Five things to note from Sterling HoldCo’s Q1 results

Sterling Financial Holdings Company Plc delivered a strong first-quarter showing that reinforced investor confidence, with its share price rally helping to lift the group’s market capitalisation sharply to N412 billion on the Nigerian Exchange Group (NGX) in recent months, as investors continue to price in its earnings momentum and expansion strategy.

Beyond the market optimism, Sterling Holdco’s unaudited first-quarter (Q1) 2026 results reveal a business growing aggressively, strengthening its capital base, and improving profitability, even as some balance sheet pressure points remain.

Here are five major takeaways from the holding company’s Q1 performance:

Sterling Holdco posted a profit before tax of N27.92 billion in the first quarter of 2026, representing a 52.8 percent increase from N18.26 billion in the corresponding period of 2025. Profit after tax also rose by 35.7 percent to N23.38 billion from N17.23 billion.

The earnings expansion was driven by stronger revenue generation. Interest income increased by 35.6 percent to N106.26 billion from N78.36 billion, while net interest income rose to N64.86 billion from N47.42 billion. Fee and commission income also remained supportive at N13.4 billion, reflecting resilience in transaction-led banking activities.

However, a notable pressure point emerged in credit quality costs. Credit loss expense surged to N9.2 billion, nearly four times the N2.45 billion recorded a year earlier. This suggests that while lending growth is supporting income expansion, risk costs are rising alongside that growth.

Operating income reached N93.4 billion during the quarter, while Gross earnings rose by 41.6 percent year-on-year to N134.8 billion, supported by a 36.8 percent increase in net interest income to N64.9 billion.

Sterling Holdco’s total assets rose to N4.07 trillion as of March 2026, up from N3.63 trillion at the same period of 2025, reflecting continued balance sheet expansion.

Loans and advances to customers increased to N1.44 trillion from N1.14 trillion, indicating continued credit creation. Debt instruments classified under fair value through other comprehensive income jumped significantly to N812.18 billion from N624 billion, showing a stronger tilt toward investment securities. Property, plant, and equipment also rose materially to N85.44 billion from N61.8 billion, indicating ongoing infrastructure investment.

Crossing the N4 trillion asset threshold is strategically significant. It reinforces Sterling’s emergence as a larger-tier banking group and signals management’s willingness to scale aggressively.

Deposits from customers rose by 14.3 percent to N2.95 trillion from N2.58 trillion in the corresponding period of 2024, with current savings rising by 7.4 percent, term deposits rising by 37 percent, and savings by 11.6 percent during the period surveyed. Deposits from banks stood at N99.94 billion compared to N138 billion previously, while other borrowed funds rose to N236.87 billion from N195 billion.

This suggests the group is becoming less dependent on retail and commercial deposits alone and is increasingly tapping institutional liquidity sources to fund growth.

One of the clearest positives in the results is Sterling’s stronger capital position.

Total equity rose sharply to N542.48 billion from N321 billion in Q1’25, representing a N221.5 billion increase in just one year. The primary driver was fresh capital injection.

Share capital increased from N22.7 billion to N34.25 billion, while share premium jumped from N108.2 billion to N227.24 billion.

The holding company’s e capital-raising programme itself was substantially completed between December 2024 and October 2025, positioning the Group well ahead of the post recapitalisation.

In December 2024, the Group completed a N75 billion private placement, raising N73.86 billion in net proceeds. Of this amount, ₦68.8 billion was allocated to Sterling Bank and N5 billion to The Alternative Bank, strengthening the capital base of both institutions.

This was followed by an N28.79 billion rights issue, which was oversubscribed by N10.29 billion. Regulatory approvals in May 2025 enabled the allotment of N26.639 billion under the Rights Issue, with the oversubscription restructured into a private placement, enabling AltBank to meet the capital requirement for non-interest banks with national licenses.

This is strategically important given Nigeria’s banking recapitalisation requirements. Sterling appears to be making visible progress in strengthening its capital buffers ahead of regulatory deadlines.

Sterling’s cash flow performance tells a more nuanced story.

Net cash generated from operating activities came in at N65.14 billion, a dramatic turnaround from the N157.38 billion net cash outflow recorded in the first quarter of 2025.

This improvement suggests stronger underlying operational cash generation and better liquidity management.

However, the group remained heavily cash-consumptive on the investment side.

Net cash used in investing activities stood at N150.99 billion, driven by large purchases of debt securities and capital expenditure. Property and equipment purchases alone cost N18.16 billion, while the company significantly increased investment allocations.

Meanwhile, financing activities contributed N107.58 billion, largely due to the equity raise and additional borrowings.