%0%0%

4% 9% 0%0%0%0%0%0%0%

Agriculture Oil & Gas Capital Market Consumer CreditManufacturing Mortgage Constructions FinanceGovernment Public Utilities Transportation CommunicationEducation Mining & Quarrying Power Others

Source: Sterling Bank Plc

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Sterling Bank exposure to Oil & Gas increased fromN99.7b (Yr. 13) to N131.6b (Yr. 14). This is 34% (Yr. 14) of the entire portfolio as against 30% (Yr. 13).

Construction sector also got 21% of the entire portfolio to rank next to oil & gas during the year 2014. Aside oil & gas and construction sectors, no other got up to 10% during the year under review.

The bank also increased its exposure to currency risk during the year. Foreign currency content of its loan & advances was 38% (Yr. 14) as against 32% (Yr. 13). In terms of security, only 0.1% of the entire loan stocks were unsecured during the year.

Non-performing loans of the bank increased from N6.9b (Yr. 13) to N11.9b (Yr. 14). It impaired 2.5% of the entire loan stock in the year 2014 as against 2% achieved in the year 2013. Provision for impaired loans & advances fell from 101% (Yr. 13) to 81% (Yr. 14). Although non-performing loan ratio was better than regulator’s expectation of 5%, the provision fell below our expectation of 100%.

LIQUIDITY

Item Year 2014 2013 2012

Loan & Advances /Total Assets (%)

45.02 46.43 40.70

Liquid Assets/Total Assets (%)

24.74 27.80 38.60

Liquid Assets /Total deposits (%)

31.10 34.47 48.30

Loans & Advances/Total Deposits (%)

58.07 57.61 50.92

Source: Sterling Bank’s Audited Accounts

Deposit liabilities grew by 15% from N570.6b (Yr. 13) to N655.9b (Yr. 14). Increase in current, savings and pledged deposits accounted for the growth during the year.

Analysis of Deposits Based on Type

Item

2014 N

%

2013 N

%

Current Account

447,637 68 355,850 62

Savings Accounts

32,643 5 25,405 4

Term deposits

171,457 26 187,280 33

Pledged deposits

4,207 1 1,976 1

TOTAL

655,944 100 570,511 100

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Current accounts continued to dominate the bank’s deposit book. It rose from N355.8b (Yr. 13) to N447.6b (Yr. 14) and represented 68% of total deposits in the year 2014. The top 20 depositors of the bank accounted for 45% of total deposits. About 70% of the top 20 depositors were represented by public sector accounts.

Analysis of Deposits Based on Maturity

Months

2014 N’M

%

Less than 3 months

311,424 47

3 – 12 Months

110,098 17

1 – 5 years

220,888 34

Over 5 years

13,534 2

TOTAL

655,944 100

Analysis of Loans & Advances based on Maturity

Months

2014 N’M

%

Less than 3 months

75,677 20

3 – 12 Months

74,110 20

1 – 5 years

187,940 51

Over 5 years

33,520 9

TOTAL

371,247 100

The maturity profile of the bank is largely in short term. The bank will have to settle 64% of its depositors within a 12 month period. A significant proportion of the total deposits, specifically 47% of depositors fund will mature for payment in less than 3months. This translate to N311b (Yr. 14) out of a total of N655.9b (Yr. 14). However, the bank has a long term fund in its book. About 36% of the bank’s deposits have their maturity profile range from 1 to more than 5yrs.

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Liquidity Gap Analysis

Item

2014 Loans &

Advances N’M

2014 Deposit

Liabilities N’M

Net Liquidity

Gap N’M

Liquid Assets

203,968 - 203,968

Less than 3 months

75,677 311,424 (31,779)

3 – 12 Months

74,110 110,098 (67,767)

1 – 5 years

187,940 220,888 (100,715)

Over 5 years

33,520 13,534 (80,724)

There exists maturity mismatch between the loans & advances and the bank’s deposit liabilities. The bank’s liquid assets also could not provide the needed support for the maturing obligations. Liquid assets went up from N197b (Yr. 13) to N204b (Yr. 14). The growth rate could not match the expansion of total assets during the year under review. This makes total assets to be less liquid in the year 2014. Coverage of deposits liabilities by liquid assets also shrunk from 34% (Yr. 13) to 31% (Yr. 14). Liquidity ratio consequently dipped from 65% (Yr. 13) to 34% (Yr. 14). Despite the decline, the bank’s liquidity ratio is well above the regulatory benchmark of 30%.

PROFITABILITY

The total earning of the bank for the year was N103.7b (Yr. 14) as against N91.7 (Yr. 13). This is a growth rate of 34%. The bank continued to generate income from interest based services. Interest income accounted for 75% and 76% of the bank’s total earnings in the year 2014 and 2013 respectively. Interest expense grew marginally by 2%. Operating expenses went up by 27% from N40b (Yr. 13) to N50b (Yr. 14). The growth in operating expenses was significantly influenced by general and admin expenses which increased fromN14b (Yr. 13) to N19.7b (Yr. 14). Cost to income ratio therefore went up from 69.4% (Yr. 13) to 73.6% (Yr. 14).

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Pre-tax profit for the year was able to absorb the rising cost of operation. Consequently, profit margin remains relatively same at 10% for the year 2013 and 2014. Due to the increase in shareholder’s funds, as a result of the private placement undertaken by the bank during the year, Return on Equity went down from 15% (Yr. 13) to 13% (Yr. 14. However return on total assets remained same at 1% for the year 2013 and 2014.

GOVERNANCE, RISK AND COMPLIANCE

Sterling Bank has a board composition that meets the requirements of the Central Bank of Nigeria (CBN) 2014 Code of Corporate Governance for Banks and Discount Houses in Nigeria. The bank directs its affairs through the use of relevant committees such as: Credit, Finance & General Purpose, Governance and Nominations, Risk Management and Audit. The contraventions reported in the bank’s annual report are not significant enough to affect its ability to discharge its financial obligation.

FUTURE OUTLOOK

The bank intends to continue its capital raising program already began with a successful right issue in the year 2013. In addition, it will further invest in the retail end of its business to enhance funding and growth. It is our expectation that growth target of the bank is achievable considering its past ability to deliver on target. In view of its current assets quality and capitalization, we consider the bank an ‘investment grade’.

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FINANCES

Financial Position as at Dec, 2014 Dec, 2013 Dec, 2012

N’000 ∆% N’000 ∆% N’000

ASSETS

Liquid Assets 203,968,381 3.66 196,769,061 -12.15 223,985,961

Investments 213,443,187 30.69 163,325,377 54.49 105,719,174

Loans & Advances (Gross) 380,924,400 15.90 328,664,904 39.19 236,131,272

Provisions 9,678,127- 39.83 6,921,156- 3.14 6,710,398-

Loans & Advances (NET) 371,246,273 15.39 321,743,748 40.24 229,420,874

Finance Leases (NET)

Other Assets 21,929,558 29.84 16,889,627 26.93 13,306,615

Fixed Assets 13,952,027 53.84 9,069,368 16.37 7,793,316

Total Assets 824,539,426 16.49 707,797,181 21.99 580,225,940 LIABILITIES

Current Deposits 447,636,827 25.79 355,849,731 25.25 284,103,953

Savings Deposit s 32,643,163 28.49 25,405,414 22.74 20,698,460

Term Deposits 171,456,737 -8.45 187,279,736 17.84 158,923,912

Other Deposits 4,207,400 112.90 1,976,216 -

Total Deposits 655,944,127 14.97 570,511,097 23.03 463,726,325 Other Liabilities 83,880,014 13.62 73,828,188 5.68 69,857,221

Share Capital 14,395,209 33.35 10,795,407 37.49 7,851,931

Reserves 70,320,076 33.53 52,662,489 35.76 38,790,463

Equity 84,715,285 33.50 63,457,896 36.05 46,642,394 Commitment and Contingencies 203,842,966 1.10 201,629,221 57.58 127,949,875

Profit & Loss

Interest Income 77,932,145 11.37 69,972,761 71.91 40,702,524

Interest Expense 34,915,362- 2.21 34,160,115- 57.42 21,699,307-

Provision for Losses 7,389,159- -10.53 8,259,094- -1187.00 759,805

Net Funds Revenue 35,627,624 29.30 27,553,552 39.42 19,763,022

Other Income 9,614,183 33.43 7,205,660 -55.41 16,160,734

Operating Expenses 50,626,714 26.52 40,013,363 41.10 28,358,868

Profit Before Tax 10,747,985 15.44 9,310,198 24.14 7,499,651

Taxation 1,743,012 68.35 1,035,334 89.58 546,112

Profit after Tax 9,004,973 8.82 8,274,864 19.00 6,953,539

Net Income 9,004,973 8.82 8,274,864 19.00 6,953,539

Staff Strength 3,023 69.93 1,779 -12.36 2,030

Branch Network 174 39.20 125 -14.38 146

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Signed: Name: Oladele Adeoye Designation: Chief Rating Officer Date: 19th June, 2015 For and on behalf of: DataPro Limited 6th Floor, Ashakun House 13/15 Lake Street, Lagos Island, Lagos. Tel: 234-1-4542803, 0709-811-9962 Cell: 0805-530-3677 Email: info@datapronigeria.net, datprong@gmail.com Website: www.datapronigeria.net

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All right reserved.

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2015Rating Report

USER GUIDE

DataPro’s credit rating is an opinion of an issuer’s overall creditworthiness and its capacity to meet its financial commitment. Our short-term ratings have a time horizon of less than 12 months in line with industry standards reflecting risk characteristics. The ratings place greater emphasis on the liquidity to meet financial commitment in a timely manner. The long-term risk indicator is divided into 8 bands ranging from AAA through DD. Each band could be modified by + or –. With + representing slightly less risk than –. Such suffixes are not added to the ‘AAA’ long –term rating category and to categories below ‘CCC’. Or to short-term rating older than A1+. LONG-TERM RATING

Investment Grade

Indicator Meaning Explanation

AAA Lowest Risk (Superior) Assigned to issuers which have on balance superior balance sheet strength, operating performances and business profile when compared to the standards established by DataPro Limited. These companies, in our opinion, have a very strong ability to meet their ongoing obligations.

AA Lower Risk (Excellent) Assigned to issuers which have, on balances

excellent balance sheet strength, operating performance and business profile when compared to the standards established by DataPro Limited. These companies, in our opinion, have a very strong ability to meet their ongoing obligations.

A Low Risk (Very Good) Assigned to issuers which have, on balance very good balance sheet strength, operating performance

And business profile when compared to the standards established by DataPro Limited. These companies, in our opinion, have a very strong ability to meet their ongoing obligation.

BBB Slight Risk (Fair) Assigned to issuers which have, on balance fair

balance sheet strength, operating performance and business profile when compared to the standards established by DataPro Limited. These companies, in our opinion, have an ability to meet their current obligations, but their financial strength is vulnerable to adverse changes in economic conditions.

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DataPro

Sterling Bank Plc

Sterling Rating Report

2015Rating Report

Non-Investment Grade

Indicator Meaning Explanation BB Moderate Risk (Marginal) Assigned to issuers which have, on balance

marginal balance sheet strength, operating performance and business profile when compared to the standards established by DataPro Limited. These companies, in our opinion have an ability to meet their current obligation, but their financial strength is vulnerable to adverse changes in economic conditions.

B High Risk (Weak) Assigned to issuers which have, on balance weak balance sheet strength, operating performance and business profile when compared to the standard established by DataPro Limited. These companies, in our opinion have an ability to meet their current obligation, but their financial strength is vulnerable to adverse changes in economic conditions.

CCC Higher Risk (Poor) Assigned to issuers, which have on balance poor balance sheet strength, operating performance and

business profile when compared to the standards established DataPro Limited. These companies, in our opinion may not have an ability to meet their current obligation and their financial strength is extremely vulnerable to adverse changes in economic conditions.

DD Highest Risk (Very Poor) Assigned to issuers, which have a balance very poor balance sheet strength, operating performance and business profile when compared to the standards established by DataPro Limited. These companies, in our opinion may not have an ability to meet their current obligation and their financial strength is extremely vulnerable to adverse changes in economic conditions.

SHORT-TERM RATING

Indicator Meaning Explanation

A1+ Highest credit quality Indicates the strongest capacity for timely payment of financial commitments. May have an added “+” to denote any exceptionally strong credit feature.

A1 Good credit quality A satisfactory capacity for timely payment of financial commitments, but the margin of safety is not as great as in the case of the higher ratings.

A2 Fair credit quality The capacity for timely payment of financial commitments is adequate. However, near term adverse changes could result in reduction to non investment grade.

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DataPro

Sterling Bank Plc

Sterling Rating Report

2015Rating Report

B Speculative Minimal capacity for timely payment of financial commitments, plus vulnerability to near term adverse changes in financial and economic conditions.

C High default risk Default is a real possibility. Capacity for meeting financial

commitments is solely reliant upon a sustained, favorable business and economic environment.

D Indicates an entity that has defaulted on all its financial obligations.