Is Sterling Financial Holdings Company Plc a good buy?

Sterling Financial Holdings Company Plc (STERLINGNG on NGX) demonstrates solid financial performance as of July 29, 2025. In Q1 2025, the bank reported a net profit of ₦12.5 billion, doubling from the prior year, driven by a 45% rise in net interest income to ₦35.2 billion. Total assets grew 15% to ₦2.8 trillion, supported by expanded loans and advances, which increased 20% to ₦1.4 trillion. Deposits rose 12% to ₦2.1 trillion, reflecting strong customer confidence amid Nigeria’s economic challenges.

Key metrics include a market cap of ₦349 billion, EPS of ₦1.61 (TTM), and a low PE ratio of 3.83, indicating potential undervaluation. Return on equity stands at 18.5%, with a dividend yield of 3.11% following a ₦0.20 per share payout in July 2025. The bank’s capital adequacy ratio is 14.3%, exceeding regulatory requirements, while non-performing loans remain low at 1.9%.

However, risks persist with high credit concentration (top 20 loans at 286% of core capital) and exposure to volatile sectors like oil and gas (26% of loans).

In my opinion, based on the financials above, it's a BUY.

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