Sterling Financial Holdings Company Plc Condensed Unaudited Group Interim Financial Statements June 2025
Sterling Financial Holdings Company Plc and Subsidiaries Condensed Unaudited Interim Financial Statements for the Period Ended 30 June 2025
TABLE OF CONTENTPage
Report of the Directors 1
Corporate Governance Report 5
Statement of Corporate Responsibility for the Financial Statements 9
Condensed Statement of Profit or Loss 10
Condensed Statement of Financial Position 11
Condensed Statements of Changes in Equity 12
Condensed Statements of Cash Flows 14
Notes to the Condensed Financial Statements 15
Directors' Report
For the period ended 30 June 2025
The Directors present their second quarter report on the affairs of Sterling Financial Holdings Company Plc ("the Company"), together with the unaudited Group Financial Statements for the quarter ended 30 June, 2025.
Principal activity and business review
The principal activity of Sterling Financial Holdings Company Plc (the Company) is to carry on business as a non-operating financial holding company investing in companies as may be approved by the Board of Directors and in accordance with Central Bank of Nigeria permissible activities. The Company has 3 (three) subsidiaries - Sterling Bank Limited, a commercial bank; Alternative Bank Limited, a non-interest bank; and SterlingFi Wealth Management Ltd, an asset management company.
Legal form
Sterling Financial Holdings Company Plc was incorporated on 13 October 2021 as a private limited liability company and re-registered as a public company on 16 November 2022. The Company's shares were listed on Nigerian Exchange Limited on 6 April 2023. The Central Bank of Nigeria issued the Company its final license on 27 June 2023 and the Company commenced operations on 1 July 2023.
Operating results
Highlights of the Group and Company's operating results for the period are as follows:
Group Company
Profit before taxation | 45,548 | 17,346 | 650 | 190 | |||
Taxation | (3,773) | (1,084) | (216) | - | |||
Profit after taxation | 41,775 | 16,262 | 434 | 190 | |||
Transfer to reserves | 9,265 | 3,890 | - | - | |||
Transfer to general reserve | 32,510 | 12,372 | - | 190 | |||
41,775 | 16,262 | - | 190 | ||||
Earnings per share (kobo) - Basic | 89k | 56k | 1k 1k | ||||
Earnings per share (kobo) - diluted | 89k | 56k | 1k 1k | ||||
June 2025 | December 2024 | June 2025 December 2024 | |||||
NPL Ratio | 5.1% | 5.4% | - - | ||||
Directors who served during the period | |||||||
In millions of Naira June 2025 June 2024 June 2025 June 2024 Gross earnings 212,612 152,202 2,775 1,035
The following Directors served during the period under review:
Name Designation Interest represented
Mr. Adeyemi Adeola Chairman Alfanoma Nigeria Limited Silverlake Investments Limited Reduvita Limited
Quakers Integrated Services Limited Concept Features Limited
Ms. Eniye Ambakederemo Independent Director Non-Executive
Mr. Adeshola Adekoya
Director STB Building Society Limited
Eltees Properties
Rebounds Integrated Services Limited
Ms. Aisha Bashir Independent Director Non-Executive
Mr. Abubakar Suleiman
Mr. Ashutosh Kumar
Director
Non-Executive
Director State Bank of India
Mr. Yemi Odubiyi Managing Director
Mr. Olayinka Oni Executive Director
Going Concern
The Directors assess the Group and the Company's future performance and financial position on an on-going basis and have no reason to believe that the Group will not be a going concern in the period ahead. For this reason, these financial statements are prepared on a going concern basis.
Directors interests in shares
Interest of Directors in the issued share capital of the Company as recorded in the Register of members and/or as notified by them for the purpose of section 301 of the Companies and Allied Matters Act 2020 were as follows:
Number of shares
Names | June 2025 Direct | June 2025 Indirect | December 2024 Direct | December 2024 Indirect |
1 Mr. Adeyemi Adeola | 71,736,011 | 12,184,865,403 | 57,600,025 | 1,443,034,413 |
2 Ms. Eniye Ambakederemo | - | - | - | - |
3 Mr. Adeshola Adekoya | - | 1,508,737,501 | - | 1,311,980,527 |
4 Ms. Aisha Bashir | - | - | - | - |
5 Mr. Abubakar Suleiman | 580,315,558 | - | 419,989,474 | - |
6 Mr. Ashutosh Kumar | - | 2,549,505,026 | - | 2,549,505,026 |
7 Mr. Yemi Odubiyi | 707,967,203 | - | 376,417,493 | - |
8 Mr. Olayinka Oni | 53,916,501 | - | 15,391,539 | - |
Director's interests in contracts
For the purpose of Section 303 of the Companies and Allied Matters Act, 2020, none of the current Directors had direct or indirect interest in contracts or proposed contracts with the Group during the year.
Director's Remuneration
The Company ensures that remuneration paid to its Directors comply with the provisions of the codes of corporate governance issued by its regulators.
In compliance with Section 16.8 of the Nigerian Code of Corporate Governance, the Company hereby disclose the remuneration paid to its Directors as follows:
Type of Package Fixed
Description
Timing
1 | Basic Salary | Part of gross salary package for Executive Directors only, reflects the financial services industry competitive salary package and the extent to which the Company's objectives have been met for the financial year. | Paid monthly during the financial year |
2 | Other Allowances | Part of gross salary package for Executive Directors only, reflects the financial services industry competitive salary package and the extent to which the Company's objectives have been met for the financial year. | Paid periodically during the financial year |
3 | Productivity Bonus | Paid to Executive Directors only and tied to performance of their line reports. It is also a function of the extent to which the Company's objectives have been met for the financial year. | Paid annually in arrears |
4 | Director Fees | Paid to Non-Executive Directors only. | Paid twice a year, in January and July |
5 | Sitting Allowances | Allowances paid to Non-Executive Directors only for attending Board and Board Committee meetings. | Paid after each meeting |
Beneficial ownership
The Company is owned by Nigerian citizens, corporate bodies and foreign investors.
Analysis of shareholding
The range analysis of the distribution of the shares of the Company as at 30 June 2025 is as follows:
Range of shares | Number of holders | % | Number of units | % |
1 - 1,000 | 35,779 | 37.89% | 16,012,394 | 0.03% |
1001 - 5,000 | 27,499 | 29.12% | 62,442,666 | 0.12% |
5,001 - 10,000 | 9,430 | 9.99% | 64,892,912 | 0.12% |
10,001 - 20,000 | 7,505 | 7.95% | 102,844,418 | 0.20% |
20,001 - 50,000 | 5,541 | 5.87% | 175,163,579 | 0.34% |
50,001 - 100,000 | 3,341 | 3.54% | 236,384,651 | 0.45% |
100,001 - 200,000 | 2,165 | 2.29% | 310,499,392 | 0.60% |
200,001 - 500,000 | 1,687 | 1.79% | 534,369,355 | 1.03% |
500,001 - 10,000,000 | 1,341 | 1.42% | 2,206,876,172 | 4.23% |
Above 10,000,001 | 143 | 0.15% | 34,891,465,276 | 66.95% |
Foreign shareholding | 4 | 0.00% | 13,516,061,599 | 25.93% |
94,435 | 100.00% | 52,117,012,414 | 100.00% |
The following shareholders have shareholdings of 5% and above as at 30 June 2025:
June 2025 Holding (units) | June 2025 % holding | December 2024 Holding (units) | December 2024 % holding | ||
Cardinal Stone Asset Management | |||||
Limited (Sterling Closed Investment | |||||
Fund) | 16,666,666,667 | 31.98% | 16,666,666,667 | 36.66% | |
Silverlake Investments Limited | 10,741,830,990 | 20.61% | 7,197,604,531 | 15.83% | |
Ess-ay Investments Limited | 2,674,858,218 | 5.13% | - | - | |
State Bank of India | - | - | 2,549,505,026 | 5.61% | |
Total Substantial Shareholdings | 30,083,355,875 | 57.72% | 26,413,776,224 | 58.10% |
Acquisition of own shares
The Company did not acquire any of its shares during the period ended 30 June 2025 (31 December 2024: Nil).
Property, plant and equipment
Information relating to changes in property, plant and equipment is given in Note 25 to the consolidated and separate financial statements.
Employment and employees
Employment of disabled persons
The Company has a non-discriminatory policy on recruitment. Applications would always be welcomed from suitably qualified disabled persons and are reviewed strictly on qualification. The Company's policy is that the highest qualified and most experienced persons are recruited for appropriate job levels irrespective of an applicant's state of origin, ethnicity, religion or physical condition.
Health, safety and welfare of employees
Health and safety regulations are in force within the Comapny's premises and employees are aware of existing regulations. The Company provides subsidies to all levels of employees for medical expenses, transportation, housing, lunch etc.
Employee training and development
The Company is committed to keeping employees fully informed as much as possible regarding the Company's performance and progress and seeking their opinion where practicable on matters, which particularly affect them as employees.
Training is carried out at various levels through both in-house and external courses. Incentive schemes designed to encourage the involvement of employees in the Company's performance are implemented whenever appropriate.
Events after reporting date
There were no events after the reporting date which could have had a material effect on the state of affairs of the Company as at 30 June 2025 or the profit for the period ended on that date which have not been adequately provided for or disclosed.
BY ORDER OF THE BOARD:
Adeyoola Temple
Group Head, Company Secretariat FRC/2015/PRO/NBA/002/00000012648
20 Marina, Lagos, Nigeria. July 29, 2025
Sterling Financial Holdings Company Plc and Subsidiaries Condensed Unaudited Interim Financial Statements for the Period Ended 30 June 2025
Shareholding Structure/ Free Float StatusFor the period ended 30 June 2025
30-June-2025 31-December-2024 | ||||
Description | Unit | Percentage | Unit | Percentage |
Issued Share Capital Substantial Shareholdings (5% and above) | 52,117,012,414 | 100.00% | 45,457,084,791 | 100.00% |
CardinalStone Asset Management Limited | ||||
(Sterling Closed Investment Fund) | 16,666,666,667 | 31.98% | 16,666,666,667 | 36.66% |
Silverlake Investments Limited | 10,741,830,990 | 20.61% | 7,197,604,531 | 15.83% |
State Bank of India | - | - | 2,549,505,026 | 5.61% |
Ess-ay Investments Ltd | 2,674,858,218 | 5.13% | - | - |
Total Substantial Shareholdings | 30,083,355,875 | 57.72% | 26,413,776,224 | 58.10% |
Director's Shareholdings (Direct, and Indirect), excluding directors with substantial interests | ||||
Mr. Adeyemi Adeola (Direct) | 71,736,011 | 0.14% | 57,600,025 | 0.13% |
Ms. Eniye Ambakederemo | - | 0.00% | - | 0.00% |
Mr. Adeshola Adekoya | - | 0.00% | - | 0.00% |
Ms. Aisha Bashir | - | 0.00% | - | 0.00% |
Mr. Abubakar Suleiman (Direct) | 580,315,558 | 1.11% | 419,989,474 | 0.92% |
Mr. Yemi Odubiyi (Direct) | 707,967,203 | 1.36% | 376,417,493 | 0.83% |
Mr. Olayinka Oni (Direct) | 53,916,501 | 0.10% | 15,391,539 | 0.03% |
Total Directors Shareholdings | 1,413,935,273 | 2.71% | 869,398,531 | 1.91% |
Other Influential Shareholdings State Bank of India | 2,549,505,026 | 4.89% | - | - |
Mike Adenuga | 1,620,376,969 | 3.11% | 1,620,376,969 | 3.56% |
Hyers Capital Ltd | 575,808,362 | 1.10% | 515,808,362 | 1.13% |
Afriswiss Asset Management Ltd | 575,808,362 | 1.10% | 575,808,362 | 1.27% |
Adeola, Tajudeen Afolabi | 404,285,555 | 0.78% | 404,285,555 | 0.89% |
FCMB Nominee Ltd/Pacific Credit Limited | 429,273,018 | 0.82% | 524,273,018 | 1.15% |
Rankinton, Investments Inc | 702,093,233 | 1.35% | 477,367,650 | 1.05% |
Glomobile Limited Sterling Bank Co-Operative Multipurpose | 443,072,978 | 0.85% | - | - |
Society Limited | 290,901,008 | 0.56% | 257,805,841 | 0.57% |
Others | 968,205,643 | 1.86% | 968,205,643 | 2.13% |
Int'l Beer & Beverages Limited | - | - | 205,716,974 | 0.45% |
Ess-ay Investments Ltd | - | - | 1,462,919,568 | 3.24% |
Total other Influential Shareholdings | 8,559,330,154 | 16.43% | 7,012,567,942 | 15.44% |
Free Float in Units and Percentage | 12,285,116,695 | 23.14% | 11,161,342,094 | 24.55% |
Free Float in Value | N70,025,165,162 | N62,430,182,791 | ||
Sterling Financial Holdings Company Plc with a free float percentage of 23.14% as at 30 June 2025, is compliant with the Exchange's free float requirements for companies listed on the Main Board.
Sterling Financial Holdings Company Plc with a free float percentage of 24.55% as at 31 December 2024, is compliant with the Exchange's free float requirements for companies listed on the Main Board.
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Corporate Governance
The Company complies with the relevant provisions of the Nigerian Code of Corporate Governance, the Nigerian Securities & Exchange Commission (SEC) Corporate Governance Guidelines and the Central Bank of Nigeria (CBN) Corporate Governance Guidelines for Financial Holding Companies in Nigeria.
Board Composition and Committee Board of Directors
The Board of Directors (the 'Board') is made up of the Non-Executive Chairman, Non-Executive Directors and Executive Directors who oversee the corporate governance of the Company. The members are as follows:
Mr. Yemi Adeola Chairman
Mr. Adeshola Adekoya Non- Executive Director
Ms. Eniye Ambakederemo Independent Director
Ms. Aisha Bashir Independent Director
Mr. Abubakar Suleiman Non-Executive Director
Mr. Ashutosh Kumar Non-Executive Director
Mr. Yemi Odubiyi Managing Director
Mr. Olayinka Oni Executive Director
Board Committees
The Board carries out its oversight functions through its various committees each of which has a clearly defined terms of reference and a charter which has been approved by the Central Bank of Nigeria. The Board has three (3) standing committees, namely: Board Audit & Risk Managemnt Committee, Board Finance & Investment Committee, and Board Governance, Nomination & Remuneration Committee. In line with best practice, the Chairman of the Board is not a member of any of the Committees. The composition and responsibilities of the committees are set out below:
Board Finance and Investment Committee
The Committee acts on behalf of the Board on all matters relating to financial management and reports to the Board for approval/ratification.
Terms of reference
Determine the policies and strategies relating to capital management of the Company, and oversee and monitor the implementation of these policies, strategies and financial objectives with a view to maximizing overall shareholder value;
Ensure finance and investment decisions are in alignment with corporate objectives and strategy;
Ensure adequate budget and planning processes exist, and performance is measured against annual budget;
Recommend dividend and tax policies to the Board for approval;
Review the adequacy of financial systems, operations and internal controls;
Approve capital and major operating expenditure and investment limits recommended by management;
Ensure that reporting on issues related to investment and finance are comprehensive for proper deliberation and decision making;
Ensure investment strategies, policies and guidelines are in compliance with all applicable regulations;
Consider and approve proposals for significant acquisitions, mergers, takeovers, divestments of operating companies, equity investment and new strategic alliances by the Company or its subsidiaries subject to the final approval of the Board;
Formulate guidelines from time to time on cost control and reduction, consistent with maximum efficiency, and make appropriate recommendations to the Board;
Review and report to the Board on, the Company's financial projections, capital and operating budgets, and actual financial results against
targets and projections;
Review and recommend to the Board all new business initiatives, especially those requiring a significant capital outlay above management limit;
Determine an optimal investment mix consistent with risk profile agreed by the Board; and
Carry out such other functions relating to finance and investment strategy as the Board may from time to time determine. The members are as follows:
Mr. Adeshola Adekoya Chairman
Mr. Abubakar Suleiman Member
Ms. Aisha Bashir Member
Mr. Yemi Odubiyi Member
Mr. Olayinka Oni Member
Board Audit and Risk Management Committee
The Committee is responsible for evaluating and handling issues relating to Internal and External Audit and Risk Management in the Company.
Terms of reference
Oversee the assessment of the qualification, independence and performance of the Internal Audit function;
Review significant findings and recommendations by Internal Audit and Management responses thereof;
Review implementation of Internal Audit recommendations by Management;
Ensure that the operations of the Internal Audit function is in compliance with acceptable International Standards for the Professional Practice of Internal Auditing;
Ensure there are effective controls in place to minimize operational risks and optimize value;
Oversee the process for identifying risks across the Company and ensure that Management puts in place adequate mechanisms to prevent, detect and report risks;
Ensure that adequate whistle-blowing procedures are in place;
Review the proposed audit plan(s) and review the results of internal audits completed since the previous Committee meeting as well as the focus of upcoming internal audit projects;
Review the results of the annual audit report and discuss the annual financial statements with external auditors and Management;
Review the auditors' management control letter presented by the external auditors and ensure adequacy of Management's response;
Review with the Chief Financial Officer annually the significant financial reporting issues and practices of the Company, and ensure that
appropriate accounting principles are applied including financial controls relating to the "closing of the books" process;
Meet separately, and at least quarterly, with the Chief Financial Officer, the Chief Internal Auditor and relevant Senior Management staff to discuss the adequacy and effectiveness of accounting and financial controls of the Company;
Ensure that there are standards, policies and processes in place to identify and measure all material risks and respond appropriately;
Re-evaluate all risk management policies on a periodic basis to accommodate major changes in internal or external factors; and ensure that changes are in the line with the Company's risk profile and appetite;
Review executive management reports, detailing the adequacy and overall effectiveness of the Company's risk and capital management documents-including policies, procedures and processes for the identification, measurement, monitoring and control of risk management;
Make recommendations to the Board concerning the levels of risk capacity and tolerance, and ensure that they are managed within these parameters; and
Provide to the Board such assurances as it may reasonably require regarding compliance by the Company. The members are as follows:
Ms. Aisha Bashir Chairperson
Mr. Adeshola Adekoya Member
Ms. Eniye Ambakederemo Member
Mr Ashutosh Kumar Member
Board Governance, Nomination & Remuneration Committee
The Committee acts on behalf of the Board on all matters relating to corporate governance, remuneration and the appointment and re-election of Directors.
Terms of reference
Review the size and composition of the Board taking into consideration the appropriate skill mix, personal qualities, expertise, ability to exercise
independent judgment and diversity required to discharge the Board's duties;
Make recommendations on the experience and training required for Board Committee membership, operating structure, and other operational matters;
Establish the criteria and execute the process, upon Board approval, for appointing and re-appointing new and existing Directors respectively, and the removal of non-performing Directors;
Ensure that every member of the Board receives a formal letter of appointment, setting out their roles, responsibilities, time commitments for Board
and Board Committees' meetings;
Develop and maintain an appropriate corporate governance framework for the Company, and make recommendation to the Board on transparent and sound corporate governance principles;
Develop job specification and Key Performance Indicators (KPIs), which shall be approved by the Board for the role of the Chairman and the Non-Executive Directors;
Ensure the Board carries out annual performance review of itself and that of its Committees in accordance with applicable laws, regulations, policies and codes. The result of the exercise shall be reviewed by this Committee who shall also ensure the recommendations following the evaluation report are implemented;
Board Governance, Nomination and Remuneration Committee - Continued
Ensure that there is a proper induction programme and ongoing learning for the Board and Board committee members;
Provide adequate oversight in reviewing and updating the Board learning programmes to ensure continuous improvement of the Board
members' performance;
Ensure that a proper succession policy and plan exists for Board members and members of its subsidiaries;
Develop, review and recommend the remuneration policy to the Board for approval;
Review and recommend to the full Board, compensation for the Chief Executive officer and senior management staff. The committee shall
ensure its recommendations are in accordance with the Company's remuneration policy, the provisions of the CBN and SEC Codes of corporate
governance and all applicable laws;
Ensure that salary scales are set within the general Company's business policy;
Make recommendations to the Board, reinforcing sound corporate governance principles, on the incentive structure of the Company including executive compensation and bonuses;
Provide input to the annual report of the Company on Directors' compensation, aligning with the provisions of the CBN and SEC Codes;
Perform other duties related to the Company's compensation structure in accordance with applicable laws, rules, policies and regulation; and
Conduct periodic peer review of compensation and remuneration levels to ensure the Company remains competitive; and
Undertake other reviews as the Committee deems necessary in order to fulfil its responsibilities as may be requested by the Board.
The members are as follows:
Ms. Eniye Ambakederemo Chairperson
Mr. Abubakar Suleiman Member
Ms. Aisha Bashir Member
Statutory Audit Committee
The Committee meets every quarter, but could also meet at any other time, as the need arise.
Terms of reference
To make recommendations to the Board to be put to the Shareholders for approval at the AGM regarding the appointment, removal and remuneration of the external auditors of the Company;
To authorise the internal auditor to carry out investigations into any activities of the Company which may be of interest or concern to the Committee;
To review and approve the annual audit plan and ensure that it is consistent with the scope of audit engagement, having regard to the seniority, expertise and experience of the audit team;
To review representation letter(s) requested by the external auditors before they are signed by Management;
To review the Management Letter and Management's Response to the auditor's findings and recommendations;
To assist in the oversight of the integrity of the Company's financial statements, compliance with legal and other regulatory requirements,
assessment of qualifications and independence of the external auditor, and performance of the Company's internal audit function as well as
that of external auditors;
To establish an internal audit function and ensure there are other means of obtaining sufficient assurance of regular review or appraisal of the system of internal controls in the Company;
To ensure the development of a comprehensive internal control framework for the Company, obtain assurance and report annually in the
financial report, on the operating effectiveness of the Company's internal control framework;
To review such other matters in connection with overseeing the financial reporting process and the maintenance of internal controls as the Committee shall deem appropriate;
To oversee management's process for the identification of significant fraud risks across the Company and ensure that adequate prevention,
detection and reporting mechanisms are in place;
At least on an annual basis, obtain and review a report by the internal auditor describing the strength and quality of internal controls including any issues or recommendations for improvement, raised by the most recent internal control review of the Company;
Discuss the annual audited financial statements and half yearly unaudited statements with Management and external auditors;
Discuss policies and strategies with respect to risk assessment and management;
Meet separately and periodically with Management, internal auditors and external auditors;
To review and ensure that adequate whistle-blowing procedures are in place;
To review, with the external auditors, any audit scope limitations or problems encountered and management's responses to same;
To review the independence of the external auditors and ensure that where non-audit services are provided by the external auditors, there is no conflict of interest;
Statutory Audit Committee - Continued
To consider any related party transactions that may arise within the Company;
Invoke its authority to investigate any matter within its terms of reference for which purpose the Company must make available the resources to the internal auditors with which to carry out this function, including access to external advice where necessary;
Prepare the Committee's report for inclusion in the Company's Annual Report; and
Report to the Board regularly at such times as the Committee shall determine necessary. The members are as follows:
Alhaji Mustapha Jinadu, F.CIoD Chairman
Mr. Adeshola Adekoya Member
Mr. Idongesit E. Udoh Member
Ms. Christie O. Vincent Member
Ms. Eniye Ambakederemo Member
Management Committee
1 Executive Committee (ExCo)
The Committee provides leadership to the Company and ensures the implementation of strategies and long-term goals approved by the Board.
Whistle Blowing Process
Whistle blowing process is a mechanism by which suspected breaches of the Company's internal policies, processes, procedures and unethical
activities by any stakeholder (staff, customers, suppliers and applicants) are reported for necessary actions.
It ensures a high degree of integrity and transparency in order to achieve efficiency and effectiveness in the Group's operations.
The reputation of the Company is of utmost importance and every staff of the Company has a responsibility to protect the Company from any persons or act that might jeopardize its reputation. Staff are encouraged to speak up when faced with information that would help protect the Company's reputation.
An essential attribute of the process is the guarantee of confidentiality and protection of the whistle blower's identity and rights. It should be noted that the ultimate aim of this policy is to ensure efficient service to the customer, good corporate image and business continuity in an atmosphere compliant with best industry practice.
The Company has a Whistle Blowing channel via the Company's website, dedicated telephone hotlines, and e-mail address in compliance with
provisions of the CBN Guidelines for Whistleblowing for Banks and Other Financial Institutions in Nigeria.
The Company's compliance function is responsible for monitoring and reporting on whistle blowing.
Compliance Statement on Securities Trading by Interested Parties
The Company has put in place a Policy on Trading on the Company's Securities by Directors and other key personnel of the Company.
During the period under review, the Directors and other key personnel of the Company complied with the terms of the Policy and the provisions of Section 14 of the Amendment to the Listing Rules of The Nigerian Stock Exchange.
Complaint Management Policy
The Company has put in place a Complaint Management Policy guiding the resolution of disputes with stakeholders on issues relating to the Investment and Securities Act.
Sterling Financial Holdings Company Plc and Subsidiaries Condensed Unaudited Interim Financial Statements for the Period Ended 30 June 2025STATEMENT OF CORPORATE RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
In accordance with section 405 of the Companies and Allied Matters Act of Nigeria 2020, the Chief Executive Officer and the Chief Financial Officer certify that the financial statements have been reviewed and based on our knowledge, the
condensed unaudited financial statements do not contain any untrue statement of material fact or omit to state a material fact, which would make the statements misleading, in the light of the circumstances under which such statement was made, and
condensed unaudited financial statements and all other financial information included in the statements fairly present, in all material respects, the financial condition and results of operation of the company as of and for, the periods covered by the unaudited financial statements;
We state that management and directors:
are responsible for establishing and maintaining internal controls and has designed such internal controls to ensure that material information relating to the Group is made known to the officer by other officers of the group and company, particularly during the period in which the condensed unaudited financial statement report is being prepared.
has evaluated the effectiveness of the group's internal controls within 90 days prior to the date of its condensed unaudited financial statements, and
certifies that the group's internal controls are effective as of that date;
We have disclosed:
all significant deficiencies in the design or operation of internal controls which could adversely affect the group and company's ability to record, process, summarize and report financial data, and has identified for the group any material weaknesses in internal controls, and
whether or not, there is any fraud that involves management or other employees who have a significant role in the group
and company's internal control; and
as indicated in the report, whether or not, there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
The condensed unaudited financial statements of the Group and the Company for the quarter ended 30 June 2025 were approved by the directors on July 29, 2025.
Yemi Odubiyi
Signed by:
Adebimpe Olambiwonnu, FCA
Chief Finance Officer Group Chief Executive Officer
FRC/2013/PRO/ICAN/001/00000001253 FRC/2013/PRO/DIR/003/00000001279
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Sterling Financial Holdings Company Plc and Subsidiaries Condensed Unaudited Interim Financial Statements for the Period Ended 30 June 2025
Condensed Statement of Profit or Loss
For the period ended 30 June 2025
Group Company Group Company
In millions of Naira
Notes June 2025 June 2024 June 2025 June 2024 Quarter 2
2025
Quarter 2
2024
Quarter 2
2025
Quarter 2
2024
Interest income 3 167,160 120,878 996 487 88,805 65,565 723 275
Interest expense 4 (69,745) (63,292) - - (38,811) (35,213) - -
Net interest income | 97,415 | 57,586 | 996 | 487 | 49,994 | 30,352 | 723 | 275 | |
Net Fees and commission income | 5 | 22,066 | 15,218 | - | - | 11,941 | 8,071 | - | - |
Net trading income | 6 | 13,013 | 12,383 | - | - | 10,114 | 5,443 | - | - |
Other operating income | 7 | 10,373 | 3,723 | 1,779 | 548 | 6,515 | 2,100 | 758 | 384 |
Operating income | 142,867 | 88,910 | 2,775 | 1,035 | 78,564 | 45,966 | 1,481 | 659 | |
Credit loss expense on financial assets | 8 | (5,214) | (4,466) | - | - | (2,768) | (2,635) | - | - |
Net operating income after impairment 137,653 84,444 2,775 1,035 75,796 43,331 1,481 659 | |||||||||
Personnel expenses | 9 | (23,649) | (13,650) | (770) | (336) | (13,006) | (7,068) | (469) | (168) |
Other operating expenses | 10 | (26,177) | (19,292) | (119) | (32) | (13,779) | (9,886) | (68) | (28) |
General and administative expenses | 11 | (29,731) | (22,138) | (1,056) | (390) | (15,349) | (11,016) | (575) | (283) |
Other property, plant and equipment cost | 12 | (8,696) | (9,443) | (143) | (47) | (4,356) | (4,790) | (78) | (19) |
Depreciation and amortisation | 13 | (3,852) | (2,575) | (37) | (40) | (2,022) | (1,332) | (18) | (20) |
Total expenses (92,105) (67,098) (2,125) (845) (48,512) (34,092) (1,208) (518) | |||||||||
Profit before income tax | 45,548 | 17,346 | 650 | 190 | 27,284 | 9,239 | 273 | 141 | |
Income tax expense | 14(a) | (3,773) | (1,084) | (216) | - | (2,740) | (481) | (153) | 1 |
Profit for the period 41,775 16,262 434 190 24,544 8,758 120 142 | |||||||||
Earnings per share - basic (in kobo) | 15 | 89k | 56k | 1k | 1k | ||||
Earnings per share - diluted (in kobo) | 15 | 89k | 56k | 1k | 1k | ||||
Statement of Other comprehensive income | |||||||||
In millions of Naira | June 2025 | June 2024 | June 2025 | June 2024 | Quarter 2 | Quarter 2 | Quarter 2 | Quarter 2 | |
2025 | 2024 | 2025 | 2024 | ||||||
Profit for the period | 41,775 | 16,262 | 434 | 190 | 24,544 | 8,758 | 120 | 142 | |
Items that will not be reclassified to profit or loss in | |||||||||
subsequent periods: Fair value loss on equity instruments at fair value | - | ||||||||
through other comprehensive income 657 2,982 - - 755 831 - -
Total items that will not be reclassified to profit or
loss 657 2,982 - - 755 831 - -
Items that will be reclassified to profit or loss in subsequent periods:
- Debt instruments measured at fair value through other comprehensive income: :
- Net change in fair value during the period 1,563 (12,462) - - 2,416 12,476 - -
Net gains/(losses) on financial investments at fair
value through
other comprehensive income: 1,563 (12,462) - - 2,416 12,476 - -
Other comprehensive loss for the period, net of tax 2,220 (9,480) - - 3,171 13,307 - -Total comprehensive (loss)/income for the period,
net of tax 43,995 6,782 434 190 27,715 22,065 120 142
# PUBLIC 10
Sterling Financial Holdings Company Plc and Subsidiaries Condensed Unaudited Interim Financial Statements for the Period Ended 30 June 2025
Condensed Statement of Financial Position
As at 30 June 2025
Group Company
In millions of Naira | Notes | June 2025 | December 2024 | June 2025 | December 2024 | |||
Assets Cash and balances with Central Bank of Nigeria | 16 | 760,743 | 867,125 | - | - | |||
Due from Banks | 17 | 760,233 | 569,455 | 20,588 | 14,735 | |||
Pledged financial assets | 18 | 39,091 | 28,675 | - | - | |||
Loans and advances to Customers | 19 | 1,183,110 | 1,103,970 | - | - | |||
Investment securities: | ||||||||
- Debt instruments at fair value through profit or | ||||||||
loss 20(a) - Debt instruments at fair value through other | 31,672 | 27,491 | - | - | ||||
comprehensive income 20(b) - Equity instruments at fair value through other | 740,472 | 485,529 | - | - | ||||
comprehensive income 20(c) | 49,676 | 48,635 | - | - | ||||
- Debt instruments at amortised cost 20(d) | 59,762 | 81,369 | - | - | ||||
Investment in subsidiary 21 | - | - | 251,775 | 225,819 | ||||
Other assets | 22 | 340,409 | 219,964 | 2,454 | 5,632 | |||
Right-of-use asset | 23 | 12,405 | 12,106 | - | - | |||
Investment Property | 24 | 3,610 | 4,036 | - | - | |||
Property, plant and equipment | 25 | 64,063 | 56,974 | 198 | 236 | |||
Intangible assets | 26 | 3,538 | 3,263 | - | - | |||
Deferred tax assets | 14(c) | 33,348 | 33,348 | - | - | |||
Total Assets | 4,082,132 | 3,541,940 | 275,015 | 246,422 | ||||
Liabilities Deposits from Banks | 27 | 299,087 | 49,364 | - | - | |||
Deposits from Customers | 28 | 2,776,180 | 2,518,512 | - | - | |||
Current income tax liabilities | 14(b) | 5,347 | 3,382 | 209 | 953 | |||
Other borrowed funds | 29 | 246,392 | 213,834 | - | - | |||
Debt securities issue | 30 | 34,095 | 34,056 | - | - | |||
Other liabilities | 31 | 323,191 | 394,927 | 3,664 | 717 | |||
Lease Liability | 32 | 1,808 | 1,800 | - | - | |||
Provisions | 33 | 592 | 576 | - | - | |||
Deferred tax liabilities | 14(c) | 20,330 | 20,330 | 44 | 44 | |||
Total Liabilities | 3,707,022 | 3,236,781 | 3,917 | 1,714 | ||||
Equity Share capital | 34 | 26,059 | 22,729 | 26,059 | 22,729 | |||
Share premium | 34 | 130,918 | 108,292 | 130,918 | 108,292 | |||
Retained earnings | 95,583 | 63,073 | 19,621 | 19,187 | ||||
Other components of equity | 122,550 | 111,065 | 94,500 | 94,500 | ||||
Total equity | 375,110 | 305,159 | 271,098 | 244,708 | ||||
Total liabilities and equity | 4,082,132 | 3,541,940 | 275,015 | 246,422 | ||||
The consolidated and separate financial statements were approved by the Board of Directors on July 29, 2025 and signed on its behalf by:
Yemi Odubiyi
Adebimpe Olambiwonnu, FCA
Chief Finance Officer Group Chief Executive Officer
FRC/2013/PRO/ICAN/001/00000001253 FRC/2013/PRO/DIR/003/00000001279
Condensed Statement of changes in equity
For the period ended 30 June 2025 Group
Share | Share | Fair value | Share | Regulatory | SMIEIS AGSMEIS | Statutory | Total other | Retained earnings | Total | |||
capital | premium | reserves | capital reserve | risk reserves | reserve | reserve | reserves | component of equity | ||||
In millions of Naira | ||||||||||||
Balance at 1 January 2025 | 22,729 | 108,292 | 23,049 | 5,276 | 36,386 | 235 | 6,523 | 39,596 | 111,065 | 63,073 | 305,159 | |
Comprehensive income for the year | - | - | - | - | - | - | - | - | - | 41,775 | 41,775 | |
Other comprehensive income net of tax | - | 2,220 | - | - | - | - | - | 2,220 | - | 2,220 | ||
Proceed from right issue | 3,330 | 22,626 | - | - | - | - | - | - | - | - | 25,956 | |
Transfer to other reserves | - | - | - | - | - | - | 2,073 | 7,193 | 9,265 | (9,265) | - | |
Dividends to equity holders | - | - | - | - | - | - | - | - | - | - | - | |
Balance at 30 June 2025 | 26,059 | 130,918 | 25,269 | 5,276 | 36,386 | 235 | 8,596 | 46,789 | 122,550 | 95,583 | 375,110 | |
Share capital | Share premium | Fair value reserves | Share capital reserve | Regulatory risk reserves | SMIEIS reserve | AGSMEIS reserve | Statutory reserves | Total other component of equity | Retained earnings | Total | |
In millions of Naira | |||||||||||
Balance at 1 January 2024 | 14,395 | 42,759 | 19,036 | 5,276 | 22,926 | 235 | 4,489 | 31,982 | 83,944 | 42,506 | 183,604 |
Comprehensive income for the year | - | - | - | - | - | - | - | - | - | 16,262 | 16,262 |
Other comprehensive income net of tax | - | - | (9,480) | - | - | - | - | - | (9,480) | - | (9,480) |
Proceed from share issued | - | - | - | - | - | - | - | - | - | ||
Transfer to other reserves | - | - | - | - | - | - | 806 | 3,085 | 3,890 | (3,890) | - |
Dividends to equity holders | - | - | - | - | - | - | - | - | - | - | - |
Balance at 30 June 2024 | 14,395 | 42,759 | 9,556 | 5,276 | 22,926 | 235 | 5,295 | 35,067 | 78,354 | 54,878 | 190,386 |
Company | ||||||||||
Share capital | Share premium | Fair value reserves | Share capital reserve | Regulatory risk reserves | SMIEIS AGSMEIS reserve reserve | Statutory Re-reserves organisation Reserve | Total other component of equity | Retained earnings | Total | |
In millions of Naira | - - - - - | - - - - - | - - - - - | - - - - - - - - - - | - 94,500 - - - - - - - - | 94,500 - - - - | ||||
Balance at 1 January 2025 | 22,729 | 108,292 | 19,187 | 244,708 | ||||||
Comprehensive income for the year Other comprehensive income net of tax Proceed from right issue | - -3,330 | - -22,626 | 434 - - | 434 -25,956 | ||||||
Transfer to other reserves | - | - | - | - | ||||||
Balance at 30 June 2025 | 26,059 | 130,918 | - | - | - | - - | - 94,500 | 94,500 | 19,621 | 271,098 |
Share | Share | Fair value | Share capital | Regulatory | SMIEIS AGSMEIS | Statutory Re- organisation | Total other component | Retained earnings | Total | |
capital | premium | reserves | reserve | risk reserves | reserve reserve | reserves Reserve | of equity | |||
In millions of Naira Balance at 1 January 2024 Comprehensive income for the year Other comprehensive income net of tax Proceed from share issued Transfer (from)/to other reserves Dividends to equity holders Balance at 30 June 2024 | 14,395 - - - - - | 42,759 - - - - - | - - - - - - | - - - - - - | - - - - - - | - - - - - - - - - - - - | - 94,500 - - - - - - - - - - | 94,500 - - - - - | 8,788 190 - - - - | 160,442 190 - - - - |
14,395 | 42,759 | - | - | - | - - | - 94,500 | 94,500 | 8,978 | 160,632 | |
For the period ended 30 June 2025
Group Company
In millions of Naira | Notes | June 2025 | June 2024 | June 2025 | June 2024 | |||
Operating activities Profit after tax | 41,775 | 16,262 | 434 | 79 | ||||
Adjustment for non cash items: Credit loss expense | 8 | 5,214 | 4,466 | - | - | |||
Depreciation and amortisation | 13 | 3,852 | 2,575 | 37 | 40 | |||
Gain on disposal of property and equipment | 7 | (1) | 13 | - | - | |||
Dividend received | 7 | (189) | (368) | - | - | |||
Foreign exchange gain/loss | (775) | (5,339) | - | - | ||||
Income tax charge | 3,773 | 1,084 | 216 | - | ||||
Net interest income | (97,415) | (57,586) | (996) | (487) | ||||
Changes in operating assets: | (43,766) | (38,893) | (309) | (368) | ||||
Restricted balance with Central bank | 115,344 | (131,272) | - | - | ||||
Pledged assets | (10,412) | (54,965) | - | - | ||||
Derivative assets | - | 276 | - | - | ||||
Investment securities at FVTPL | (4,181) | (23,572) | - | - | ||||
Loans and advances to customers | (80,445) | (29,874) | - | - | ||||
Other assets | (134,575) | 123,387 | 3,178 | (433) | ||||
(158,035) | (154,913) | 2,869 | (801) | |||||
Changes in operating liabilities: Deposit from banks | 249,723 | 56,195 | - | - | ||||
Deposits from customers | 268,134 | 50,495 | - | - | ||||
Derivative liabilities | - | 2,161 | - | - | ||||
Lease liability paid | - | (15) | - | - | ||||
Other liabilities | (64,941) | (31,347) | 3,024 | (31) | ||||
Cash generated from operations | 294,881 | (77,424) | 5,893 | (832) | ||||
Interest received | 167,160 | 120,878 | 996 | 487 | ||||
Interest paid on deposits from banks and customers | (60,644) | (48,312) | - | - | ||||
Income tax paid | (5,558) | (1,273) (1,037) | (6) | |||||
Net cash flows from operating activities | 395,839 | (6,131) 5,852 | (351) | |||||
Investing activities | ||||||||
Proceed from sale/redemption of debt instruments at FVOC | 212,439 | 302,214 | - | - | ||||
Purchase of debt instruments at FVOCI | (465,819) | (519,226) | - | - | ||||
Redemption of debt investment held at amortised cost | 35,361 | 64,761 | - | - | ||||
Purchase of debt investment held at amortised cost | (13,748) | (16,709) | - | - | ||||
Right-of-use asset | 23 | (948) | (342) | - | - | |||
Proceed from sales of investment properties | 909 | - | - | - | ||||
Purchase of investment properties | 24 | (500) | - | - | - | |||
Purchase of property and equipment | 25 | (13,576) | (9,126) | (27) | (20) | |||
Purchase of intangible assets | 26 | (751) | (103) | - | - | |||
Proceeds from the sale of property and equipment | 3,781 | 86 | 28 | - | ||||
Purchase of equity instrument at FVOCI | 2,672 | - | - | - | ||||
Investment in subsidiaries | - | - (25,956) | - | |||||
Dividend received | 7 | 189 | 368 - | - | ||||
Net cash flows from/(used in) investing activities | (239,991) | (178,077) (25,955) | (20) | |||||
Financing activities | ||||||||
Proceeds from other borrowed funds | 77,100 | 24,893 | - | - | ||||
Repayments of other borrowed funds | (42,462) | (44,242) | - | - | ||||
Interest paid on debt securities issued & borrowings | (9,054) | (15,098) | - | - | ||||
Proceeds from ordinary shares issued | 25,956 | - | 25,956 | - | ||||
Net cash flows from/(used in) financing activities | 51,540 | (34,447) | 25,956 | - | ||||
Net increase/(decrease) in cash and cash equivalents | 207,388 | (218,655) | 5,853 | (371) | ||||
Effect of exchange rate changes on cash and cash | ||||||||
equivalents | (7,648) | 89,729 | - | - | ||||
Cash and cash equivalents at beginning of the period | 659,493 | 391,875 | 14,735 | 8,696 | ||||
Cash and cash equivalents at end of the period | 35 | 859,233 | 262,949 20,588 | 8,325 | ||||
I
14
Notes to the Consolidated and Separate Financial Statements
For the period ended 30 June 2025
Corporate information
Sterling Financial Holdings Company Plc ("the Company") is a company incorporated in Nigeria with registered office at 20 Marina Lagos. These separate and consolidated financial statements, for the period ended 30 June 2025, are prepared for the Company and the Group (Holding Company and its subsidiaries, separately referred to as "Group entities") respectively.
The Group operating entities are engaged in commercial banking with emphasis on retail and consumer banking, trade services, corporate, investment and non-interest banking activities. It also provides wholesale banking services including the granting of loans and advances, letter of credit transactions, money market operations, electronic and mobile banking products and other banking activities.
Accounting policies
(a) Basis of preparation and statement of compliance
The condensed consolidated and separate financial statements of the Company and its subsidiary have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and in the manner required by the Companies and Allied Matters Act 2020, The Financial Reporting Council of Nigeria (Amendment) Act 2023, the Companys and Other Financial Institutions Act 2020, and relevant Central Bank of Nigeria circulars.
The condensed consolidated and separate financial statements have been prepared on a historical cost basis, except for financial assets measured at fair value.
Functional and Presentation currency
The consolidated and separate financial statements are presented in Nigerian Naira and all values are rounded to the nearest million (N'million) except when otherwise indicated.
Basis of Consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 30 June 2025. Sterling Financial Holdings Company Plc consolidates a subsidiary when it controls the entity. Control is achieved when the Company is exposed or has rights to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
Generally, there is a presumption that a majority of voting rights results in control. However, under individual circumstances, the Company may still exercise control with less than 50% shareholding or may not be able to exercise control even with ownership over 50% of an entity's shares. When assessing whether it has power over an investee and therefore controls the variability of its returns, the Company considers all relevant facts and circumstances, including:
The purpose and design of the investee
The relevant activities and how decisions about those activities are made and whether the Company can direct those activities
Contractual arrangements such as call rights, put rights and liquidation rights
Whether the Company is exposed, or has rights, to variable returns from its involvement with the investee, and has the power to affect the variability of such returns
Profit or loss and each component of OCI are attributed to equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group's accounting policies. All intra-group assets, liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.
Seasonality of operations
The impact of seasonality or cyclicality on operation is not regarded as significant to the condensed interim financial statement. The operation of the Group were even within the financial year.
Issuance, repurchase and repayment of debts and equity securities
During the period under review, the Group did not issue any commercial paper that resulted in an external inflow into the Bank.
Significant events after the end of the reporting period
There were no events after the reporting date which could have a material effect on the financial position of the Group and the Company as at 30 June 2025 and profit or loss and other comprehensive income attributable to equity holders on that date which have not been adequately adjusted for or disclosed.
Dividends
The Directors did not recommend the payment of any dividend for the Company's interim results for the period ended 30 June 2025.
Changes to accounting policy
The accounting policies adopted are consistent with those of the previous financial period.
Summary of material accounting policies
The accounting policies applied by the Company in these condensed interim financial statements are the same as those applied by the Group in its consolidated financial statements as at 31 December 2024 (unless otherwise stated). Below are the significant accounting policies.
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the lease term.
The right-of-use assets are presented in Note 24 and are subject to impairment in line with the Group's policy as described in Impairment of non-financial assets.
Lease liabilities
Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising thereof is accounted for on a straight-line basis over the lease term and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value (mainly offsite ATM space) assets recognition exemption to leases (i.e., below N2million). Lease payments on short term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
Financial instruments
Recognition and initial measurement
Regular purchases and sales of financial assets and liabilities are recognised on the trade date. A financial asset or financial liability is
measured initially at fair value plus or minus, for an item not at fair value through profit or loss, direct and incremental transaction costs that are directly attributable to its acquisition or issue. Transaction costs of financial assets and financial liabilities carried at fair value through profit or loss are expensed in profit or loss at initial recognition. Financial assets that are transferred to third parties but do not qualify for derecognition are presented in the statement of financial position as "pledged asset" if the transferee has the right to sell or re-pledge them.
Classification of financial instruments
The Group classified its financial assets under IFRS 9, into the following measurement categories:
Those to be measured at fair value through other comprehensive income (FVOCI) (either with or without recycling)
Those to be measured at fair value through profit or loss (FVTPL)); and
Those to be measured at amortised cost.
The classification depends on the Group's business model for managing financial assets and the contractual cashflow characteristics of the financial asset (i.e solely payments of principal and interest- SPPI test). Directors determine the classification of the financial instruments at initial recognition.
The Group classifies its financial liabilities as liabilities at fair value through profit or loss and liabilities at amortised cost.
- Subsequent measurements Debt instruments
The subsequent measurement of financial assets depend on its initial classification:
Amortised cost: A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
The financial asset is held within a business model whose objective is to hold financial assets to collect contractual cash flows; and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is determined using the effective interest method and reported in profit or loss as 'Interest income'.
The amortised cost of a financial asset or liability is the amount at which the financial asset or liability is measured at initial recognition, minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initial amount recognised and the maturity amount, minus any reduction for impairment.
Fair value through other comprehensive income (FVOCI): Investment in debt instrument is measured at FVOCI only if it meets both of the following conditions and is not designated as FVTPL:
the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The debt instrument is subsequently measured at fair value. Gains and losses arising from changes in fair value are included in other comprehensive income (OCI) and accumulated in a separate component of equity. Impairment gains or losses, interest revenue and foreign exchange gains and losses are recognised in profit and loss. Upon disposal or derecognition, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other operating income. Interest income from these financial assets is determined using the effective interest method and recognised in profit or loss as 'Interest income'.
The measurement of credit impairment is based on the three-stage expected credit loss model as applied to financial assets at amortised cost.
Fair value through profit or loss (FVTPL): Financial assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. The gain or loss arising from changes in fair value of a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is included directly in the profit or loss and reported as 'Net trading income in the period in which it arises. Interest income from these financial assets is recognised in profit or loss as 'Interest income'.
Equity instruments
The Group subsequently measures all equity investments at fair value. For equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in fair value in OCI. This election is made on an investment-by-investment basis. Where the Group's management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments continue to be recognised in profit or loss as other operating income when the Group's right to receive payments is established unless the dividend clearly represents a recovery of part of the cost of the investment. All equity financial assets are classified as measured at FVOCI. Where the Group has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss.
- Business model assessment
The Group makes an assessment of the objective of a business model in which an asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:
The stated policies and objectives for the portfolio and the operation of those policies in practice. In particular, whether management's strategy focuses on earning contractual interest revenue, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of the liabilities that are funding those assets or realising cash flows through the sale of the assets;
How the performance of the portfolio is evaluated and reported to the Group's management;
The risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;
How managers of the business are compensated e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and
The frequency, volume and timing of sales in prior periods, the reasons for such sales and its expectations about future sales activity. However, information about sales activity is not considered in isolation, but as part of an overall assessment of how the Group's stated objective for managing the financial assets is achieved and how cash flows are realised.
Financial assets that are held for trading or managed and whose performance is evaluated on a fair value basis are measured at FVTPL because they are neither held to collect contractual cash flows nor held both to collect contractual cash flows and to sell financial assets.
Assessment of whether contractual cash flows are solely payments of principal and interest on principal
For the purposes of this assessment, 'principal' is defined as the fair value of the financial asset on initial recognition. 'Interest' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making the assessment, the Group considers:
contingent events that would change the amount and timing of cash flows;
leverage features;
prepayment and extension terms;
terms that limit the Group's claim to cash flows from specified assets (e.g. non-recourse asset arrangements); and
Features that modify consideration of the time value of money - e.g. periodical reset of interest rates.
The Group holds a portfolio of long-term fixed rate loans for which the Group has the option to revise the interest rate at future dates. These reset rights are limited to the market rate at the time of revision. The right to reset the rates of the loans based on the revision in market rates are part of the contractually agreed terms at inception of the loan agreement, therefore the borrowers are obligated to comply with the reset rates without any option of repayment of the loans at par at any reset date. The Group has determined that the contractual cash flows of these loans are solely payments of principal and interest because the option varies with the interest rate in a way that is considered a consideration for the time value of money, credit risk, other basic lending risks and costs associated with the principal amount outstanding. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
- Reclassifications
Financial assets are not reclassified subsequent to their initial recognition, except in the period after the Group changes its business model for managing financial assets that are debt instruments. A change in the objective of the Group's business occurs only when the Group either begins or ceases to perform an activity that is significant to its operations (e.g., via acquisition or disposal of a business line).
The following are not considered to be changes in the business model:
A change in intention related to particular financial assets (even in circumstances of significant changes in market conditions)
A temporary disappearance of a particular market for financial assets
A transfer of financial assets among parts of the entity with different business models
When reclassification occurs, the Group reclassifies all affected financial assets in accordance with the new business model. Reclassification is applied prospectively from the 'reclassification date'. Reclassification date is 'the first day of the first reporting period following the change in business model. Gains, losses or interest previously recognised are not restated when reclassification occurs.
The Group may only sell insignificant portion of debt instruments measured at amortised cost frequently without triggering a change in business model. If the Group sells significant portions, this will not be more than twice a year subject to cases of unlikely to reoccur events such as:
Run on the Company/stressed liquidity scenarios
Credit risk event i.e. perceived issuer default
In the event of merger and takeover, the Company may sell portion of the portfolio if the security holdings violates set limits
Other one-off events
Significance is defined to mean 5% of the portfolio value and subject to the policy on frequency above.
The Group may sell debt instruments measured at amortised cost without triggering a change in business model if the sale is due to deterioration in the credit quality of the financial assets or close to maturity. A financial asset is said to be close to maturity if the outstanding tenor of the financial asset from the time of issue is 25% or less of the original tenor.
Sales close to maturity are acceptable if the proceeds from the sales approximate the collection of the remaining contractual cash flows. At the point of sale an assessment will be conducted to determine that the cash flows expected from the financial asset does not exceed the cash flows from the sales by ten (10) per cent.
- Modifications of financial assets and financial liabilities Financial assets
If the terms of a financial asset are modified, the Group evaluates whether the cash flows of the modified asset are substantially different. If the cash flows are substantially different, then the contractual rights to cash flows from the original financial asset are deemed to have expired. In this case, the original financial asset is derecognised and a new financial asset is recognised at fair value. Any difference between the amortised cost and the present value of the estimated future cash flows of the modified asset or consideration received on derecognition is recorded in the profit or loss statement.
If the cash flows of the modified asset carried at amortised cost are not substantially different, then the modification does not result in derecognition of the financial asset. In this case, the Group recalculates the gross carrying amount of the financial asset and recognises the amount arising from adjusting the gross carrying amount as a modification gain or loss in profit or loss.
Financial liabilities
The Group derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different. This occurs when the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10 percent different from the discounted present value of the remaining cash flows of the original financial liability. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in profit or loss. If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment (i.e the modified liability is not substantially different), any costs or fees incurred are adjusted to the carrying amount of the liability and are amortised over the remaining term of the modified liability.
- Impairment of financial assets
In line with IFRS 9, the Group assesses its financial instruments for impairment using Expected Credit Loss (ECL) approach.
The Group applies a three-stage approach to measuring expected credit losses (ECL) on debt instruments accounted for at amortised cost, FVOCI, loan commitment and financial guarantee contracts. Assets migrate through the following three stages based on the change in credit quality since initial recognition:
i) Stage 1: 12-months ECL
For exposures where there has not been a significant increase in credit risk since initial recognition and that are not credit-impaired upon origination, the portion of the lifetime ECL associated with the probability of default events occurring within the next 12 months is recognised. Interest revenue is calculated by applying the effective interest rate to the gross carrying amount.
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