Sterling Bank 2009 Annual Report

Sterling Bank Plc and subsidiary companies
Group financial statements for 15 months

Period ended 31 December 2009
Together with Directors' and Auditor's Reports

Table of contents
Page
Corporate governance report 2 - 5
Directors' report 6 - 11
Directors' responsibility statements 12
Audit Committee's Report 13
Auditors opinion 14 - 15
Statement of significant accounting policies 16 - 27
Consolidated profit and loss accounts 28
Consolidated balance sheets 29
Statements of cash flow 30
Notes to the financial statements 31 - 100
Value added statements 101 - 102
Five-year financial summaries 103 - 104
1
Group Financial Statements for Period Ended 31 December 2009
Corporate Governance
The Bank is committed to the principle of best practice in corporate governance, which aims at ensuring integrity,
openness, credibility, transparency and accountability in all facets of its business.
In line with corporate governance guidelines issued by the Central Bank of Nigeria in April 2006, the Board had
constituted the following committees:
Board Composition and Committee
Board Credit Committee

The Committee acts on behalf of the Board on credit matters and reports to the Board for approval/
ratification. The members are as follows:
Attendance No. of Meetings

1 Alhaji Lawal Kankia Ibrahim Chairman 2 8
2 Mr Yemi Idowu Member 6 8
3 Captain Harrison Kuti Member 7 8
4 Mr Yinka Adeola Member 8 8
5 Mr Yemi Adeola Member 7 8
6 Mr T.P.N. Rao Member 6 8
Board Finance and General Purpose Committee

The Committee acts on behalf of the Board on all matters relating to financial management and reports to the
Board for approval/ratification. The members are as follows:
1 Captain Harrison Kuti Chairman 4 4

2 Alhaji Aliyu A. Alkali, mni (Died) Member 2 4
3 Alhaji Bashir M. Borodo, MFR Member 4 4
4 Mr. Yemi Adeola Member 4 4
5 Mr T.P.N. Rao Member 4 4
Board Establishment Committee

The Committee acts on behalf of the Board on all matters relating to the workforce. The members are as follows:

1 Alhaji Bashir M. Borodo, MFR Chairman 2 3
4 Mr. Lanre Adesanya Member 2 3
2
Board Risk Management Committee

The committee is responsible for evaluating and handling issues relating to risk management in the Bank. The
members are as follows:

1 Mr. Yemi Idowu Chairman 4 4
2 Mr. Yinka Adeola Member 4 4
4 Mallam Garba Imam Member 3 4
5 Mr. T.P.N Rao Member 4 4
Audit Committee
The Committee acts on behalf of the Board on all audit matters. Decisions and actions of the Committee are
presented to the Board for approval/ratification. The members are as follows:

1 Mr. Mustapha Jinadu Chairman 6 6
2 Mr. Labaran Tanko Member 6 6
3 Mr. Jerome Akpan Member 6 6
5 Mr. Yemi Idowu Member 5 6
6 Alhaji Bashir M. Borodo, MFR Member 6 6
Board Meetings
Attendance at Board meetings for the period ended 31 December 2009
Director Attendance No of Meetings

Alhaji (Dr) S Adebola Adegunwa, OFR 7 7
Mr Yemi Adeola 7 7
Mr. T.C.A Ranganathan 1 7
Mr. Yemi Idowu 7 7
Captain Harrison Kuti 7 7
Alhaji Bashir M Borodo, MFR 5 7
Alhaji Aliyu A Alkali mni 7 7
Mr. Yinka Adeola 7 7
Mr Lanre Adesanya 7 7
Mallam Garba Imam 7 7
Mr. T.P.N. Rao 7 7
3
Management Committees
1 Executive Committee (EXCO)

The Committee provides leadership to the management team and ensures the implementation of strategies
approved by the Board. It deliberates and takes decisions on the effective and efficient management of the Bank.
2 Assets and Liability Committee (ALCO)

The Committee ensures adequate liquidity and the management of interest rate risk within acceptable
parameters. It also reviews the economic outlook and its impact on the Bank strategies.
3 Management Credit Committee (MCC)

The Committee approves new credit products and initiatives, minimum/prime lending rate and reviews the
credit policy manual. It approves exposures up to its maximum limit and the risk asset acceptance criteria.
4 Management Performance Review Committee (MPR)

The Committee reviews the Bank’s monthly performance on set targets and monitors budget achievement. It
also assesses the efficiency of resource deployment in the Bank and re-appraises cost management initiatives.
5 Criticised Assets Committee (CAC)

The Committee reviews the Bank’s credit portfolio and collateral documentation. It reviews the non-performing
loan stock and recovery strategies for bad loans.
6 Computer Steering Committee (CSC)

The Committee establishes the overall technology priorities by identifying projects that support the Bank’s
business plan. It provides guidance in effectively utilizing technology resources to meet business and
operational needs of the Bank.
7 Management Risk Committee (MRC)

The Committee is responsible for planning, management and control of the Bank's overall risks. It includes
setting the Bank's risk philosophy, risk appetite, risk limits and risk policies.
Succession Planning
Sterling Bank PLC has a Succession Planning Policy which was approved by the Board of Directors in 2009.
Succession Planning is aligned to the Bank’s overall organisational development strategy. In line with this policy,
a new Unit was set-up in the Human Resources & Performance Management Group to implement, amongst
others, a Succession Plan for the Bank.
The policy identifies six critical roles comprising 298 positions in respect of which there is a formal succession
planning.
Successors were nominated based on experience, skills and competencies through an automated process by
current role holders in conjunction with the Human Resources & Performance Management Group.
Development initiatives have also been put in place to accelerate successors’ readiness.
4
Code of Ethics
Sterling Bank has a Code of Ethics that specifies acceptable behavior of its staff. It is a requirement that all
staff should sign a confirmation that they have read and understood the document upon employment.
The Bank also has a Sanctions Manual which provides sample offences/violation and prescribes measures to
be adopted in various cases. The Head of Human Resources & Performance Management is responsible for
the implementation and compliance of the “Code of Ethics”.
Whistle Blowing Process
Sterling Bank recognizes that an effective whistle-blowing programme is a key element of good corporate
governance and risk management.
An essential attribute of the whistle-blowing process is the guaranty of confidentiality and protection of the
whistle–blower’s rights. It is also designed to ensure a sound, clean and high degree of integrity and transparency
in order to achieve efficiency and effectiveness in our operations.
The Bank has therefore provided for a whistle blowing channel via the Bank’s website, dedicated telephone
hotlines and email address in compliance with section 6.1.12 of the Central Bank of Nigeria (CBN) code of
corporate Governance for Banks in Nigeria post consolidation.
This robust whistle blowing process allows for reporting suspected breaches of the Bank’s internal policies
and unethical activities by all stakeholders of the Bank (i.e. Staff, Customers, Suppliers and Applicants etc).
The Bank’s Chief Compliance Officer (CCO) is responsible for monitoring and reporting on whistle blowing.
5
Directors' Report
For the period ended 31 December 2009
The Directors present their annual report on the affairs of Sterling Bank Plc (“the Bank”) and the subsidiary
companies ("the Group"), together with the audited financial statements and auditors' report for the period ended 31
December 2009
Change in accounting year end

The Group changed its financial year end from 30 September to 31 December based on the circular BSD/DIR/GEN/
CIR/03/017 issued by the Central Bank of Nigeria in respect of a common year end for all banks. These Group
financial statements have therefore been prepared for the fifteen-months period ended 31 December 2009.
Principal activity and business review

Sterling Bank Plc, (formerly known as NAL Bank Plc) was the pioneer merchant bank in Nigeria, established
on 25 November 1960 as a private liability company and was converted to a public limited company in April, 1992.
Sterling Bank Plc is engaged in universal banking with emphasis on consumer banking, trade services, investment
banking and capital market activities. It also provides wholesale banking services including the granting of loans
and advances, letter of credit transactions, equipment leasing, money market operations, electronic banking
products and other banking activities. Asset management services, insurance broking, stock broking, issuing
house, underwriting, security registration and custodial services are provided through its subsidiaries.
Legal form
Following the consolidation reforms introduced and driven by the Central Bank of Nigeria in 2004, the Bank
emerged from the consolidation of NAL Bank Plc, Indo-Nigerian Bank Limited, Magnum Trust Bank Plc,
NBM Bank Limited and Trust Bank of Africa Limited. NAL Bank Plc as the surviving bank adopted a new
name for the enlarged entity, ‘Sterling Bank Plc’. The enlarged bank commenced post merger business
operations on January 3, 2006 and the Bank’s shares are currently quoted on the Nigerian Stock Exchange(NSE).
The Bank has four (4) (2008: 5) non-bank subsidiaries; Sterling Asset Management and Trustees Limited, which
is engaged in investment and trusteeship business, Sterling Capital Markets Limited, engaged in investment banking,
financial advisory and asset management services, Sterling Registrars Limited, which act as registrars to public
companies, and SBG Insurance Brokers Limited, engaged in insurance brokerage business. The financial result of
these entities have been consolidated in these financial statements.
The Bank disposed 40% of the 60% equity interest in Nigerian Stockbrokers Limited (NSL) during the period.
Consequently, Nigerian Stockbrokers Limited which was previously a subsidiary, is now accounted for at the
period end as an Associate within the Group financial statements.
6
Operating results
Highlights of the Group's operating results for the period are as follows:
Group Group Bank Bank

31 December 30 September 31 December 30 September
2009 2008 2009 2008
15 months 12 months 15 months 12 months
N'000 N'000 N'000 N'000
Gross earnings 46,717,490 36,129,278 43,464,716 32,777,845
(Loss)/profit before taxation

and exceptional items (11,632,428) 6,289,809 (9,072,908) 6,096,985
Exceptional income - 4,774,732 - 4,774,732
Exceptional charge - (3,081,993) - (3,081,993)
(Loss)/profit before taxation (11,632,428) 7,982,548 (9,072,908) 7,789,724

Taxation 2,612,826 (1,398,669) 2,412,502 (1,266,571)
(Loss)/profit after taxation (9,019,602) 6,583,879 (6,660,406) 6,523,153

Non-controlling interest - (20,212) - -
(Loss)/profit attributable to group (9,019,602) 6,563,667 (6,660,406) 6,523,153
Transfer to statutory reserve - 1,956,946 - 1,956,946

Transfer to general reserve (9,019,602) 4,606,721 (6,660,406) 4,566,207
(9,019,602) 6,563,667 (6,660,406) 6,523,153
Total non-performing loan 22,842,806 7,196,566 22,289,082 7,196,566

Total non-performing loan as % of
gross loan 23.61% 9.67% 23.26% 9.81%
Earnings per share (kobo) - Basic (72)k 52k (53)k 52k
7
Beneficial ownership
The Bank is owned by Nigerian citizens, corporate bodies and foreign investors.
Directors who served during the year
The following directors served during the year under review:
Name Designation Date appointed Interest represented

/resigned
Alh.(DR).S.A Adegunwa,(OFR) Chairman Ess-ay Investment Limited
Mr.Yemi Adeola Group Managing -
Director
Mr.Lanre Adesanya Executive -
Director
Mr.T.P.N Rao (Indian) Executive -
Director
Mallam Garba Imam Executive -
Director
Mr. T. C. A. Rangannathan (Indian) Non-Executive Resigned on State Bank of India
Director 22/10/2009
Mr.Abhay Kumar Singh (Indian) Non-Executive Appointed on State Bank of India
Director 22/10/2009
Capt. Harrison Kuti Non-Executive Hak Air Limited
Director
Mr. Yemi Idowu Non-Executive Eban Odan Industrial
Director & Commercial Company
Alh. Aliyu A. Alkali (mni) Non-Executive Died New Nigeria Development
Director 25/09/2009 Company Limited
Alh.L.K Ibrahim Non-Executive Appointed on New Nigeria Development
Director 22/10/2009 Company Limited
Alh Bashir Borodo (MFR) Non-Executive Dantata Investment & Securities
Director Company Limited
Mr. Yinka Adeola Non-Executive Concept Features Limited
Director Alfanoma Nigeria Limited
Plural Limited
Reduvita Investment Limited
Quaker Intergrated Services Limited
8
Directors interests in shares

Interest of directors in the issued share capital of the Bank as recorded in the Register of members and/or as
notified by them for the purpose of section 275 of the Companies and Allied Matters Act of Nigeria were as follows:
Number of shares
December December September September
2009 2009 2008 2008
Names Direct Indirect Direct Indirect
Alh.(DR).S.A Adegunwa,(OFR) 900,962,953 18,841,522 771,902,130
Mr.Abhay Kumar Singh - 1,854,185,474 - 1,854,185,474
Capt. Harrison kuti - 704,149,559 - 704,149,559
Mr. Yemi Idowu - 191,248,789 - 937,313,460
Alh. Lawal Kankia Ibrahim - 121,615,633 - 116,902,603
Alh Bashir Borodo (MFR) 22,401 268,298,525 22,401 262,643,422
Mr. Yinka Adeola 12,723,566 248,444,153 12,723,566 687,794,972
Mr.Yemi Adeola 15,299,487 - 15,299,487 11,852,038
Mr.Lanre Adesanya 2,888,664 - 2,888,664 -
Mr.T.P.N Rao - - - -
Mallam Garba Imam 1,052,631 - 1,052,631 -
Analysis of shareholding
The range analysis of the distribution of the shares of the Bank as at 31 December 2009 is as follows:
Range of shares Number % Number %

of holders of units
1 - 1,000 32,717 35.31% 14,914,384 0.12%

1001 - 5,000 28,431 30.69% 63,681,612 0.51%
5,000 - 10,000 10,267 11.08% 68,468,997 0.55%
10,001 - 20,000 8,328 8.99% 111,883,733 0.89%
20,001 - 50,000 5,875 6.34% 179,337,822 1.43%
50,001 - 100,000 3,080 3.32% 204,489,345 1.63%
100,001 - 200,000 1,672 1.80% 231,927,286 1.85%
200,001 - 500,000 1,099 1.19% 333,609,996 2.66%
500,001 - 10,000,000 1,083 1.17% 1,725,154,023 13.73%
Above 10,000,001 87 0.09% 6,679,242,503 53.17%
Foreign shareholding 5 0.01% 2,950,381,842 23.48%
92,644 100.00% 12,563,091,543 100.00%
9
The following shareholders have shareholdings of 5% and above as at 31 December 2009:
December 2009 September 2008

% holding % holding
State Bank of India 14.76 14.75

Essay Investments Ltd 7.17 5.33
HAK Air Limited 5.6 5.6
Eba-Odan Commercial and Industrial Co. Ltd 1.42 7.46
Retirement of directors
Mr. Abhay Kumar Singh who was appointed as a Director since the last Annual General Meeting hereby retires and
offers himself for election. In accordance with Articles 92 of our Articles of Association, Captain Harison Kuti and
Mr. Yinka Adeola retire by rotation and being eligible, offer themselves for re-election.
Donations
The Group during the year donated a total sum of N25,355,000 (September 2008: N83,572,000) to various charitable
organizations and higher education institutions in the country details of which are shown below. No donation was made
to any political organization.
Details of donations Purpose N'000
Lagos Monarch Community Hall Project Cultural Development 5,000

Lagos State Waste Management Authority Donation Of Uniforms 4,700
Land Registry Company (LASG) Donation Of Pick-Up Vehicle 4,200
National Petroleum Investment Training Programme
Management Services 4,125
Lagos State Government Educational Summit 2,500
Nigerian Immigration Service Jingles For E-Payment
Authority 1,575
Women In Management And Business 1st Wimbiz Conference 1,000
Northern Nigeria Economic Summit Group Annual Summit 500
Ondo State Government Support For Ekimogun Day 500
Fate Foundation Youth Development Programme 480
Lagos State Ministry Of Transportation Commisioning Of Lagos State
Drivers Institute, Ikorodu 300
Sponsorship Of Children's Parliament Children's Parliament 250
National Sports Commission Sports Stakeholders Conference 225
25,355
Acquisition of own shares
The Bank did not acquire any of its shares during the period ended 31 December 2009 (30 September 2008: Nil).
Property and equipment

Information relating to changes in tangible assets is given in note 22 to the financial statements.
10
Employment and employees

Employment of disabled persons:
The Bank has a non-discriminatory policy on recruitment. Applications would always be welcomed from suitably
qualified disabled persons and are reviewed strictly on qualification. The Bank'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 Bank's premises and employees are aware of existing regulations.
The Bank provides subsidies to all levels of employees for medical expenses, transportation, housing, lunch etc.
Employee involvement and training:

The Bank is committed to keeping employees fully informed as much as possible regarding the Bank'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 Bank's performance are implemented whenever appropriate.
Post balance sheet event

There were no post balance sheet events which could have had a material effect on the state of affairs of the Bank
as at 31 December 2009 or the profit for the period ended on that date, which have not been adequately provided for
or disclosed.
Auditors
KPMG Professional Services have indicated their willingness to continue in office. In accordance with Section 357(2)
of the Companies and Allied Matters Act of Nigeria, a resolution will be proposed at the Annual General Meeting to
authorize the Directors to fix their remuneration.
BY ORDER OF THE BOARD:
Justina Lewa
Company Secretary
20, Marina, Lagos, Nigeria.
10 May 2010
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STATEMENTS OF DIRECTORS' RESPONSIBILITIES IN RELATION TO THE FINANCIAL

STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2009
In accordance with the provisions of Sections 334 and 335 of the Companies and Allied Matters Act 1990,
and Sections 24 and 28 of the Banks and Other Financial Institution Act 1991, the Directors are responsible
for the preparation of annual financial statements which give a true and fair view of the state of affairs of the
Group and the Bank, and of the financial performance for the period.
The responsibilities include ensuring that:
(a) appropriate internal controls are established both to safeguard the assets of the Group and to prevent
and detect fraud and other irregularities;
(b) the Group keeps accounting records which disclose with reasonable accuracy the financial position of
the Group and which ensure that the financial statements comply with the requirements of the
Companies and Allied Matters Act, 1990, Banks and Other Financial Institutions Act, 1991, Prudential
Guidelines, Nigerian Accounting Standards and relevant Circulars issued by the Central Bank of
Nigeria;
(c) the Group has used appropriate accounting policies, consistently applied and supported by reasonable
and prudent judgements and estimates, and that all applicable accounting standards have been followed;
and
(d) it is appropriate for the financial statements to be prepared on a going concern basis unless it is
presumed that the Bank and its subsidiaries will not continue in business.
The directors accept responsibility for the annual financial statements, which have been prepared using
appropriate accounting policies supported by reasonable and prudent judgments and estimates in conformity
with Statements of Accounting Standards, the requirements of the Companies and Allied Matters Act of
Nigeria, Banks and Other Financial Institutions Act, 1991, Prudential Guidelines, and relevant Circulars issued
by the Central Bank of Nigeria.
The directors are of the opinion that the financial statements give a true and fair view of the state of the
financial affairs of the Bank and Group and of the financial performance for the period.
The directors further accept responsibility for the maintenance of accounting records that may be relied upon
in the preparation of the financial statements, as well as adequate systems of financial control.
Nothing has come to the attention of the directors to indicate that the Group will not remain a going concern
for at least twelve months from the date of this statement.
Signed on behalf of the Directors by:
___________________________ ___________________________
Alhaji (Dr) S.A. Adegunwa, OFR Yemi Adeola
10 May 2010 10 May 2010
12
Report of the Audit Committee

To the members of Sterling Bank Plc:
In accordance with the provision of Section 359 (6) of the Companies and Allied Matters Act of Nigeria,
the members of the Audit Committee of Sterling Bank Plc hereby report as follows:
● We have exercised our statutory functions under Section 359 (6) of the Companies and Allied Matters
Act of Nigeria and acknowledge the co-operation of management and staff in the conduct of these
responsibilities.
● We are of the opinion that the accounting and reporting policies of the Bank and Group are in accordance
with legal requirements and agreed ethical practices and that the scope and planning of both the external
and internal audit for the period ended 31 December 2009 were satisfactory and reinforce the Group’s
internal control systems.
● We are satisfied that the Bank has complied with provisions of Central Bank of Nigeria circular BSD/1/2004
dated 18 February 2004 on “Disclosure of directors' related credits in the financial statements of banks”,
and hereby confirm that an aggregate amount of N1.692 billion (September 2008: N1.197 billion) was
outstanding as at 31 December 2009.The status of performance of these facilities are disclosed in note
38.
● We have deliberated with the External Auditors, who have confirmed that necessary co-operation was
received from management in the course of their statutory audit and we are satisfied with the management’s
response to the External Auditor's recommendations on accounting and internal control matters and with
the effectiveness of the Bank's system of accounting and internal control.
Mr. Mustapha Jinadu

Chairman, Audit Committee 10 May, 2010
Members of the Audit Committee are:
1 Mr. Mustapha Jinadu Chairman

2 Mr. Labaran Tanko Member
3 Mr. Jerome Akpan Member
4 Captain Harrison Kuti Member
5 Mr. Yemi Idowu Member
6 Alhaji Bashir M. Borodo, MFR Member
In attendance:
Justina Lewa Secretary
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To the Members of Sterling Bank Plc:
Report on the Financial Statements

We have audited the accompanying financial statements of Sterling Bank Plc (“the Bank”) and its subsidiaries
(“the Group”), which comprise the group and separate balance sheets as at 31 December 2009, and the group
and separate profit and loss accounts, group and separate statements of cash flow and group and separate
statements of value added for the period then ended, and the statement of accounting policies, notes to the
financial statements and five years financial summary, as set out on pages 16 to 104.
Directors' Responsibility for the Financial Statements

The directors are responsible for the preparation and fair presentation of these financial statements in accordance
with Statements of Accounting Standards applicable in Nigeria and in the manner required by the Companies
and Allied Matters Act of Nigeria, the Banks and Other Financial Institutions Act of Nigeria, and relevant
Central Bank of Nigeria circulars. This responsibility includes: designing, implementing and maintaining internal
control relevant to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circumstances.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our
audit in accordance with International Standards on Auditing. Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor's judgment, including the assessment of
the risks of material misstatement of the financial statements, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation
of the financial statements in order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of Sterling Bank Plc
("the Bank") and its subsidiaries (together "the Group") as at 31 December 2009, and of the Group and Bank's
financial performance and cash flows for the year then ended in accordance with Statements of Accounting
Standards applicable in Nigeria and in the manner required by the Companies and Allied Matters Act of
Nigeria, Banks and Other Financial Institutions Act of Nigeria, and relevant Central Bank of Nigeria circulars.
14
Emphasis of matter
Without qualifying our opinion, we draw attention to Note 43 to the financial statements which indicates that
the Group and Bank incurred losses of N9.020billion and N6.660billion respectively during the period ended
31 December 2009 and as of that date, the Group and Bank had shareholders’ funds of N21.074billion and
N22.142billion respectively. The Note also explains the details of the on-going recapitalisation plans of the Bank.
Report on Other Legal and Regulatory Requirements

Compliance with the requirements of Schedule 6 of the Companies and Allied Matters Act of Nigeria
In our opinion, proper books of account have been kept by the Bank and its subsidiaries, so far as appears from
our examination of those books and the group and separate balance sheets and profit and loss accounts are in
agreement with the books of accounts.
Compliance with Section 27 (2) of the Banks and Other Financial Institutions Act of Nigeria and Central Bank
of Nigeria circular BSD/1/2004
i. The Bank contravened the provisions of Sections 25 of the Banks and Other Financial Institutions Act
of Nigeria during the period ended 31 December 2009. Details of these and other contraventions are
are stated in Note 40 to the financial statements.
ii. Related party transactions and balances are disclosed in Note 38 to the financial statements in compliance
with the Central Bank of Nigeria circular BSD/1/2004.
10 May, 2010
Lagos, Nigeria
15
Statement of significant accounting policies
A summary of the principal accounting policies, which have been applied consistently throughout the current
and preceding periods, is set out below: except for the waiver of the requirement for a one percent (1%) general
provision on performing loans as described in note h.
(a) Basis of preparation
These financial statements are the consolidated financial statements of Sterling Bank Nigeria Plc., a
company incorporated in Nigeria, and its subsidiaries (hereinafter collectively referred to as "the Group").
The financial statements are prepared under the historical cost convention modified by the revaluation of
certain investment securities, and comply with the Statement of Accounting Standards issued by the
Nigerian Accounting Standards Board (NASB).
The preparation of financial statements in conformity with the generally acceptable accounting principles
requires the use of estimates and assumption that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Although these estimates are based on the
director's best knowledge of current events and actions, actual results ultimately may differ from those
estimates.
(b) Reporting period:

The Group changed its financial year end from 30 September to 31 December based on the circular
BSD/DIR/GEN/CIR/03/017 issued by the Central Bank of Nigeria in respect of a common year end for
all banks. These Group financial statements have therefore been prepared for the fifteen-months period
ended 31 December 2009.
(c) Goodwill
The excess of the cost of the combination over the value of the net identifiable assets acquired is recognized
as an asset in the Bank’s balance sheet as goodwill arising on combination. Effective 1 January, 2008, the
Nigerian Accounting Standards Board introduced the Statement of Accounting Standard No. 26 on Accounting
for Business Combinations. This Standard provides that goodwill arising from a business combination be
recognised as an asset and tested periodically for impairment. Impairment losses are to be charged to the
profit and loss account.
(d) Basis of consolidation
Subsidiaries
Subsidiary undertakings, which are those companies in which the Bank, directly or indirectly, has an
interest of more than half of the voting rights or otherwise has power to exercise control over their
operations, have been consolidated. Where necessary, accounting policies for subsidiaries have been
changed to ensure consistency with the policies adopted by the Bank. Separate disclosure is made for
minority interest.
16
The accounting policies of the subsidiaries are consistent with the policies adopted by the Bank and all
inter-company transactions, balances and unrealised surpluses and deficits on transactions between group
companies have been eliminated.
The consolidated financial statement combine the financial statement of Sterling Bank Plc ("the Bank")
and its subsidiaries ("the Group") wherein there is majority shareholding and/or control of the Board of
Directors and management. The consolidated subsidiaries are Sterling Asset Management and Trustees
Limited, Sterling Registrars Limited, Sterling Capital Markets Limited and Sterling Insurance Brokers
Limited.
Unrealised gain/losses on intergroup transactions

Inter-company transactions, balances and unrealised gains on transactions between Group companies
are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of
impairment of the asset transferred.
Investments in subsidiary are recognised in the separate financial statements of the Bank at cost.
Associates and joint ventures

Associates are those entities in which the Bank has significant influence but not control, over the financial
and operating policies. Joint ventures are those entities over whose activities the Group has joint control,
established by contractual agreement and requiring unanimous consent for strategic financial and operating
decisions. Investments in associates and joint ventures are accounted for using the equity method of
accounting and are recognised at cost less impairment in the Bank’s separate financial statements.
The Group’s share of the associates and joint ventures' post acquisition profits or losses are recognised in
the profit and loss accounts. Its share of pre-acquisition reserves is recognised in reserves. The cumulative
reserves are adjusted against the carrying amount of the investments.
When the Group’s share of losses equals or exceeds its interest in an associate/joint venture including any
other unsecured receivables, the Group’s carrying amount is reduced to nil and recognition of further loss is
discontinued except to the extent that the Group has incurred legal or constructive obligations or made
payments on behalf of an associate. Distributions received from an associate are applied to reduce the
carrying amount of the investment. Adjustments are also made to the carrying amount of the investment
for changes in the Bank’s proportionate interest in the associate arising from changes in equity that have
not been recognized in the associate’s profit and loss account. Such changes include those arising from
the revaluation of properties, plant and equipment and from foreign exchange translation differences. The
Bank’s share of those reserves is recognized directly in the equity of the Bank.
SMIEES Investments
Due to the effective percentage holding of the Bank in Small and Medium Enterprise Equity Investment
Scheme (SMIEES), some of the entities qualify as associates. However, equity method of accounting
for associates are not applied as they are held for sale. The investment in SMIEES are recognised at
cost less impairment in the financial statements.
17
(e) Segment reporting

A segment is a distinguishable component of the Group that is engaged in providing related products or
services (business segment), or in providing products or services within a particular economic environment
(geographical segment), which is subject to risks and rewards that are different from those other segments.
Segment information is presented in respect of the Group’s business segments. The Group’s primary format
for segment reporting is based on business segments. The business segments are determined by
management based on the Group’s internal reporting structure. Segment results, assets and liabilities include
items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
(f) Foreign currency items
i. Reporting currency
The consolidated financial statements are presented in Nigerian Naira, which is the Bank's reporting
currency.
ii. Transactions and balances

Transactions denominated in foreign currencies are recorded in Naira at the rate of exchange ruling at the
date of each transaction. Monetary assets and liabilities denominated in foreign currencies at the balance
sheet date are translated at the rate of exchange prevailing at that date. Any gain or loss arising from a
change in exchange rates subsequent to the date of the transaction is included in the profit and loss account.
Exchange losses on long term monetary assets and liabilities arising from significant currency devaluations
are deferred and amortized to the profit and loss account over the remaining life of the asset/liability where
it is reasonable to expect that similar currency devaluations affecting the items will not recur on the
items in future.
(g) Income recognition

Credits to the profit and loss account are recognised as follows:
(i) Interest is recognised on accrual basis except for interest on non-performing credit facilities,
which is recognised on a cash basis.
(ii) Credit-related fee income constituting at least 10% of the projected annual yield of the related
facility is deferred and amortised over the life of the related credit in proportion to the outstanding
balance. Otherwise it is recognised at the time the credit is granted.
(iii) Non - credit related fees are recongised when the successful outcome of the assignment can
be determined and the assignment is considered substantially completed.
(iv) Income from advances under finance lease is recognised on a basis that provides a constant
yield on the outstanding principal over the lease term.
(v) Commissions and fees charged to customers for services rendered are recognised at the time
the service or transaction is effected.
18
(v) Investment income is recognised on an accrual basis and credited to the profit and loss account.
(vi) Dividend income is recognised when the right to receive the dividend is established.
(vii) Brokerage income is recongised on an accrual basis.
(h) Loans and advances

Loans and advances are stated net of allowance for doubtful accounts. Allowances are determined in
accordance with the Central Bank of Nigeria's Prudential Guidelines for Licensed Banks for specific
assessment of each customer's account as stated below:
Period principal or interest has been outstanding Classification % Provision required

90 days but less than 180days Substandard 10
180days but less than 360days Doubtful 50
Over 360 days Lost 100
Upon classification of facility as non-performing, interest previously accrued and not received are reversed
from revenue account and credited into interest in suspense account. Future interest charged on the account
is credited to the same account until such facilities becomes performing.
A minimum of 1% general allowance is made on all loans and advances not specifically provided for. In
the current year, the Nigerian Accounting Standard Board (NASB), via its publication dated 08 February
2010 at the request of the Central Bank of Nigeria (CBN) granted a waiver for financial statements ended
on or before 31 December 2009 of the 1% general provision required by paragraph 55 of “Statement of
Accounting Standards – SAS 10 on Accounting for Banks and Non-bank financial institutions”. Accordingly,
the Bank did not make a general provision on loans and advances. The general provision brought forward
in the Bank from the prior period has been written back to the profit and loss account (see Note 13 (b)(ii)).
Margin facilities are classified as either performing or non-performing loans. Allowance for losses on
non performing margin facilities are determined by writing down the outstanding balance of the loans to
the net realisable value of the underlying securities. The excess of the loan amount above the net
realisable value of the underlying securities is charged to the profit and loss account.
Bad debts are written off when the extent of the loss has been determined. Recoveries are written back
to profit and loss account on a cash basis.
When a loan in respect of which a provision for impairment has already been made is deemed not collectible,
it is written off against the related provision for impairments and subsequent recoveries are credited to
the profit and loss account.
Loan in respect of which a previous provision was not made are written off directly to profit and loss
account when they are deemed to be not collectible.
19
Advances to customers under finance leases are stated net of unearned income. Lease finance income
is recognised in a manner, which provides a constant yield on the outstanding net investment over the lease
period.
In accordance with Prudential Guidelines for licensed banks, specific allowance is made, as applicable to
loans and advances, on leases that are past due for 90 days or more.
(i) Other assets

Prepayments, receivables and other sundry debit balances are classified as other assets and are stated at
cost net of allowances for amounts doubtful of recovery.
Allowances for doubtful accounts are made in line with the provisions of the CBN Prudential Guidelines
for receivables whose collection has been identified by management as doubtful. When a receivable is
deemed not collectible, it is written off against the related allowance and subsequent recoveries are
credited to the profit and loss account.
(j) Investment
The Group classifies its investments into the following categories: short-term investments, long-term
investments and investments in subsidiaries. Investment securities (short-term and long-term investments)
are initially recognized at cost and classified upon initial recognition. Debt and equity securities intended to
be held for a period not exceeding one year or with tenor to maturity not exceeding one year, and
investments held for trading are classified as short-term investments.
i. Short-term investments
Short-term investments are investments held temporarily in place of cash and which can be converted into
cash when current financing needs make such conversion desirable. In addition, such investment is to be
held for not more than one year.
Investments held-for-trading are those investments that the Group acquires principally for the purpose of
selling in the near term, or holds as part of a portfolio that is managed together for short-term profit taking.
Investments held-for-trading and other marketable securities are stated at net realisable value. The gain/loss
on revaluation is credited/charged to profit and loss account during the year/period.
Treasury bills are presented net of unearned discount. Unearned discount is deferred and amortised as
earned. Investments in treasury bills held for trading are carried at net realizable value. Gains or losses
resulting from market valuation are recognised in the profit and loss account.
ii. Long-term investments

Long-term investments are investments held over a long period of time to earn income. Long-term
investments may include debt and equity securities.
Long term investments in marketable securities are stated at the lower of cost and net realizable value.
Any discount or premium arising on acquisition of debt is included in the original cost of the investment
and is amortised over the period of purchase to maturity.
20
Interest earned whilst holding investment securities is reported as interest income. Dividends receivable
are included separately in dividend income when a dividend is declared. A change in market value of
investment securities is not taken into account unless it is considered to be permanent.
iii. Investments in subsidiaries

Investments in subsidiaries are carried in the Bank’s balance sheet at cost less provisions for impairment
losses. Where, in the opinion of the Directors, there has been impairment in the value of an investment,
the loss is recognised as an expense in the period in which the impairment is identified.
On disposal of an investment, the difference between the net disposal proceeds and the carrying amount
amount is charged or credited to the profit and loss account.
iv. Investments in associates

Investments in associates are carried in the Bank’s balance sheet at cost less impairment.
(k) Investment properties

Investment properties are carried in the balance sheet at valuation amount and revalued periodically on a
systematic basis not exceeding three years. An increase in the carrying amount of investment arising
from the revaluation is credited directly to owner's equity as revaluation surplus.
A permanent decline in the value of the investment is charged to the income statement while a reduction
in the carrying amount of the investment is reversed when there is an increase, other than temporary, in
the value of the investment, or if the reasons for the reduction no longer exist.
(l) Property and equipments

All property and equipments are initially recorded at cost or valuation less accumulated depreciation. They
are subsequently stated at historical cost/revalued amount less depreciation. Historical/revalued amount
includes expenditure that is directly attributable to the acquisition of the assets.
Subsequent costs are included in the asset's carrying amount or are recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the asset will flow to
the Group and the cost of the asset can be measured reliably. All other repairs and maintenance are
charged to the profit and loss account during the financial period in which they are incurred.
Construction cost in respect of offices is carried at cost as capital work in progress. On completion of
construction, the related amounts are transferred to the appropriate category of property and equipment.
Depreciation is calculated on a straight line basis to write down the cost of the property and equipment to
their residual values over their estimated useful lives as follows:
Leasehold properties - 2%
Leasehold improvements - 10%
Furniture, fittings and equipment - 20%
Computer software and equipment - 33⅓%
Motor vehicles - 25%
Capital work in progress is not depreciated.
21
Assets that are subject to depreciation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An asset's carrying amount is
written down immediately to its recoverable amount if the asset's carrying amount is greater than its
estimated recoverable amount. The recoverable amount is the higher of the asset's value less cost to
sell or the value in use.
Gains and losses on disposal are determined by comparing proceeds with carrying amount. These are
included in the profit and loss account for the year.
(m) Leases
The Group classifies a lease as finance lease if the following conditions are met:
(a) Lease is non-cancelable, and

(b) any of the following is applicable
i. the lease term covers substantially (80% or more) the estimated useful life of the asset or,
ii. the net present value of the lease at its inception using the minimum lease payments and implicit
interest rate is equal to or greater than the fair value of the leased asset or,
iii. the lease has a purchase option which is likely to be exercised.
A lease that does not quality as a finance lease as specified above is treated as an operating lease.
A Group company can be a lessor or a lessee in either a finance lease or an operating lease.
i. Where a Group Company is the lessor

When assets are held subject to a finance lease, the transactions are recognized in the books of the Group
at the net investments in the lease. Net investment in the lease is the gross investment in the lease
discounted at the interest rate implicit in the lease. The gross investment is the sum of the minimum lease
payments plus any residual value payable on the lease. The discount on lease is defined as the difference
between the gross investment and the present value of the asset under the lease.
The discount is recognized as unearned in the books of the Group and amortized to income as they are
earned over the life of the lease at a basis that reflects a constant rate of return on the Group’s net
investment in the lease.
Finance lease are treated as risk assets and the net investment in the lease are subject to the provisioning
policy listed in note (h) above.
When assets are held subject to an operating lease, the assets are recognized as property and equipment
based on the nature of the asset and the Group’s normal depreciation policy for that class of asset applies.
Lease income is recognized on a straight line over the lease term.
All indirect costs associated with the operating lease are charged as incurred to the profit and loss account.
22
ii. Where a Group Company is the lessee

When the assets leased are subject to operating lease, the total payments made under operating leases
are charged to profit and loss on a systematic basis in line with the time pattern of the Group’s benefit.
When the assets are subject to a finance lease, the Group accounts for it by recording the lease as an
acquisition of an asset and the incurrence of a liability.
At the beginning of the lease term, the Group records the initial asset and liability at amounts equal to the
fair value of the leased asset less the present value of an un-guaranteed or partially guaranteed residual
value which would accrue to the lessor at the end of the term of the lease. The discount factor to apply
in calculating the present value of the un-guaranteed residual value accruing to the lessor is the interest
rate implicit in the lease.
Where the Group cannot determine the fair value of the leased asset at the inception of the lease or is
unable to make a reasonable estimate of the residual value of the lease without which the interest rate
implicit in the lease could not be computed, the initial asset and liability are recorded at amounts equal to
the present value
The leased asset is depreciated or the rights under the leased asset are amortized in a manner consistent
with the Group’s own assets.
The minimum lease payment in respect of each accounting period is allocated between finance charge
and the reduction of the outstanding lease liability. The finance charge is determined by applying the rate
implicit in the lease to the outstanding liability at the beginning of the year.
(n) Cash and cash equivalents
(i). Cash and balances with CBN

Cash comprises cash in hand denominated in Naira and foreign currencies and cash balances held with
Central Bank of Nigeria (CBN). Cash equivalent are short-term, highly liquid investments which are:
- readily convertible into cash, whether in local or foreign currency; and

- so near to their maturity dates as to present insignificant risk of changes in value as a result of changes
in interest rates.
(ii). Due from other banks

Due from other banks represents cash held in other banks in Nigeria and banks outside Nigeria.
(o) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be
required to settle the obligation.
(p) Off balance sheet transactions/contingent liabilities and contingent assets

A contingent liability is a possible obligation that arises from past events and whose existence will be
confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly
within the control of the Group or the Group has a present obligation as a result of past events but is not
recognised because it is not likely that an outflow of resources will be required to settle the obligations;
or the amount cannot be reliably estimated.
23
Contingent liabilities normally comprise of legal claims under arbitration or court process in respect of
which a liability is not likely to eventuate.
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed
only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the
control of the Group.
A contingent asset is never recognised rather they are disclosed in the financial statements when they arise.
Transactions to which there are no direct balance sheet risks to the Group are reported and accounted
for as off balance sheet transactions and comprise:
Acceptances
Acceptances are undertakings by the Bank to pay bills of exchange drawn on customers. The Bank
expects most acceptances to be settled simultaneously with the reimbursement from customers.
Acceptances, which meet the conditions, set out in Central Bank of Nigeria (CBN) Guidelines on the
treatment of bankers acceptances and commercial papers are accounted for and disclosed as contingent
liabilities. The income and expense relating to these acceptances are recognised and reported net in the
financial statements.
Guarantees and performance bonds

The Bank provides financial guarantees and bonds to third parties on the request of customers in the form
of bid and performance bonds or advance payment guarantees. These agreements have fixed limits and
generally do not extend beyond the period stated in each contract.
The uncollaterized portion of bonds and guarantees are disclosed in financial statements. Commissions
and fees charged to customers for services rendered in respect of bonds and guarantees are recognized
at the time the services or transactions are effected.
Commitments
Commitments to extend credit or deliver on sales or purchases of foreign exchange in future are recognized
as off balance sheet engagements. Commissions and fees charged to customers for services rendered in
respect of commitments are recognized at the time the service or transaction is effected.
Letters of credit
The Bank provides letters of credit to guarantee the performance of customers to third parties. Confirmed
letters of credit for which the customer has not provided cash cover are reported off balance sheet.
(q) Retirement benefits

Pension costs
The Bank operates a defined contributory pension scheme. The scheme is fully funded and is managed
by licensed Pension Fund Administrators. Membership of the scheme is automatic upon commencement
of duties at the Bank. The employee and the Bank contributes 7.5% and 15% respectively of the
employee's annual basic salary as well as housing and transport allowances to the scheme. Employer's
contributions to this scheme are charged to profit and loss account in the period to which they relate.
Employee's contributions are funded through their payroll.
24
(r) Deferred taxation

Deferred taxation, which arises from timing differences in the recognition of items for accounting and tax
purposes, is calculated using the liability method. Deferred taxation is fully provided for on timing differences,
which are expected to reverse at the rate of tax likely to be in force at the time of reversal. Currently
enacted tax rates are used to determine deferred income tax.
A deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available
against which the associated unused tax losses and deductible temporary differences can be utilised.
Deferred tax assets are reduced to the extent that it is no longer possible that the related tax benefit will
be realised.
(s) Taxation
Income tax expenses/credits are recognised in the profit and loss account. Current income tax is the
expected tax payable on the taxable income for the year, using statutory tax rates at the balance sheet date.
(t) Borrowings
Borrowings are recorded at face value less amount repaid. Direct issue cost are capitalised and amortized
over the tenor of the underlying instrument. Interest costs are recognised in the income statement over the
duration of the instrument.
(u) Ordinary share capital

Share issue costs
Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net
of tax, from the proceeds.
(v) Dividends
Dividends on ordinary shares are appropriated from retained earnings and recognised as a liability in the
period in which they are declared. Dividends that are proposed but not yet declared are disclosed in the
notes to the financial statements.
(w) Sale of loans or securities

A sale of loans or securities without recourse to the seller is accounted for as a disposal and the asset
excluded from the balance sheet.
Profits or losses on sale of loans and securities without recourse to the seller is recognised by the seller
when the transaction is completed.
The Group regards a sale of loans or securities as without recourse, if it satisfies all the following
conditions. Any sale not satisfying these conditions will be regarded as with recourse.
- control over the economic benefit of the asset must be passed on to the buyer;
- the seller can reasonably estimate any outstanding cost; and
- there must not be any repurchase obligations
A sale or transfer of loans or securities with recourse where there is an obligation to, or an assumption
of, repurchase is not treated as a sale, and the asset remains in the Group's balance sheet, with any
related cash received recognised as a liability.
Profit arising from the sale or transfer of loans or securities with recourse to the seller is amortized over
the remaining life. However, losses are recognised as soon as they can be reasonably estimated.
25
Where there is no obligation to or assumption of repurchase, the sale is treated as a disposal and the
asset excluded from the balance sheet, and any contingent liability disclosed.
(x) Offsetting
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is
a legal enforceable right to set off the recognised amounts and there is an intention to settle on a net
basis, or realise the asset and settle the liability simultaneously.
(y) Funds under management

Funds under management represent cash deposits made by customers. Funds under management are
accounted for at cost plus accrued interest. Interests earned by customer are reported as interest
expenses in the profit and loss account.
(z) Earnings per share

The Group's presents basic earnings per share for its ordinary shares. Basic earnings per share are
calculated by dividing the profit and loss attributable to ordinary shareholders of the Group by the
weighted number of ordinary shares oustanding during the year.
Adjusted earnings per share is determined by dividing the profit or loss atributable to ordinary shareholders
by the weighted number of ordinary shares adjusted for any bonus shares issued.
26
Consolidated Profit and Loss Accounts

For the Period Ended 31 December 2009
Dec. 2009 Sept. 2008 Dec. 2009 Sept. 2008
Notes 15 months 12months 15 months 12months
N'000 N'000 N'000 N'000
GROSS EARNINGS 46,717,490 36,129,278 43,464,716 32,777,845
Interest and similar income 3 34,009,601 22,405,298 32,587,287 22,177,928

Interest and similar expenses 4 (20,613,620) (10,240,379) (20,134,503) (10,457,211)
Net interest margin 13,395,981 12,164,919 12,452,784 11,720,717
Fee and commission income 5 6,085,807 10,679,177 5,599,130 6,725,479

Fee and commission expenses - - - -
Net fee and commission income 6,085,807 10,679,177 5,599,130 6,725,479
Foreign exchange earnings 994,697 564,830 994,697 564,830

Income from investments 6 2,668,755 1,214,766 2,071,836 2,044,401
Other income 2,958,630 1,265,207 2,211,766 1,265,207
Operating income 26,103,870 25,888,899 23,330,213 22,320,634
Operating expenses 7 (22,068,318) (16,467,429) (19,434,227) (13,966,433)

Loan loss expenses 13 (12,532,003) (2,146,593) (11,513,630) (2,134,555)
Diminution in value of other risk assets 8 (3,024,310) (985,068) (1,455,264) (122,661)
Group's share of post tax result of associates
and joint ventures (111,667) - - -
(LOSS)/PROFIT ON ORDINARY ACTIVITIES
BEFORE EXCEPTIONAL ITEMS (11,632,428) 6,289,809 (9,072,908) 6,096,985
Exceptional income - 4,774,732 - 4,774,732

Exceptional charge 24(b) - (3,081,993) - (3,081,993)
BEFORE TAXATION (11,632,428) 7,982,548 (9,072,908) 7,789,724
Taxation 9 2,612,826 (1,398,669) 2,412,502 (1,266,571)

AFTER TAXATION (9,019,602) 6,583,879 (6,660,406) 6,523,153
Non-controlling interest 33 - (20,212) - -
(LOSS)/PROFIT ATTRIBUTABLE TO EQUITY

HOLDERS OF THE BANK (9,019,602) 6,563,667 (6,660,406) 6,523,153
APPROPRIATIONS
Transfer to statutory reserve 32 - 1,956,946 - 1,956,946
Transfer to general reserve 32 (9,019,602) 4,606,721 (6,660,406) 4,566,207
(9,019,602) 6,563,667 (6,660,406) 6,523,153
Earnings per share (kobo) - Basic 37 (72)k 52k (53)k 52k
The accounting policies on pages 16 to 27 and financial statements and notes on page 28 to 104. form an integral part of these financial statements
28
Consolidated Balance Sheets
As at 31 December 2009
Notes Dec. 2009 Sept. 2008 Dec. 2009 Sept. 2008
ASSETS N'000 N'000 N'000 N'000
Cash in hand and balances with CBN 10 8,573,674 16,150,062 8,573,234 16,149,550
Treasury bills 11 9,607,738 21,378,831 9,607,738 21,378,831
Due from other banks 12 57,833,221 84,799,102 56,592,146 80,847,858
Loans and advances to customers 13 78,035,834 66,882,520 78,140,098 65,787,520
Other facilities 14(a) 350,000 - 350,000 -
Advances under finance lease 15 4,548,757 3,366,161 3,917,488 3,362,144
Investment securities 16 27,505,802 36,210,808 25,738,514 31,451,241
Investment in subsidiaries 17 - - 2,467,622 1,550,405
Investment in associates 18 43,377 258,661 260,093 232,500
Investment properties 19 12,584,288 1,945,651 60,000 154,276
Other assets 20 12,421,527 12,309,161 10,762,879 9,207,117
Deferred tax assets 21(a) 4,601,074 1,158,674 4,081,815 1,163,816
Property and equipment 22 5,212,873 5,387,190 5,089,200 5,217,665
Equipment on lease 23 - - - -
Goodwill 24 - - - -
TOTAL ASSETS 221,318,165 249,846,821 205,640,827 236,502,923
LIABILITIES
Customers' deposits 25 161,276,895 176,916,144 160,470,381 184,730,209
Due to other banks 26 2,650,000 5,418,920 150,000 -
Current income tax payable 9 1,026,117 1,750,366 393,405 1,157,102
Other liabilities 27 20,674,674 23,164,531 7,878,686 9,236,795
Other facilities 14(b) 350,000 - 350,000 -
Defined contribution obligations 28 54,945 66,889 54,811 66,739
Deferred tax liabilities 21(b) 10,428 15,714 - -
Long-term borrowing 29 14,201,550 11,073,200 14,201,550 11,073,200
TOTAL LIABILITIES 200,244,609 218,405,764 183,498,833 206,264,045
NET ASSETS 21,073,556 31,441,057 22,141,994 30,238,878
CAPITAL AND RESERVES
Share capital 30 6,281,545 6,281,545 6,281,545 6,281,545
Share premium 31 12,314,019 12,314,019 12,314,019 12,314,019
Share reserve 32 5,276,423 5,276,423 5,276,423 5,276,423
Retained earnings 32 (7,321,736) 2,638,933 (6,214,608) 1,702,107
Other reserves 32 4,523,305 4,761,101 4,484,615 4,664,784
Attributable to equity holders of the Bank 21,073,556 31,272,021 22,141,994 30,238,878
Non-controlling interest 33 - 169,036 - -
21,073,556 31,441,057 22,141,994 30,238,878
Guarantees and other commitments on behalf
of customers 34(c) 25,198,318 91,180,933 25,198,318 91,180,933
SIGNED ON BEHALF OF THE BOARD OF DIRECTORS BY:
Alhaji (Dr) S.A. Adegunwa, OFR Yemi Adeola

Chairman Group MD/CEO
Approved by the Board of Directors on 10 May 2010
29
Statements of Cash Flow

For the peiod ended 31 December 2009
Notes Dec. 2009 Sept. 2008 Dec. 2009 Sept. 2008
N'000 N'000 N'000 N'000
OPERATING ACTIVITIES
Net cash flow from operating activities 35 (32,810,525) 66,618,027 (43,406,468) 70,142,565
Income tax paid 9(b) (1,414,458) (276,072) (1,207,789) (157,352)
Net cash flow from operating activities (34,224,983) 66,341,955 (44,614,257) 69,985,213
INVESTING ACTIVITIES
Proceeds from disposal of property
and equipments 93,156 512,276 87,351 376,503
Purchase of property and equipment 22(a)&(b) (1,637,449) (1,808,540) (1,575,822) (1,656,453)
Dividend received - - - 1,670,544
Additions to quoted bonds and equities 5,242,729 (12,969,866) 5,150,414 (12,969,866)
Disposal of unquoted equities & SMEEIS (529,130) (22,952) (138,555) (12,952)
Proceeds from disposal of investment/
trading properties 19(b) 193,017 4,232,911 193,017 3,157,886
Additions to investment properties (10,792,913) (1,791,375) (60,000) -
Proceeds from disposal of investment
in SMEEIS - 120,000 - 120,000
Redemption of promissory notes 193,259 279,653 193,259 60,252
Purchase of additional investment in
subsidiary 17(a) - - (1,000,000) -
Proceeds from disposal of subsidiary - - 93,600 -
Net cash flows from investing activities (7,237,331) (11,447,893) 2,943,264 (9,254,086)
FINANCING ACTIVITIES
Proceeds from long term borrowings - 11,073,200 - 11,073,200
Dividend paid to non-controlling interest - (37,440) - -
Dividend paid during the period (1,256,309) - (1,256,309) -
Net cash flows from financing activities (1,256,309) 11,035,760 (1,256,309) 11,073,200
Net increase in cash and short-term

funds (42,718,623) 65,929,822 (42,927,302) 71,804,327
Cash and short term funds, beginning

of year 114,970,953 49,041,131 116,438,117 44,633,790
Cash and short term funds, end of
year 39 72,252,330 114,970,953 73,510,815 116,438,117
30
Notes to the Consolidated Financial Statements

1 General information
Sterling Bank Plc, (formerly known as NAL. Bank Plc) was the pioneer merchant bank in Nigeria, established
on 25 November, 1960 as a private limited company and was converted to a public limited company in April 1992.
Sterling Bank Plc is engaged in universal banking with emphasis on consumer banking, trade services,
investment banking and capital market activities. It also provides wholesale banking services including granting
of loans and advances, letters of credit transactions, equipment leasing, money market operations, electronic
banking products and other banking services. Asset management services, insurance broking, issuing house,
underwriting, security registration and custodial services are provided through its subsidiaries.
The Bank has four (4) subsidiaries as shown below:

Country of Percentage
Incorporation holding
Sterling Capital Markets Limited Nigeria 100%
Sterling Assets Management and Nigeria 100%
Sterling Registrars Limited Nigeria 100%
SBG Insurance Broker Limited Nigeria 100%
The Bank has investments in two (2) associates and a joint venture company as shown below:
Associate
Nigerian Stockbrokers Limited Nigeria 20%
Crusader Sterling Pensions Limited Nigeria 20%
Joint ventures
Knight Rook Limited Nigeria 34.6%
2 Segment analysis
(a) By business segment
The Group is divided into seven (7) main business segments.
(i) Retail
Retail and commercial banking incorporates private banking services, private customer current accounts,
savings deposits, investment savings products, custody, credit and debit cards, customer loans and mortgages,
and provides these services to individuals and medium size companies.
(ii) Corporate banking
Corporate banking incorporates direct debit facilities, current accounts, deposits, overdrafts, loans and
other credit facilities, and foreign currency.
(iii) Treasury
Incorporates financial instrument trading, acquisition and allocation of funds towards achieving optimum
liquidity management.
(iv) Insurance brokerage
Provides insurance brokerage services to individual and corporate bodies.
(v) Asset management
Includes portfolio and asset management transactions with individuals and corporate customers.
(vi) Registrar
Provides registrar services to corporate customers.
(vii) Investment banking
Provides capital market and financial advisory services to corporate customers.
31
Ste
Group Financial Statem
Toge
2 (b) Business segments:

Corporate Treasury Retail Investment Asset Insurance Registrar
Banking Banking Banking Management Brokers
Dec. 2009 Dec. 2009 Dec. 2009 Dec. 2009 Dec. 2009 Dec. 2009 Dec. 2009
N'000 N'000 N'000 N'000 N'000 N'000 N'000
15 months 15 months 15 months 15 months 15 months 15 months 15 months
Gross earnings:
Derived from external
customers 3,430,375 8,783,163 30,798,264 1,076,079 1,824,176 202,370 451,700
Derived from other
business segments - - - - - - -
3,430,375 8,783,163 30,798,264 1,076,079 1,824,176 202,370 451,700
Interest and similar expenses (2,095,968) (4,135,995) (13,555,617) (8,354) (817,686) - -

Fee and commission expenses - - - - - - -
Segment results 1,334,407 4,647,168 17,242,647 1,067,725 1,006,490 202,370 451,700
(Loss)/profit on ordinary
activities before taxation 445,493 3,745,028 (13,417,073) (1,951,889) 110,527 118,048 273,365
Taxation - - - - - - -
Loss/profit after tax
Other segment information:
Depreciation 33,114 82,786 1,539,807 28,634 20,040 6,879 14,565

Group's share of post tax
result of associates and joint
ventures - - - - - - -
Assets and Liabilities:

Tangible segment assets 13,457,322 73,403,500 111,539,699 3,266,997 16,087,031 551,350 3,012,266
Intangible segment assets - - -
Unallocated segment assets - - -
Total assets 13,457,322 73,403,500 111,539,699 3,266,997 16,087,031 551,350 3,012,266
Segment liabilities 4,418,114 24,069,500 150,749,620 2,554,633 15,502,083 414,082 2,536,577

Unallocated liabilities - - - - - - -
Total liabilities 4,418,114 24,069,500 150,749,620 2,554,633 15,502,083 414,082 2,536,577
Net Assets 9,039,208 49,334,000 (39,209,921) 712,364 584,948 137,268 475,689

Guaranty Tru
Group Financial Stateme
Toget
2 (c) Business segments:

Corporate Treasury Retail Investment Asset Insurance Registr
Banking Banking Banking Management Brokers
Sept. 2008 Sept. 2008 Sept. 2008 Sept. 2008 Sept. 2008 Sept. 2008 Sept. 20
N'000 N'000 N'000 N'000 N'000 N'000 N'000
12 months 12 months 12 months 12 months 12 months 12 months 12 mont
Gross earnings:
Derived from external
customers 5,737,028 3,588,359 21,505,186 2,571,275 1,484,197 89,826 314
Derived from other
business segments - - - - - -
5,737,028 3,588,359 21,505,186 2,571,275 1,484,197 89,826 314
Interest and similar expenses (554,797) (1,352,310) (7,921,707) - (254,853) -

Fee and commission expenses - - - - - -
Segment results 5,182,231 2,236,049 13,583,479 2,571,275 1,229,344 89,826 314
Profit on Ordinary Activities

Before Taxation 3,174,772 1,091,626 2,095,655 412,313 792,663 12,914 222
Taxation
Profit after tax
Depreciation (129,797) (493,000) (507,000) (28,495) (13,770) (3,802) (11
Assets and Liabilities:

Tangible segment assets 55,243,257 98,592,517 77,898,287 7,148,264 8,801,611 464,989 672
Intangible segment assets - - -
Unallocated segment assets - - -
Total assets 55,243,257 98,592,517 77,898,287 7,148,264 8,801,611 464,989 672
Segment liabilities 30,383,534 56,837,281 108,951,820 6,526,299 7,477,155 373,971 5,038
Unallocated liabilities - - - - - -
Total liabilities 30,383,534 56,837,281 108,951,820 6,526,299 7,477,155 373,971 5,038
Net Assets 24,859,723 41,755,236 (31,053,533) 621,965 1,324,456 91,018 (4,365
Notes to the Financial Statements

As at 30 September 2008
3 Interest and similar income
(a) Interest and similar income was derived as follows:

Dec. 2009 Sept. 2008 Dec. 2009 Sept. 2008
N'000 N'000 N'000 N'000
Placements 2,393,296 1,102,860 1,428,038 1,066,192

Treasury bills and investment
securities 12,574,860 8,877,680 12,574,860 8,877,680
Loans and advances 18,213,579 11,946,849 17,943,262 11,756,147
Advance under finance lease 827,866 477,909 641,127 477,909
34,009,601 22,405,298 32,587,287 22,177,928
(b) Interest income by source

Dec. 2009 Sept. 2008 Dec. 2009 Sept. 2008
N'000 N'000 N'000 N'000
Lending to financial institutions 6,719,402 1,102,860 5,754,144 1,066,192

Lending to non-bank customers 19,041,445 12,424,758 18,584,389 12,234,056
Discount income 8,248,754 8,877,680 8,248,754 8,877,680
34,009,601 22,405,298 32,587,287 22,177,928
(c) Included in interest and discount income is an amount of N29.8million earned from outside Nigeria.
(September 2008: N84.16 million)
4 Interest and similar expenses

(a) Interest and similar expenses comprise:

Dec. 2009 Sept. 2008 Dec. 2009 Sept. 2008
N'000 N'000 N'000 N'000
Current account 567,352 131,996 567,352 131,996

Savings accounts 374,702 231,947 374,702 231,947
Time deposits 14,186,950 8,621,802 14,533,873 8,621,802
Inter-bank-takings/borrowings 3,122,982 1,241,723 3,122,982 1,458,555
Borrowed funds 2,361,634 12,911 1,535,594 12,911
20,613,620 10,240,379 20,134,503 10,457,211
(b) Interest expenses outside Nigeria during the year amount to N1.54billion, (September 2008 Nil).
34
5 Fee and commission income

Fee and commission income comprise:
Dec. 2009 Sept. 2008 Dec. 2009 Sept. 2008
N'000 N'000 N'000 N'000
Commission on turnover 1,671,033 1,633,263 1,671,033 1,633,263

Facility management fees 1,214,074 2,068,883 1,192,774 2,068,883
Commission on letter of credit
and off balance sheet transactions 613,705 296,613 613,705 296,613
Commissions and similar income 1,836,792 2,576,129 1,788,235 2,047,077
Insurance brokerage commission 82,520 110,648 - -
Other fees and commission 667,683 3,993,641 333,383 679,643
6,085,807 10,679,177 5,599,130 6,725,479
6 Income from investments

Income from investments comprises:
Dec. 2009 Sept. 2008 Dec. 2009 Sept. 2008
N'000 N'000 N'000 N'000
Profit on disposal of government
bonds 1,864,562 - 1,864,562 -
Profit on disposal of investment &
investment properties 658,268 940,910 146,297 100,001
Dividend income from subsidiaries - - - 1,670,544
Dividend others 145,925 273,856 60,977 273,856
2,668,755 1,214,766 2,071,836 2,044,401
35
7 (a) Operating expenses

Analysis of operating expenses
Dec. 2009 Sept. 2008 Dec. 2009 Sept. 2008
N'000 N'000 N'000 N'000
Wages, salaries & related
staff cost (see note (b)(i)) 6,415,855 6,140,104 5,857,029 5,584,317
Profit on disposal of fixed assets (38,771) (171,265) (38,771) (173,070)
Director’s remuneration and
expenses 85,205 47,376 73,680 41,103
Repairs and maintenance 1,422,903 921,917 1,417,464 957,893
Rent and rates 597,095 368,068 597,095 368,068
Insurance cost 980,359 729,811 1,043,419 727,879
Depreciation on property and
equipment 1,725,825 1,169,103 1,655,707 1,099,744
Depreciation on equipment on
lease - 30,053 - 30,053
Information technology levy 2,257 88,379 81,584
Auditors' remuneration 100,615 81,767 75,500 65,000
Other professional fees 13,822 5,263 8,500 -
Business combination expenses - 264,730 - 264,730
Contract service 455,867 369,470 455,867 369,470
Advertising & business promotion 1,236,598 423,572 1,236,598 423,572
General administrative expenses 9,070,688 5,999,081 7,052,139 4,126,090
22,068,318 16,467,429 19,434,227 13,966,433
(b) Staff and executive directors' costs
(b) (i) Employee costs, including executive directors, during the year amounted to:
Dec. 2009 Sept. 2008 Dec. 2009 Sept. 2008
N'000 N'000 N'000 N'000
Wages and salaries 6,004,845 5,812,730 5,434,494 5,264,089
Other pension costs 496,215 374,750 496,215 361,331
6,501,060 6,187,480 5,930,709 5,625,420
(b) (ii) The average number of persons in employment during the year was as follows: :

Dec. 2009 Sept. 2008 Dec. 2009 Sept. 2008
Number Number Number Number
Executive directors 4 6 4 4
Management staff 86 94 63 65
Non-management staff 1,521 1,440 1,488 1,384
1,611 1,540 1,555 1,453
36
(b) (iii) Employees other than directors, earning more than N60,000 per annum, whose duties were wholly or
mainly discharged in Nigeria, received remuneration (excluding pension contributions and certain benefits)
in the following ranges:

Dec. 2009 Sept. 2008 Dec. 2009 Sept. 2008
Number Number Number Number
N161,001 - N261,000 1 4 - -
N261,001 - N361,000 - - - -
N361,001 - N461,000 - 5 - -
N461,001 - N561,000 - 6 - -
N561,001 - N661,000 206 209 206 209
N661,001 - N761,000 5 12 5 4
N761,001 - N861,000 117 80 117 76
N861,001 - N961,000 15 43 15 43
N961,001 - N1,061,000 3 1 - -
N1,061,001 - N1,161,000 - - - -
N1,161,001 - N1,261,000 6 4 - -
N1,461,001 - N1,561,000 - 14 - -
N2,061,001 - N2,161,000 13 - - -
N2,161,001 - N2,261,000 3 8 - -
N2,761,001 - N2,861,000 412 307 401 307
N3,161,001 - N3,261,000 3 9 - -
N3,361,001 - N3,461,000 - - - -
N4,061,001 - N4,161,000 239 266 239 266
N4,161,001 - N4,261,000 - - - -
N5,061,001 - N5,161,000 167 156 152 156
N5,161,001 - N5,261,000 1 18 - -
N5,961,001 - N6,061,000 149 130 149 130
N6,461,001 - N6,561,000 - - - -
N7,361,001 - N7,461,000 86 68 86 68
N7,461,001 - N7,561,000 - - - -
N8,461,001 - N8,561,000 - - - -
N8,861,001 - N8,961,000 64 72 64 72
N9,961,001 - N10,061,000 - - - -
N10,761,001 - N10,861,000 54 60 54 57
N11,000,001 and above 63 62 63 61
1,607 1,534 1,551 1,449
37
(c) Directors' remuneration

(c) (i) Directors' remuneration was provided as follows
Bank Bank
Dec. 2009 Sept. 2008
15 months 12 months
N'000 N'000
Fees as directors 23,750 16,800

Executive compensation 97,221 71,794
Other emoluments 29,386 7,400
- 150,357 95,994
(c) (ii) The directors' remuneration shown above (excluding pension contributions and certain benefits) includes:
Bank Bank
Dec. 2009 Sept. 2008
15 months 12 months
N'000 N'000
Chairman 5,350 3,800
Highest paid director 32,950 19,765
(c) (iii) The emoluments of all other directors fell within the following ranges:
Bank Bank
Dec. 2009 Sept. 2008
15 months 12 months
Number Number
Below N1,000,000 - -
N1,000,000 - N5,000,000 2 7
N10,000,001- N15,000,000 5 3
N15,000,001 - N20,000,000 - 1
N20,000,001 - N25,000,000 3 -
N25,000,001 - N30,000,000 - -
10 11
38
8 Diminution in value of other risk assets

Diminution in value of other risk assets comprise:
Dec. 2009 Sept. 2008 Dec. 2009 Sept. 2008
N'000 N'000 N'000 N'000
Specific allowance on long-term
investments (see note 16(j)) 507,609 34,524 507,609 34,524
Specific allowance on short term
investments 1,285,137 - - -
Specific allowance on other assets
(see note 20(b)) 1,231,564 950,544 947,655 88,137
3,024,310 985,068 1,455,264 122,661
9 Taxation
(a) Tax charge
The tax charge for the period comprise:
Dec. 2009 Sept. 2008 Dec. 2009 Sept. 2008
N'000 N'000 N'000 N'000
Company income tax 656,237 198,227 365,834 178,181

Education tax 16,552 90,956 - 69,629
Capital gains tax 10,748 477,473 10,748 477,473
NITDA 2,716 - - -
686,253 766,656 376,582 725,283

Prior year additional charge
(See (b) below) 76,808 67,510
Deferred tax (credit)/charge
(see note 21(a)) (3,380,995) 642,324 (2,856,594) 541,288
Deferred tax charge/(credit)
(see note 21(b)) 5,108 (10,311) - -
(2,612,826) 1,398,669 (2,412,502) 1,266,571
39
(b) Current income tax payable

The movement on this account during the year was as follows:

Dec. 2009 Sept. 2008 Dec. 2009 Sept. 2008
N'000 N'000 N'000 N'000
Balance, beginning of year 1,750,366 1,326,703 1,157,102 606,413

Disposal of subsidiary (67,204) - - -
Prior year underprovision
(see (a) above) 76,808 - 67,510 -
Charge for the year (see (a)
above) 686,253 766,656 376,582 725,283
Payments during the year (1,414,458) (276,072) (1,207,789) (157,352)
Reclassification to other liabilities (5,648) (66,921) - (17,242)
Balance, end of year 1,026,117 1,750,366 393,405 1,157,102
10 Cash in hand and balances with CBN
(a) Cash in hand and balances with CBN comprises:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Cash and foreign monies 3,046,683 2,570,140 3,046,243 2,569,628

Operating account held with the
Central Bank of Nigeria (CBN) 4,414,688 11,641,800 4,414,688 11,641,800
7,461,371 14,211,940 7,460,931 14,211,428
Mandatory reserve deposits with
Central Bank of Nigeria (CBN) 1,112,303 1,938,122 1,112,303 1,938,122
8,573,674 16,150,062 8,573,234 16,149,550
11 Treasury bills
(a) Treasury bills investments comprise:
Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Treasury bills (see (ii) &
(iii) below) 9,764,933 22,054,882 9,764,933 22,054,882
Unearned interest (157,195) (676,051) (157,195) (676,051)
9,607,738 21,378,831 9,607,738 21,378,831
(b) Included in treasury bills are amounts of N5.2billion pledged for clearing activities and as collection bank for
government taxes and for electronic card transactions. (30 September 2008: Nil).
(c) Investment in treasury bills are stated at market value, the cost of the investment is N9.56billion (31
September 2008: N20.7billion)
40
12 Due from other banks

(a) Due from other banks comprise:
Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Balance held with other local banks
- Current account 9,032,648 14,437,599 8,522,891 10,486,355
- Placements (see note (b) below) 36,425,160 54,262,136 35,693,842 54,262,136
Balances held with banks outside
Nigeria (see note (c) below) 12,375,413 16,099,367 12,375,413 16,099,367
57,833,221 84,799,102 56,592,146 80,847,858
(b) Included in placement is an amount of N8billion held with other banks and financial institutions as at
30 September 2008 secured by treasury bills.
(c) Included in balances with other banks and financial institutions outside Nigeria is N1.07billion ( September
2008: N1.27billion) representing the Naira value of foreign currencies held on behalf of customers to cover
letters of credit transactions. The corresponding liability for this amount is included in other liabilities
(see Note 27).
(d) Included in balances held with other banks outside Nigeria is an amount of N5.23billion ($35,000,000), held
in lien by Citibank International on a loan facility availed to the Bank. (30 September 2008: Nil) (see note 29)
13 Loans and advances to customers
(a) (I) The classification of loans and advances by type is as follows:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Overdraft 41,115,957 34,655,920 41,936,063 34,655,920

Term loans 38,898,723 35,336,061 37,826,091 35,336,061
Others 16,734,737 4,467,383 16,054,732 3,350,413
96,749,417 74,459,364 95,816,886 73,342,394

Loan loss allowance
- Specific (see (b)(i)) below) (16,256,733) (5,800,986) (15,703,009) (5,800,986)
- General (see (b)(ii)) below) (483,071) (690,031) - (668,061)
- Interest -in- suspense (1,973,779) (1,085,827) (1,973,779) (1,085,827)
(see (b)(iii) below)
(18,713,583) (7,576,844) (17,676,788) (7,554,874)
78,035,834 66,882,520 78,140,098 65,787,520
(b) The movement on loan loss allowance accounts during the period was as follows:
(b) (i) Specific allowance

The movement in specific loan loss allowance during the period is as follows:
41

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Balance, beginning of period 5,800,986 7,348,436 5,800,986 7,348,436

Charge for the period (see note(g)) 16,952,599 2,696,484 16,398,875 2,696,484
Allowance no longer required
(see note (g)) (4,486,839) (835,536) (4,486,839) (835,536)
Write-offs (2,010,013) (3,408,398) (2,010,013) (3,408,398)
Balance, end of period/year 16,256,733 5,800,986 15,703,009 5,800,986
(b) (ii) General allowance

The movement in general loan loss allowance during the period was as follows:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Balance, beginning of period/year 690,031 417,694 668,061 405,970

Writeback during the period
(see note(g)&(b)(iv)below) (672,197) - (668,061) -
Charge for the period (see note(g)) 465,237 272,337 - 262,091
Balance, end of period/year 483,071 690,031 - 668,061
(b) (iii) Interest-in-suspense:

The movement on the interest-in-suspense account during the period was as follows:
Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Balance, beginning of period 1,085,827 1,286,436 1,085,827 1,286,436

Interest suspended during the
period 2,524,166 962,935 2,524,166 962,935
Allowance no longer required (1,016,138) (336,626) (1,016,138) (336,626)
Amount written-off (620,076) (826,918) (620,076) (826,918)
Balance, end of period 1,973,779 1,085,827 1,973,779 1,085,827
(b) (iv) In the current year, the Bank did not make a general provision on loans and advances and reversed the general
provision of N668,061,000 carried forward from prior period. The change which represents a change in
accounting estimates was based on a publication by the Nigerian Accounting Standard Board (NASB) dated
08 February 2010 at the request of Central Bank of Nigeria (CBN) in which a waiver was granted on the
1% general provision required by paragraph 55 of “Statement of Accounting Standards – SAS 10 on Accounting

for Banks and Non-bank financial institutions” for financial statements for periods ended on or before 31
December 2009.
Pursuant to the above and having ensured that full provisions were made on a case by case basis for all
loan impairments by the Bank, the Board of Directors reversed the balance of N668,061,000 of general
provisions which stood to the credit of the Bank as at 31 December 2009.
42
(c) Loans and advances by security type is as follows:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Secured against real estate 36,959,008 19,947,048 36,959,008 19,435,545

Margin lending 16,852,938 16,272,748 16,172,933 14,708,872
Otherwise secured 42,715,860 36,039,662 42,683,850 39,196,152
Unsecured 221,611 2,199,906 1,095 1,825
96,749,417 74,459,364 95,816,886 73,342,394
(d) The gross value of loans and advances by maturity is as follows:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
1 - 3 months 53,881,341 44,871,988 54,998,108 44,886,556

3 - 6 months 4,876,782 4,647,539 4,876,782 4,072,027
6 - 12 months 12,406,890 5,089,910 12,406,890 5,033,884
Over 12 months 25,584,404 19,849,927 23,535,106 19,349,927
96,749,417 74,459,364 95,816,886 73,342,394
(e) The gross value of loans and advances by performance is:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Performing 73,906,611 67,262,798 73,527,804 66,145,828

Non-performing
Sub-standard 2,086,534 49,480 2,085,534 49,480
Doubtful 10,131,846 640,746 10,131,846 640,746
Lost 10,624,426 6,506,340 10,071,702 6,506,340
96,749,417 74,459,364 95,816,886 73,342,394
43
(f) The gross value of loans and advances by sector is as follows:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Agriculture 723,314 726,161 723,314 726,161

Oil and Gas 8,414,941 7,146,930 8,414,941 7,146,930
Capital Market 14,688,065 14,578,219 14,904,311 13,461,249
Consumer Credit 4,601,680 11,099,446 4,601,680 11,099,446
Manufacturing 12,510,073 12,711,336 12,510,073 12,711,336
Mortgage 3,772,952 1,623,470 3,772,952 1,623,470
Real Estate and Construction 16,412,008 4,858,410 16,412,008 4,858,410
Finance and Insurance 5,919,961 752,757 5,919,961 752,757
Government 5,900,588 10,397 4,751,811 10,397
Other public utilities 45,833 54,753 45,833 54,753
Transportation 4,396,926 3,081,936 4,396,926 3,081,936
Communication 467,567 713,263 467,567 713,263
Education 261,735 179,580 261,735 179,580
Mining and Quarrying - - - -
Power 94 - 94 -
Others 18,633,680 16,922,706 18,633,680 16,922,706
96,749,417 74,459,364 95,816,886 73,342,394
(g) Loan loss expenses

Analysis of loan loss expenses is as follows:
Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Loans and advances to customers
- General allowance
Writeback (see note (b)(ii)) (672,197) - (668,061) -
Charge (see note (b)(ii)) 465,237 272,337 - 262,091
- Specific allowance
(see note (b)(i) 16,952,599 2,696,484 16,398,875 2,696,484
-Allowance no longer required
(see note (b)(i) (4,486,839) (835,536) (4,486,839) (835,536)
-Amounts written off 303,616 - 303,616 -
12,562,416 2,133,285 11,547,591 2,123,039
Advances under finance lease
- General allowance
Writeback during the period
(see note 15(c)) (33,961) - (33,961) -
Charge during the year
(see note 15(c)) 2,182 13,308 - 11,516
- Specific allowance
(see note 15(c)) 1,366 - - -
(30,413) 13,308 (33,961) 11,516
12,532,003 2,146,593 11,513,630 2,134,555
44
14 Other facilities
(a) The Bank acts as intermediary for NEXIM (Nigerian Export-Import Bank) loan. The classification of such
loans outstanding at period end is as follows:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Gross 350,000 - 350,000 -

Allowance - - - -
350,000 - 350,000 -
(b) Analysis of performance:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Performing 350,000 - 350,000 -

Non-performing - - - -
350,000 - 350,000 -
(c) Maturity profile of other facilities:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
1-3 months - - - -
3-6 months 350,000 - 350,000 -
6-12 months - - - -
Over 12 months - - - -
350,000 - 350,000 -
15 Advances under finance lease

(a) The advances under finance lease comprise:
Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Gross investment in leases 5,724,468 4,358,120 5,085,487 4,191,596

Less: unearned income (1,167,999) (953,834) (1,167,999) (795,491)
4,556,469 3,404,286 3,917,488 3,396,105

Less: general allowance
(see note (b) below) (6,346) (38,125) - (33,961)
specific allowance
(see note (c) below) (1,366) - - -
4,548,757 3,366,161 3,917,488 3,362,144
45
(b) The movement in general allowance on advance under finance lease during the period is as follows:
Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Balance, beginning of period 38,125 24,817 33,961 22,445

Write-back during the period
(see note 13(g)) (33,961) - (33,961) -
Charge for the year
(see note 13(g)) 2,182 13,308 - 11,516
Balance, end of period 6,346 38,125 - 33,961
(c) The movement in specific allowance on advance under finance lease during the period is as follows:
Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Balance, beginning of period - - - -

Charge for the period
(see note 13(g)) 1,366 - - -
Balance, end of period 1,366 - - -
(d) The net value of advances under finance lease by maturity is as follows:
Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
1-3 months 122,017 52,360 122,017 52,360

3-6 months 287,484 157,378 287,484 157,378
6-12 months 435,064 558,249 435,064 527,358
Over 12 months 3,711,904 2,636,299 3,072,923 2,659,009
4,556,469 3,404,286 3,917,488 3,396,105
(e) The net value of advances under finance lease by performance is:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Performing 4,555,103 3,404,286 3,917,488 3,396,105

Non performing 1,366 - - -
4,556,469 3,404,286 3,917,488 3,396,105
46
16 Investment securities
Investment securities comprise:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
(a) Investment securities - long term
Quoted:
- Equities (see (c) below) 569,631 518,312 569,631 485,404
- Bonds (see (d) below) 23,355,641 28,649,689 23,355,641 28,590,282
23,925,272 29,168,001 23,925,272 29,075,686
Unquoted:
- Equities (see (e) below) 529,655 523,743 358,602 352,237
- Nigerian Sovereign Debt
Instrument (see (f) below) 70,954 264,213 70,954 264,213
- Equities in small and medium scale
enterprises (see (g) below) 474,758 342,568 474,758 342,568
- Joint venture (see (h) below) 1,621,232 1,592,779 1,592,779 1,592,779
'- Crusader debentures
(see (i) below) 350,000 - - -
- Other unquoted equities 12,575 - - -
3,059,174 2,723,303 2,497,093 2,551,797
Allowance made on long-term
investments (j) (683,851) (176,242) (683,851) (176,242)
26,300,595 31,715,062 25,738,514 31,451,241
(b) Investment securities - short term
Short term Investments comprises:

Proprietary trading stock
(cost: N2.70billion,
September 2008:N2.71billion) 1,201,007 2,357,770 - -
Portfolio of quoted investments
(market value: N4.29million, 4,200 2,137,976 - -
September 2008:N2.31billion)
1,205,207 4,495,746 - -
27,505,802 36,210,808 25,738,514 31,451,241
(c) Long term quoted equities investment comprise investment in Nigeria Energy Sector Fund and Frontier
Fund. The market value of the investment as at 31 December 2009 was N363.8million. (September 2008:
N485.4million). Provision has been made for diminution in the value of the investment.
47
(d) (i) Analysis of long-term investment in bonds is as follows:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Neimeth Debenture - 38,800 - -

Lagos State Revenue Bond - 20,600 - -
Federal Government Bond
(see (d)(ii) and (iii) below) 23,355,641 28,590,289 23,355,641 28,590,282
23,355,641 28,649,689 23,355,641 28,590,282
(ii) The investment in long-term bonds are stated at cost, the market value of the investment is N24.3billion.
(September 2008: Market value N30.7billion). Investments in the other bonds and debenture are stated at cost.
(iii) Included in FGN Bonds is an amount of N21.7billion pledged as security for interbank takings and the long
term loan from Citibank International (see note 29(b)).
(e) (i) Analysis of unquoted equity investments is as presented:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Africa Export/Import Bank 29,898 23,533 29,898 23,533

Central Securities Clearing
Systems Limited 7,000 7,800 - -
National Association of Securities
Dealers Limited 416 874 416 416
Nigeria Interbank Settlement
Scheme Plc 52,583 52,583 52,583 52,583
Opticom Leasing Limited 21,000 21,000 21,000 21,000
Valucard Nigeria Plc 18,811 18,811 18,811 18,811
Associated Discount House
Limited 10,734 10,734 10,734 10,734
Kraft Konsult Limited 7,300 7,300 7,300 7,300
Saddle Ind. Limited 10,200 10,200 10,200 10,200
Peugeot Automobile Nigeria Ltd 153,248 153,248 - -
Kakawa Discount Equity Fund 10,000 10,000 - -
OGE Insurance Brokers Limited 805 - - -
Safetrust Savings and Homes 207,660 207,660 207,660 207,660
529,655 523,743 358,602 352,237
(ii) The directors are of the opinion that adequate allowance has been made for the diminution in the value of
long-term investments at the balance sheet date.
(f) This represents the Bank's investment in US dollar denominated Nigerian Sovereign Debt Promissory Notes
issued in 1988, which is redeemable in installment and maturing on 05 January 2010. Interest is earned on
the Note at 5.0919775% per annum.
48
(g) (i) Equity investments in small and medium scale enterprises:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Pathcare Nigeria Limited

(see (g)(ii) below) 6,287 6,287 6,287 6,287
Capetex Ind. Limited
(see (g)(iii) below) 6,200 6,200 6,200 6,200
Woodmasters Nigeria Limited
(see (g)(iv) below) 5,000 5,000 5,000 5,000
Eltel Communication Limited
(see (g)(v) below) 23,056 23,056 23,056 23,056
Trust Hospital Limited
(see (g)(vi) below) 50,000 50,000 50,000 50,000
Best Food Global Limited

(see (g)(vii) below) 15,000 15,000 15,000 15,000
Pyramid Bag Manufacturing
Limited (see (g)(viii) below) 22,360 22,360 22,360 22,360
Diamond Foam Limited
(see (g)(ix) below) 10,422 10,422 10,422 10,422
Unique Ventures CML
(see (g)(x) below) 8,000 8,000 8,000 8,000
Cards Technology Limited
(see (g)(xi) below) 76,000 76,000 76,000 76,000
Investments through SME Manager
(see (g)(xii) below) 252,433 120,243 252,433 120,243
474,758 342,568 474,758 342,568
(g) (ii) This represents the Bank’s 4% equity investment in Pathcare Nigeria Limited.
(g) (iii) This represents the Bank’s 20% equity investment in Capetex Industries Limited.
(g) (iv) This represents the Bank’s 25% equity investment in Woodmaster Nigeria Limited.
(g) (v) This represents the Bank’s 20.98% equity investment in Eltel Communications Limited.
(g) (vi) This represents the Bank’s 10 % equity investment in Trust Hospital Limited.
(g) (vii) This represents the Bank’s 5.19% equity investment in Best Food Global Limited.
(g) (viii)This represents the Bank’s 28% equity investment in Pyramid Bag Manufacturing Limited.
(g) (ix) This represents the Bank's 37.89% equity investment in Diamond Foam Limited.
(g) (x) This represents the Bank’s 20% equity investment in Unique Ventures CML.
(g) (xi) This represents the Bank's 10% equity investment in Cards Technology Limited.
(g) (xii) This represents the Bank's indirect equity investment in SMEEIS entities through SME Manager. During the
year, the Bank made additional investment of N132.2million through SME Manager (September 2008:
Nil)
49
(g) (xiii) The Bank makes investments under the Small and Medium Enterprises Equity Investment Scheme
(SMEEIS) based on the Policy Guidelines for 2001 Fiscal Year (Monetary Policy Circular No. 35).
A total of N474.8million (September 2008: N342.6million) has so far been invested under the scheme. Due
to the effective percentage holding of the Bank in these companies, some of them qualify as associates.
However, equity method of accounting for associates are not applied as they are held for sale and the
value of the Bank's residual interest in the individual investee companies is not material.
(h) Investment in joint venture

This represents the Bank's 34.6% interest in Knight Rook Limited, a jointly controlled entity established to
undertake capital development projects, it is jointly controlled with three other Nigerian banks.
The investment in the joint venture has been accounted for using the equity method of accounting as follows:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Balance, beginning of the year 1,592,779 1,592,779 1,592,779 1,592,779

Previously unconsolidated reserve 62,785 - - -
Current year share of loss (34,332) - - -
1,621,232 1,592,779 1,592,779 1,592,779
(i) This represents investment in Crusader Nigeria Plc's 12% unsecured convertible debentures, maturing in
2013.
(j) The movement on the allowance on long-term investments is as follows:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Balance, beginning of year 176,242 227,439 176,242 177,422

Allowance made during the year
(see note 8) 507,609 34,524 507,609 34,524
Allowances no longer required - (85,721) - (35,704)
Balance, end of year 683,851 176,242 683,851 176,242
17 Investment in subsidiaries
(a) (i) Investment in subsidiaries comprises the following:
Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Sterling Capital Markets Limited
(see (c) below) - - 1,346,312 1,346,312
Sterling Assets Management and
Trustee Limited (see (d) below) - - 1,100,000 100,000
Sterling Registrars Limited
(see (e) below) - - 11,310 11,310
SBG Insurance Broker Limited
(see (f) below) - - 10,000 10,000
Nigerian Stock Brokers Limited - - - 82,783
- - 2,467,622 1,550,405
50
(ii) The movements in investments in subsidiaries account during the period was as follows:
Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Balance, beginning of the period

/year - - 1,550,405 1,550,405
Addition during the period
(see note (a)(iii)) - - 1,000,000 -
Disposal during the period
(see note (a)(iv)) - - (55,190) -
Reclassification to investment in
associates (see note 18(c)) - - (27,593) -
- - 2,467,622 1,550,405
(iii) The Bank acquired additional investment of 20million units of ordinary share in Sterling Asset Management
Limited during the year. The additional investment which represents 16.7% of share capital of Sterling
Asset Management Limited was acquired from Sterling Capital Market, a wholly owned subsidiary of the
Bank.
(iv) During the year, the Bank disposed 40% of its equity holding in Nigerian Stock Brokers Limited. The disposal
of the investment in the subsidiary was accounted for as follows:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Sales Proceed - - 93,600 -

Cost of disposal - - (55,190) -
Profit on disposal - - 38,410 -
51
(b) (i) The subsidiary companies, country of incorporation, nature of business, percentage equity holding and period
consolidated with the parent company is as detailed below:
Country of Company Nature of Percentage Period

Incorporation Name Business of equity end
capital held
1 Nigeria Sterling Capital Markets Limited Banking 100% 31/12/2009
2 Nigeria Sterling Assets Management and Asset
Trustees Limited Management 100% 31/12/2009
3 Nigeria Sterling Registrars Limited Registrars 100% 31/12/2009
4 Nigeria SBG Insurance Broker Limited Insurance 100% 31/12/2009
Brokers
(c) This represents the cost of the Bank’s 100% equity investment in Sterling Capital Markets Limited of
1,346,312,000 ordinary shares of N1 each.
(d) This represents the cost of the Bank’s 100% equity investment in Sterling Asset Management Limited of
120,000,000 ordinary shares of N1 each.
(e) This represents the cost of the Bank’s 100% equity investment in Sterling Registrars Limited of 50,000,000
ordinary shares of N1 each.
(f) This represents the cost of the Bank’s 100% equity investment in SBG Insurance Broker Limited of
10,000,000 ordinary shares of N1 each.
53
Group Financia
Condensed results of consolidated entities

(h) Condensed results of the consolidated entities as at 31 December 2009, are as follows:
Group Elimination Bank Sterling Sterling SBG Sterling N
Balance Entries Capital Markets Asset Mgt & Insurance Brokers Registrars St
Trustees Ltd Limited (U
N'000 N'000 N'000 N'000 N'000 N'000 N'000
Condensed profit and loss account
Operating income 26,103,870 (105,991) 23,330,213 1,067,725 1,006,490 202,370 451,700
Operating expenses (22,068,318) 159,684 (19,434,227) (1,821,358) (341,541) (74,846) (174,270)
Loan loss expenses (12,532,003) - (11,513,630) (1,017,961) (412) - -
Diminution on other risk
values (3,024,310) - (1,455,264) (275,965) (554,010) (9,476) (4,065)
and joint ventures (111,667) - - - - - -
Profit before tax (11,632,428) 53,693 (9,072,908) (2,047,559) 110,527 118,048 273,365
Taxation 2,612,826 - 2,412,502 519,259 (188,905) (49,400) (80,630)
Profit after tax (9,019,602) 53,693 (6,660,406) (1,528,300) (78,378) 68,648 192,735
Condensed financial position

Subsidiary companies/parent
company Group Elimination Bank Sterling Sterling SBG Sterling
Balance Entries Capital Markets Asset Mgt & Insurance Registrars
Limited Trustees Ltd Brokers Limited
Limited
N'000 N'000 N'000 N'000 N'000 N'000 N'000
Assets
Cash in hand and balances with CBN 8,573,674 - 8,573,234 181 - 195 64
Treasury bills 9,607,738 - 9,607,738 - - - -
Due from other banks 57,833,221 (2,170,856) 56,592,146 62,022 231,308 172,217 2,946,384
Loans and advances to customers 78,035,834 (1,116,767) 78,140,098 795,182 217,321 - -
Other facilities 350,000 - 350,000 - - - -
Advances under finance lease 4,548,757 - 3,917,488 - 631,269 - -
Investment securities 27,505,802 28,453 25,738,514 1,278,654 424,539 23,067 12,575
Investment in subsidiaries - (2,467,622) 2,467,622 - - - -
Investment in associates 43,377 (242,877) 260,093 - 26,161 - -
Investment properties 12,584,288 - 60,000 - 12,524,288 - -
Other assets 12,421,527 (1,270,638) 10,762,879 563,323 1,996,224 336,420 33,317
Deferred tax assets 4,601,074 - 4,081,815 519,259 - - -
Property and equipment 5,212,873 - 5,089,200 48,376 35,922 19,451 19,926
Equipment on lease - - - - - - -
Goodwill - - - - - - -
TOTAL ASSETS 221,318,165 (7,240,307) 205,640,827 3,266,997 16,087,032 551,350 3,012,266
Group Financia
Group Elimination Bank Sterling Sterling SBG Sterling N

Balance Entries Capital Markets Asset Mgt & Insurance Brokers Registrars St
Trustees Ltd Limited (U
N'000 N'000 N'000 N'000 N'000 N'000 N'000
LIABILITIES & RESERVES
Customers' deposits 161,276,895 (2,170,856) 160,470,381 - 2,977,370 - -
Due to other banks 2,650,000 (820,106) 150,000 820,106 2,500,000 - -
Current income tax payable 1,026,117 - 393,405 312,250 193,402 40,155 86,905
Other liabilities 20,674,674 (1,270,637) 7,878,686 1,422,277 9,824,530 372,002 2,447,816
Other facilities 350,000 - 350,000 - - - -
Defined contribution obligations 54,945 - 54,811 - - - 134
Deferred tax liabilities 10,428 - - - 6,781 1,925 1,722
Long-term borrowing 14,201,550 - 14,201,550 - - - -
Equity and reserves 21,073,556 (2,978,708) 22,141,994 712,364 584,949 137,268 475,689
TOTAL LIABILITIES &
RESERVES 221,318,165 (7,240,307) 205,640,827 3,266,997 16,087,032 551,350 3,012,266
company Group Elimination Bank Sterling Sterling SBG Sterling
Balance Entries Capital Markets Asset Mgt & Insurance Registrars
Limited Trustees Ltd Brokers Limited
Limited
N'000 N'000 N'000 N'000 N'000 N'000 N'000
Condensed cash flow
Net cash flow from operating
activities (34,224,983) 16,328,137 (44,614,257) (2,865,071) (690,113) (58,124) (2,325,555)
Net cash flow from investing
activities (7,237,331) (10,669,465) 2,943,264 740,820 (225,829) (15,010) (11,111)
Net cash flow from financing
activities (1,256,309) 2,738,616 (1,256,309) (675,000) (1,988,616) - (75,000)
Increase in cash and cash

equivalents (42,718,623) 8,397,288 (42,927,302) (2,799,251) (2,904,558) (73,134) (2,411,666)
Cash balance, beginning of year 114,970,953 (13,068,032) 116,438,117 2,861,454 3,135,754 245,546 5,358,114
Cash balance, end of year 72,252,330 (4,670,744) 73,510,815 62,203 231,196 172,412 2,946,448
Group Financial Sta
T
Condensed results of consolidated entities

(h) Condensed results of the consolidated entities as at 30 September 2008, are as follows:
company Group Elimination Bank Sterling Sterling SBG Ste
Balance Entries Capital Markets Asset and Insurance Reg
Limited Management Brokers Li
Trustees Ltd Limited
N'000 N'000 N'000 N'000 N'000 N'000 N
Condensed profit and loss
Operating income 25,888,899 (1,273,877) 22,320,634 2,330,077 1,230,008 142,568
Operating expenses (16,467,429) (547,715) (13,966,433) (582,164) (534,006) (76,912)
Loan loss expenses (2,146,593) (12,038) (2,134,555) - - -
Diminution on other risk
values (985,068) - (122,661) (845,950) (16,457) -
Exceptional income 4,774,732 - 4,774,732 - - -
Exceptional charge (3,081,993) - (3,081,993) - - -
Profit before tax 7,982,548 (1,833,630) 7,789,724 901,963 679,545 65,656
Taxation (1,398,669) - (1,266,571) 205,946 (232,167) (21,016)
Profit after tax 6,583,879 (1,833,630) 6,523,153 1,107,909 447,378 44,640
Condensed financial position

N'000 N'000 N'000 N'000 N'000 N'000 N
Assets
Cash in hand and balances with CBN 16,150,062 - 16,149,550 254 - 9
Treasury bills 21,378,831 - 21,378,831 - - -
Due from other banks 84,799,102 (8,364,540) 80,847,858 2,840,555 3,135,754 245,537
Loans and advances to customers 66,882,520 (1,080,092) 65,787,520 1,548,237 626,855 -
Advances under finance lease 3,366,161 (421,487) 3,362,144 - 425,504 -
Investment securities 36,210,808 1,847 31,451,241 1,573,665 790,819 34,201
Investment in subsidiaries - (2,536,751) 1,550,405 973,771 - -
Investment in associates 258,661 26,161 232,500 - - -
Investment properties 1,945,651 - 154,276 - 1,791,375 -
Other assets 12,309,161 (1,805,704) 9,207,117 1,125,883 3,142,489 175,682
Deferred tax assets 1,158,674 (5,142) 1,163,816 - - -
Property and equipment 5,387,190 (24,697) 5,217,665 64,812 64,812 9,662
Equipment on lease - - - - - -
Goodwill - - - - - -
TOTAL ASSETS 249,846,821 (14,210,405) 236,502,923 8,127,177 9,977,608 465,091
Group Financial Sta
T
Group Elimination Bank Sterling Sterling SBG Ste

N'000 N'000 N'000 N'000 N'000 N'000 N
LIABILITIES & RESERVES
Customers' deposits 176,916,144 (7,814,065) 184,730,209 - -
Due to other banks 5,418,920 5,418,920 - - -
Current income tax payable 1,750,366 33,686 1,157,102 233,433 147,670 21,016
Other liabilities 23,164,531 (9,315,286) 9,236,795 5,645,531 9,161,469 372,967
Other facilities - - - - - -
Defined contribution obligations 66,889 150 66,739 - - -
Deferred tax liabilities 15,714 (5,142) - 7,551 5,142 2,488
Long-term borrowing 11,073,200 - 11,073,200 - - -
Equity and reserves 31,441,057 (2,528,668) 30,238,878 2,240,662 663,327 68,620
TOTAL LIABILITIES &
RESERVES 249,846,821 (14,210,405) 236,502,923 8,127,177 9,977,608 465,091
N'000 N'000 N'000 N'000 N'000 N'000 N
Condensed cash flow
Net cash flow from operating
activities 66,341,955 1,591,578 69,985,213 (2,865,071) (441,344) 51,876 (
Net cash flow from investing
activities (11,447,893) (2,676,023) (9,254,086) 740,820 (211,158) (30,692)
Net cash flow from financing
activities 11,035,760 (2,151,788) 11,073,200 (675,000) 2,944,594 (22,500)
Increase in cash and cash

equivalents 65,929,822 (3,236,233) 71,804,327 (2,799,251) 2,292,092 (1,316) (
Cash balance, beginning of year 49,041,131 (5,364,607) 44,633,790 2,861,454 843,662 246,862
Cash balance, end of year 114,970,953 (8,600,840) 116,438,117 62,203 3,135,754 245,546
18 Investment in associates
(a) Investment in associate is as follows:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Crusader Sterling Pension Ltd

(see note (b) below) 43,377 258,661 232,500 232,500
Nigerian Stock Brokers Limited
(see note (c)(i) below) - - 27,593 -
43,377 258,661 260,093 232,500
(b) This represents the Bank's 20% interest in Crusader Sterling Pension Limited and was accounted for as
follows:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Balance beginning of the period
/year 258,661 258,661 232,500 232,500
Share of loss carried forward (236,296) - - -
Current year share of profit 21,012 - - -
43,377 258,661 232,500 232,500
(c) This represents the Bank's 20% interest in Nigerian Stock Brokers Limited and was accounted for as
follows:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Reclassified from subsidiary account
during the period (see note
17(a)(ii)) 27,593 - 27,593 -
Share of loss carried forward (27,593) - - -
- - 27,593 -
(d) (ii) During the year, the Bank sold 40% of its equity holding in Nigerian Stock Brokers Limited. The balance
of investment in the entity of 20% was accounted for using the equity method of accounting.
58
(e) The summarized financial information of the Group's associate is set out below:
Crusader
Sterling Pension NSL Total
Dec 2009 Dec 2009 Dec 2009

N'000 N'000 N'000
Total assets 284,142 2,812,279 3,096,421
Total liabilities 198,061 4,433,551 4,631,612
Net assets 86,081 (1,621,272) (1,535,191)
Gross income 352,883 119,544 472,427
(Loss)/profit after taxation 32,841 (2,084,950) (2,052,109)
19 Investment properties
(a) The movement in investment properties is analysed below
Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Balance, beginning of year 1,945,651 5,836,513 154,276 5,602,394

Addition during the period (See (b)) 10,792,913 1,791,375 60,000 -
Disposal (154,276) (5,682,237) (154,276) (5,448,118)
Balance, end of year 12,584,288 1,945,651 60,000 154,276
(b) Included in investment properties purchased during the year is an amount of N10.73billion representing private
and commercial properties purchased by the Bank's subsidiary; Sterling Asset Management and Trustees
Limited in various locations within Lagos state.
59
20 Other assets
(a) Analysis of other assets is as follows:
Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Other assets comprise:
Prepayments 2,399,771 2,066,303 2,270,799 1,905,360
Interest receivable 869,280 847,582 866,222 734,316
Stock 159,409 86,132 159,409 86,132
Receivable from insured 335,762 175,682 -
Receivable - sale of trading
properties 1,915,467 3,001,690 -
Deferred exchange difference 1,932,216 - 1,932,216 -
Pledged bonds - 1,500,000 - 1,500,000
Intercompany receivable - - - 1,272,521
Other receivable accounts 6,820,030 5,950,827 6,840,743 4,067,643
14,431,935 13,628,216 12,069,389 9,565,972

Allowance for other assets
(see note (b) ) (2,010,408) (1,319,055) (1,306,510) (358,855)
12,421,527 12,309,161 10,762,879 9,207,117
(b) The movement on the allowance for other assets was as follows:
Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Balance, beginning of year 1,319,055 1,538,094 358,855 1,421,660

Disposal of subsidiary (12,629) - - -
Allowances made during the year
(see note 8) 1,231,564 950,544 947,655 88,137
Allowances no longer required (47,600) (22,531) - -
Allowance written off (479,982) (1,147,052) - (1,150,942)
Balance, end of year 2,010,408 1,319,055 1,306,510 358,855
60
21 Deferred taxation
(a) Deferred tax asset
The movement on the deferred tax asset account during the year was as follows:
Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Balance, beginning of period 1,158,674 460,087 1,163,816 376,326

Realised from revaluation reserve 61,405 140,226 61,405 140,226
Transfer to revaluation reserve - 1,188,552 - 1,188,552
Charge/(reversal) during the period
(see note 9(a)) 3,380,995 (630,191) 2,856,594 (541,288)
Balance, end of period 4,601,074 1,158,674 4,081,815 1,163,816
(b) Deferred tax liability
The movement on the deferred tax liability account during the year was as follows:
Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Balance, beginning of period 15,714 24,203 - -

Transfer to cost of disposal of
subsidiary (2,843) -
Write back of deferred tax (7,551) 1,822 - -
Current year credit/charge
(see note 9(a)) 5,108 (10,311) - -
Balance, end of period 10,428 15,714 - -
(c) Deferred tax

Deferred tax comprises:
Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Deferred tax liability (10,428) (15,714) - -

Deferred tax asset 4,601,074 1,158,674 4,081,815 1,163,816
4,590,646 1,142,960 4,081,815 1,163,816
61
(d) The deferred tax asset arises from the following:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Property and equipment 1,383,736 1,037,050 1,395,322 1,050,032

Unrelieved losses 2,918,792 - 2,401,255 -
General provision 2,880 202,733 - 210,607
Revaluation loss/(gain) 358,840 (96,823) 358,840 (96,823)
Others (73,602) - (73,602) -
4,590,646 1,142,960 4,081,815 1,163,816
62
Sterling B
Group Financial Statements
Together w
22 Property and equipment
(a) The Group:
The movement on these accounts during the period was as follows:
Leasehold Land Capital Furniture, Computer Motor
and work-in- fittings and software and vehicles
Building progress equipment equipment
N'000 N'000 N'000 N'000 N'000

(a) (i) Cost
Beginning of the period 2,974,299 284,898 3,117,780 2,868,719 2,013,
Additions 106,499 168,466 435,771 443,736 482,
Transfers 26,644 (211,490) 134,091 50,499
Disposals (1,772) - (86,341) (1,750) (277,
Disposal of subsidiary - - (37,615) - (29,
End of the period 3,105,670 241,874 3,563,686 3,361,204 2,189,
(a) (ii) Accumulated depreciation

Beginning of the period 743,456 - 1,842,228 2,204,353 1,082,
Charge for the year 152,965 - 527,480 572,212 473,
Disposals - - (63,855) (1,462) (247,
Disposal of subsidiary - - (17,549) - (18,
End of the period 896,421 - 2,288,304 2,775,103 1,289,
Net book value

At 31 December, 2009 2,209,249 241,874 1,275,382 586,101 900,
At 30 September, 2008 2,230,843 284,898 1,275,552 664,366 931,
(a) (iii) There are no leased movable assets included in property and equipments.(September 2008: Nil)
The Group had capital commitments of N393.5 million (30 September 2008: N14.17million) as at the balance sheet date i
authorized and contracted capital projects.
Capital work in progress represents construction costs in respect of new offices. On completion of construction, the related
transferred to other categories of property and equipment.
Sterling B
Group Financial Statements
Together w
(b) The Bank:

The movement on these accounts during the year was as follows:
Leasehold Land Capital Furniture, Computer Motor
and work-in- fittings and software and vehicles
Building progress equipment equipment
N'000 N'000 N'000 N'000 N'000
(b) (i) Cost
Beginning of the period 2,967,792 276,938 2,992,456 2,856,667 1,838,
Additions 106,499 176,026 404,040 431,899 457,
Transfers 26,644 (211,490) 134,091 50,499
Disposals (1,772) - (86,341) (1,429) (261,
End of the period 3,099,163 241,474 3,444,246 3,337,636 2,034,
(b) (ii) Accumulated depreciation

Beginning of year 736,550 - 1,774,038 2,200,549 1,003,
Charge for the year 152,965 - 508,892 561,988 431,
Disposals - - (60,481) (1,429) (240,
End of year 889,515 - 2,222,449 2,761,108 1,195,
Net book value

At 31 December, 2009 2,209,648 241,474 1,221,797 576,528 839,
At 30 September, 2008 2,231,242 276,938 1,218,418 656,118 834,
(b) (iii) There are no leased movable assets included in property and equipments. (September 2008: Nil)
The Bank had capital commitments of N393.5 million (30 September 2008: N14.17million) as at the balance sheet date in
authorized and contracted capital projects.
Capital work in progress represents construction costs in respect of new offices. On completion of construction, the related
transferred to other categories of property and equipment.
23 Equipment on lease
The movement on equipment on lease during the period is as follows:
Furniture,
machinery and Motor Total
equipment Vehicle
N'000 N'000 N'000
Cost
Beginning of year 119,392 57,294 176,686
Retirement (119,392) (57,294) (176,686)
End of year - - -
Accumulated depreciation
Beginning of year 119,392 57,294 176,686
Retirement (119,392) (57,294) (176,686)
End of year - - -
At 31 December 2009 - - -
At 30 September 2008 - - -
24 Goodwill
(a) Movement on the goodwill account during the year is as follows:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Balance, beginning of year - 3,081,993 - 3,081,993

Amortisation during the year - - - -
Impairment charge - (3,081,993) - (3,081,993)
Balance, end of year - - - -
25 Customers' deposits
(a) Deposits and other accounts comprise:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Time 85,846,059 45,574,248 84,982,537 50,646,153

Savings 6,931,309 5,691,384 6,931,309 5,691,384
Demand 47,933,755 112,041,672 47,990,763 114,783,832
Domiciliary 7,591,272 3,872,290 7,591,272 3,872,290
Interbank takings 12,974,500 9,736,550 12,974,500 9,736,550
161,276,895 176,916,144 160,470,381 184,730,209
65
(b) The maturity profile of deposits and other accounts is as follows:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Under 1 month 120,087,625 155,597,473 120,144,633 163,909,747

1-3 months 28,009,891 10,398,003 27,146,369 9,661,759
3-6 months 2,356,139 238,035 2,356,139 238,035
6-12 months 1,975,240 54,844 1,975,240 54,844
Over 12 months 8,848,000 10,627,789 8,848,000 10,865,824
161,276,895 176,916,144 160,470,381 184,730,209
26 Due to other banks

Due from other banks comprise:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Borrowings (see (b) below) 2,650,000 5,418,920 150,000 -

2,650,000 5,418,920 150,000 -
Borrowing represents various interest bearing overdraft facilities obtained from banks and discount houses in
Nigeria and with maturities from three to twelve months.
27 Other liabilities
Analysis of other liabilities is as follows:
Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Foreign currency denominated
liabilities (see note 12 (c)) 1,073,437 1,267,626 1,073,437 1,267,626
Interest payable 871,566 804,439 871,566 827,634
Dividend payable 110,305 21,449 110,305 21,449
Certified cheques 3,281,370 1,624,289 3,281,370 1,624,289
Unearned income 95,069 1,569,369 95,069 1,569,369
Other credit balances 1,464,566 2,146,424 1,194,810 2,026,463
Due to insurance companies 347,075 320,501
Information technology levy - 95,645 - 88,850
Funds under management - 1,556,970 - -
Funds held on behalf of customers 1,064,509 602,001 - -
Intercompany balances - - 649,678 727,850
Customers' deposit for properties 1,311,465 97,289 - -
Deposit for shares 13,770 - - -
Funds awaiting remittance - 4,701,268 - -
Property investment payable 7,768,497 2,129,625 - -
Other account payable 3,273,045 6,227,636 602,451 1,083,265
20,674,674 23,164,531 7,878,686 9,236,795
66
28 Defined contribution obligations
The movement on the defined contribution obligations during the period is as follows:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Balance, beginning of the period/
year 66,889 197,342 66,739 197,342
Charge for the year 725,420 361,542 723,212 361,392
Contribution remitted (737,364) (491,995) (735,140) (491,995)
Balance, end of the period/year 54,945 66,889 54,811 66,739
29 Long-term borrowing
(a) The movement on long term borrowing during the year is as follows

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Due to Citi Bank Int'l Plc 14,201,550 11,073,200 14,201,550 11,073,200
(b) Long-term borrowing represents the Naira equivalent of a USD95,000,000 (30 September 2008: $95,000,000)
facility granted to the Bank by Citi Bank International Plc payable in 3 years commencing October 2008. Interest
is payable quarterly at a LIBOR plus a margin of 475 basis point and the principal is due at maturity in
September 2011. FGN Bond amount of N12.1billion held in investment securities and cash sum of $35million
(N5.23billion) held in cash collateral with banks outside Nigeria are pledged as securities to the borrowing
(see note 16(d)(iii)) and (see note 12(d)) respectively.
30 Share capital
(a) Authorised:
Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
24,000,000,000 Ordinary shares of
50k each (September 2008:
24,000,000,000 of 50k each) 12,000,000 12,000,000 12,000,000 12,000,000
(b) Issued and fully-paid:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
12.563 billion Ordinary shares of
50k each (September 2008:
12.563billion ordinary shares of
50k each) 6,281,545 6,281,545 6,281,545 6,281,545
67
(c) (i) Movement in issued and fully paid share capital
Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Balance, beginning of period/year 6,281,545 5,276,423 6,281,545 5,276,423

Transfer from share premium for -
share compensation - 6,658,513 - 6,658,513
Transfer to share premium from -
share reconstruction - (5,653,391) - (5,653,391)
(c) (ii) Movement in nominal share capital

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Beginning of period/year 12,563,090 10,552,846 12,563,090 10,552,846

Issue of compensation shares - 13,317,026 - 13,317,026
Eliminated from share reconstruction - (11,306,782) - (11,306,782)
31 Share premium
The movement on the account during the year was as follows:
Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Balance, beginning of period/year 12,314,019 13,319,141 12,314,019 13,319,141

Transfer from share premium for
share compensation - (6,658,513) - (6,658,513)
Transfer to share premium from
share reconstruction
(see 30(c)(i)) - 5,653,391 - 5,653,391
68
S
Group Financial Sta
To
32 Reserves
(a) (i) Group Other reserves

Share Statutory SMEEIS Revaluation Translation Capital Total
Reserves Reserves Reserves Reserves Reserves Reserves Other reserve
N'000 N'000 N'000 N'000 N'000 N'000 N'000
Balance, beginning of the year (01

October 2007) 5,276,423 1,761,422 234,503 3,455,879 489,203 96,317 6,037,324
Transferred from profit and loss account - 1,956,946 - - - - 1,956,946
Transfer to non-controlling interests - - - 98,998 - - 98,998
Realised on disposal - - - (3,961,840) (311,382) - (4,273,222
Reversals during the year - - - (247,497) - - (247,497
Realised from disposal of investment -
properties - - - 1,188,552 - - 1,188,552
Balance, beginning of the period 5,276,423 3,718,368 234,503 534,092 177,821 96,317 4,761,101
Dividend paid (see note 32(a))
Transferred from profit and loss account - - - - - - -
Disposal of subsidiary - - - - - (57,627) (57,627
Previously unconsolidated reserves: -
associates and joint ventures - - - - - - -
Realised during the period - - - (48,092) (132,077) - (180,169
Balance, end of the period

(31 December 2009) 5,276,423 3,718,368 234,503 486,000 45,744 38,690 4,523,305
S
Group Financial Sta
To
(b) (i) Bank Other reserves

Share Statutory SMEEIS Revaluation Translation Capital Total
Reserves Reserves Reserves Reserves Reserves Reserves Other reserve
N'000 N'000 N'000 N'000 N'000 N'000 N'000
Balance, beginning of the year (01
October 2007) 5,276,423 1,761,422 234,503 3,307,380 489,203 - 5,792,508
Transferred from profit and loss account - 1,956,946 - - - - 1,956,946
Transfer to non-controlling interests - - - - - - -
Realised on disposal - - - (2,773,288) (311,382) - (3,084,670
Balance, beginning of the period

(01 October 2008) 5,276,423 3,718,368 234,503 534,092 177,821 - 4,664,784
Dividend paid (see note 32(a)) -
Transferred from profit and loss account - - - - - - -
Realised during the period - - - (48,092) (132,077) - (180,169
Balance, end of the period

(31 December 2009) 5,276,423 3,718,368 234,503 486,000 45,744 - 4,484,615
33 Non-controlling interest
The movement on the non-controlling interest account was as follows:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Balance, beginning of period 169,036 285,262 - -

Share of profit for the period - 20,212 - -
Dividend received - (37,440) - -
Writeback of revaluation reserve - (98,998) - -
Disposal of subsidiary during the
period (169,036) - - -
Balance, end of period - 169,036 - -
34 Contingent liabilities
(a) Litigation and claims
There are litigation and claims against the Group as at 31 December 2009 amounting to N3.8billion (September
2008: N3.29billion). These claims arose in the normal course of business and are being contested by the
Bank. The directors, having sought advice of professional counsel, are of the opinion that no significant
liability will crystalise from these claims. Provisions of N172million have been made in these financial
statements on cystalised claims.
(b) (i) Guarantees and other commitments on behalf of customers.

In the normal course of business, the Group is party to financial instruments with off-balance sheet risk. The
instruments are used to meet the credit and other financial requirements of customers. The contractual
amounts of the off-balance sheet financial instruments are:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Bonds, guarantees and indemnities 19,433,968 27,598,600 19,433,968 27,598,600

Letters of credit 5,753,562 12,819,190 5,753,562 12,819,190
Bankers acceptance - 39,749,558 - 39,749,558
Forward Purchase - 11,012,060 - 11,012,060
Others 10,788 1,525 10,788 1,525
25,198,318 91,180,933 25,198,318 91,180,933
(b) (ii) All the transaction-related bonds and guarantees are fully collaterised. The cash component out of the
balance was N4.814billion (30 September 2008: N119.2milion).
71
35 Net cash flow from operating activities

Reconciliation of profit before tax to cash generated from operating activities

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Profit after tax (9,019,602) 6,583,879 (6,660,406) 6,523,153

Add back: taxation charge (2,612,826) 1,398,669 (2,412,502) 1,266,571
Profit before tax (11,632,428) 7,982,548 (9,072,908) 7,789,724
Adjustment to reconcile profit before

tax to net cash flow from
operating activities:
Allowance for bad and doubtful
loans 12,532,003 2,146,593 11,513,630 2,134,555
Loan written off
Diminution in value of other risk
assets - investments 507,609 34,524 507,609 34,524
Diminution in value of short term
securities 1,285,137 - - -
Allowance on other assets 1,231,564 950,544 947,655 88,137
Profit on disposal of subsidiary
(see note 17(a)(v)) - - (38,410)
Profit on disposal of trading
properties (see note 19(b)) (107,444) (5,615,641) (107,444) (4,774,732)
Depreciation on equipment on lease - 30,053 - 30,053
Depreciation on property and
equipment (see note 22(a) &(b)) 1,725,825 1,169,103 1,655,707 1,099,744
Profit on disposal of property and
equipments (38,771) (171,265) (38,771) (173,070)
Goodwill amortized during the year - 3,081,993 - 3,081,993
Revaluation gain on redemption of
investment (132,077) (140,226) (132,077) (140,226)
Amortisation of deferred cost - 264,731 - 264,731
Loss on investment - 69,641 - 85,774
Write-back of investment - (3,996) - (3,996)
Allowance no longer required on
other assets (see note 20(b)) (47,600) (22,531) - -
Allowance no longer required - (85,721) - (35,704)
on investments
Dividend income - - - (1,670,544)
Gain on disposal of investment - (100,001) - (100,001)
Exchange loss on long-term
borrowing 1,196,134 - 1,196,134 -
6,519,952 9,590,349 6,431,125 7,710,962
72
(Increase)/decrease in operating assets

Cash reserve balance 825,819 (1,938,122) 825,819 (1,938,122)
Investment securities - short term 2,005,402 13,882,597 - 13,721,471
Loans and advances (23,715,730) (21,902,199) (23,900,169) (21,952,724)
Other facilities (350,000) - (350,000) -
Advances under finance lease (1,152,183) (1,146,146) (521,383) (1,151,653)
Other assets 841,617 (4,780,622) (611,995) (1,836,230)
(21,545,075) (15,884,492) (24,557,728) (13,157,258)
Deposits and other accounts (15,639,249) 77,698,075 (24,259,828) 77,796,482

Other liabilities (2,484,209) (4,785,905) (1,358,109) (2,207,621)
Other facilities 350,000 - 350,000 -
Defined contribution obligations (11,944) (11,928)
(17,785,402) 72,912,170 (25,279,865) 75,588,861
(32,810,525) 66,618,027 (43,406,468) 70,142,565
36 Dividend

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Dividend declared : Nil

(September 2008: N0.10) 1,256,309 - 1,256,309 -
1,256,309 - 1,256,309 -
During the year, a dividend of N0.10 per share was declared and paid to ordinary shareholders.
37 Earnings per share

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Loss/profit attributable to group

shareholders (9,019,602) 6,563,667 (6,660,406) 6,523,153
Number of ordinary shares in issue

at year end 12,563,090 12,563,090 12,563,090 12,563,090
Basic earnings per share (72)k 52k (53)k 52k
73
38 Related party transactions

(a) During the period, the Bank granted various credit facilities to companies whose directors are also directors of Sterling Bank Plc
at rates and terms comparable to other facilities in the Bank’s portfolio. An aggregate of N1.692billion (September 2008:
N1.197billion) was outstanding on these facilities at the end of the period, of which N6.323million was non-performing. Details of
these insider related credits are:
Name of Borrowers Relationship Facility type Authorised Balance Status Security
N'000 N'000
Lecky Silver Touch Yemi Idowu Overdraft 490,000 472,274 Performing Legal Mortgage
Touchdown Travels Yinka Adeola Term loan 100,000 98,830 Performing Equitable Mortgage
Limited
Touchdown Travels Yinka Adeola Overdraft 600,000 601,562 Performing Equitable Mortgage
Limited
Adeola, Rilwan Yinka Adeola Overdraft - 327 Performing Legal Mortgage,
Adedayo Personal Guarantee
Adeola, Rilwan Yinka Adeola Term loan 12,000 2,984 Performing Legal Mortgage,
Adeola, Rilwan Yinka Adeola Term loan 20,000 14,314 Performing Legal Mortgage,
Fareast Mercantile Yemi Idowu Overdraft 300,000 42,205 Performing Debenture on Fixed &
Co. Ltd Floating Assets of Company
Fareast Mercantile Yemi Idowu Overdraft - 15 Performing Debenture on Fixed &
Co. Ltd Floating Assets of Company
UTC Nigeria Plc Yinka Adeola Overdraft - 38,071 Performing Legal Mortgage
UTC Nigeria Plc Yinka Adeola Term loan 286,000 265,876 Performing Legal Mortgage
Lykarock Nigeria Alhaji Aliyu Overdraft 10,000 6,323 Non-Performing Tripartite Legal Mortgage
Limited Alkali
General Agro Oil Yemi Idowu Overdraft 40,000 29,198 Performing Debenture on Fixed &
Indus .Ltd Floating Assets of Company
Century Exports Yemi Idowu Overdraft 75,000 57,986 Performing Debenture on Fixed &
Limited Floating Assets of Company
Eterna Oil & Gas Yinka Adeola Trade finance 500,000 61,864 Performing Equitable Mortgage on
Plc facility Tank Farm
TOTAL 2,433,000 1,691,829 -
(b) Subsidiary's deposit with the Bank are as follows:

Entity Dec 2009 Sept 2008
N'000 N'000
SBG Insurance Brokers Limited 83,294 3,818

Sterling Asset & Management Trustees Limited 734,129 2,593,975
Sterling Capital Markets Limited 862 792
Sterling Registrars Limited 665,634 1,068,721
1,483,919 3,667,306
(c) Director related contingent liabilites (bonds and guarantees) are as follows:
Dec 2009 Sept 2008
N'000 N'000
Touchdown Travels Yinka Adeola 4,000 -
Limited
Fareast Mercantile Yemi Idowu 130,350 -
Co. Ltd
134,350 -
74
39 Cash and cash equivalents
For the purpose of cash flow, cash and cash equivalents include cash, treasury bills, and other eligible bills, operating
account with other banks, amount due from other banks and short-term government securities.

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Cash in hand and balances with
CBN (less restricted balances)
(see note 10(a)) 7,461,371 14,211,940 7,460,931 14,211,428
Treasury bills (see note 11) 9,607,738 21,378,831 9,607,738 21,378,831
Due from other bank (see note 12) 57,833,221 84,799,102 56,592,146 80,847,858
Due to other banks (see note 26) (2,650,000) (5,418,920) (150,000) -
72,252,330 114,970,953 73,510,815 116,438,117
40 Compliance with banking regulations

The Bank contravened certain sections of the Banks and Other Financial Institutions Act 1991 and circulars
issued by the Central Bank of Nigeria. Details of the contraventions during the period is as follows:
Section Nature Penalty

N'000
BOFIA 1991 S. 25 Rendition of inaccurate monthly
report (MBR) in September, 2008 2,000
Money Laundering (Prohibition) S.3 (1) Opening of accounts with

Act of 2004 inadequate documentation 2,000
BSD/FE/48/VOL.6/304 Inability to provide required minimum

28th March, 1995 stipulated information in the Bank's
credit print-out 2,000
BSD/PA/4/97 Treatment of credits as Contingents

12th August & September 2008 Commercial Paper 2,000
8,000
41 Events after balance sheet date

There were no post balance sheet events which could have a material effect on the financial position of the
Group as at 31 December 2009 and loss attributable to equity holders on that date which have not been
adequately adjusted for or disclosed.
42 Comparatives
Where necessary, comparative figures have been restated to conform to changes in presentation in the
the current year, as required by the 18 January 2010 CBN circular BSD/DIR/CEN/CIR/04/004 on "minimum
information to be contained in the financial statements".
75
43 Recapitalisation plans:
As a consequence of the difficult economic environment in the months leading up to the Bank’s financial
year end of December 2009, a significant portion of its risk assets portfolio suffered significant impairment
as a large number of obligors fell into arrears in respect of their loan obligations. The provision for loan losses
on these facilities resulted in losses after tax for the Group and Bank of N9.020billion and N6.660billlion
respectively for the period ended 31 December 2009. As a result of these losses, shareholders funds for the
Group and Bank stood at N21.074billion and N22.141billion respectively. These are stated after recognition of
a Group and Bank deferred tax asset of N4.601billion and N4.082billion respectively. This level of
shareholders' fund is below the minimum regulatory requirement of N25billion. However, Group and Bank
still maintained a regulatory capital adequacy ratio is excess of 10%.
The Board of the Bank has therefore initiated the following actions aimed at increasing the capital level above
the regulatory minimum requirement:
i Aggressive recovery on non-performing loans to improve the Bank's profitability in 2010.
ii Capital infusion by a number of institutional investors.
iii A possible business combination with another bank.
The directors have also estimated income and cash flow projections based on the assumptions that represent
the best estimates of economic conditions in the short and medium term. Arising from the projections, the
directors consider that it is probable that future taxable profits will be available against which the accumulated
tax losses can be utilised and, accordingly, have retained the deferred tax asset referred to in this note.
76
44 Financial Risk Management

(a) Principal Credit Policies
Introduction:
Sterling Bank has a Credit Policy Guide which is the primary reference document for creating and managing credit risk
exposures in the bank.
The guide outlines and standardizes general policies and procedures’ framework for credit risk management in the Bank
and incorporates provisions for:
· Credit risk analysis,

· Credit approval,
· Credit Administration and
· Reporting of credit risk exposures.
Sterling Bank’s credit risk management policies comprise the following:
· Policies: clear articulation of management criteria for decision making.

· Standards: performance criteria and expected results and outcomes against which actions, decisions
and results achieved will be benchmarked for compliance with articulated policies and
objectives.
· Procedures: description of specific activities and tasks in respect of the creation and management
of risk assets.
Integrated Risk Management Process
Sterling Bank’s Integrated Risk Management Framework is made up of five distinct modules for the proactive creation
and deliberate management of risk exposures in the bank. The module includes:
· Risk Portfolio Planning
· Exposure Development and Creation.
· Exposure Management.
· Delinquency Management/ Loan Workout.
· Credit Recovery
Each module represents a critical component of Sterling bank’s risk management framework for creating and maintaining
an appropriate risk environment in the bank to maximize returns on risk assets with minimal loss.
(b) Risk rating methodology:
A Risk Rating (“RR”) is a grade given to a credit facility to reflect its quality and acceptability to the Bank.
The Bank maintains a two-dimensional credit rating system involving the determination of a borrower rating and facility
rating for each exposure.
77
Separate Risk Ratings are maintained for STRUCTURED and UNSTRUCTURED, wholesale and retail customers
Consumer credit in the bank is largely driven by standard credit product programmes and a credit scoring model.
(c) Enterprise risk management
The Bank’s Enterprise Risk Management Framework is designed in line with the CBN Risk based supervision
requirement and global best practices with the establishment of the following:
· An appropriate Risk Governance Structure at the Board and Management level.
· Adoption of an Enterprise Risk Management policy for the bank.
· Development of Risk Management frameworks and policies for each of the 3 core risk areas of the Bank i.e
Credit, Market (Liquidity, Interest Rate & Investment) and Operational Risk Management Units.
· Setting up of acceptable risk management systems, tools and limits to significantly improve the Bank’s overall
risk management capabilities.
· The process for identification, measurement, monitoring, control and reporting of risks throughout its operations
and its various business lines.
The ERM structure manages the Bank’s inherent risks in the following areas:
· Credit Risk
· Market Risk
· Operational Risk
The Board Risk Management Committee (BRMC) has responsibility for overview of risk functions. The BRMC reviews
and recommends the Enterprise risk management polices, procedures and profiles pertaining to the Bank.
The committee is also responsible for approval of the Bank’s Risk philosophy, Risk appetite and Tolerance.
(d) Credit Risk:

Credit Risk is most simply defined as the potential that a bank borrower or counter party will fail to meet obligations in
accordance with agreed terms.
Credit risks arise anytime bank’s funds are extended, committed, invested or otherwise exposed through actual or implied
contractual agreements.
Major credit risks that affect Sterling Bank include:
· Direct lending risks.

· Contingent lending risk
· Issuer risk
· Presettlement risk
· Settlement Risk
· Clearing risk
78
The Objectives of Credit Risk Management in Sterling Bank are:
· To identify the credit risk in each investment, loan or other activity that exposes the bank to credit risk.
· To achieve optimal mix of loans volume and asset quality.
· To maintain single digit and above industry average ratio of Non-performing Loan-to-Total Loan ratio.
· To incur, monitor and manage credit risk in a manner that complies with all applicable laws and regulations and
international best practices.
· Maintain acceptable levels of credit risk for credit risk exposures.
· Ensure effective diversification of credit exposures to various industry segments as approved by the board and
operate within the exposure limit for each industry.
Credit risk measurements
Loans and Advances
Sterling Bank has developed internal risk acceptance criteria for measuring quality of credit risk.
Various qualitative and quantitative factors are considered in the obligor risk rating process which is in line with global best
practice.
The Bank is currently gathering data to enable measurement of risk on a wider spectrum using the Probability of Default
(PD), Loss Given Default (LGD), Exposure at Default (EAD) and VAR at Risk (VAR) approach in line with the
Basel II accord.
Risk Rating Scale and its External Rating Equivalent
Sterling Risk Risk Score S&P Equivalent

R.R Rating Range)
Description
Superior 1 90-100 AAA TO AA-

Strong 2 80-89.99 A+ to A-
Good 3 70-79.99 BBB+ to BBB-
Satisfactory 4 50-69.99 BB+ to BB-
High Risk 5 40-49.99 B+ to B-
Watchlisted 6 30-39.99 CCC+ to CCC
Sub - standard 7 20-29.99 CC+ to C-
Doubtful 8 10-19.99 D
Lost 9 <10 D
79
Credit risk control and mitigation policy:
Sterling bank has in place various credit control and mitigation policies. Regional and sectorial exposure limits have been
set to manage concentration and intrinsic risks in the Bank. These limits are regularly monitored and reviewed by the
Bank's Board Risk Management Committee.
Collateral policies
Collateral policies are designed to ensure that the Bank’s exposure is secured, and to minimize the risk of credit losses to
the Bank in the event of decline in quality or delinquency of assets.
Guidelines for acceptability of credit collateral are approved by the MCC, and include articulation of:
· Acceptable collateral for each credit product.

· Required documentation/ perfection of collateral.
· Conditions for waivers of collateral requirement and guidelines for approval of collateral waiver.
· Acceptability of cash and other forms of collateral denominated in Foreign Currency
Master netting arrangements

Credit facilities collaterised partly or fully with deposits are settled by set off, based on underlying set-off arrangement.
(e) Provisioning policy

The Bank’s provisioning policy is designed to ensure compliance with the CBN’s prudential guidelines.
The policy entails that Non-performing exposures are adequately provided for based on number of days past due.
80
Risk Assets (Loans and Advances, Advances under Finance Leases, off-balance sheet direct credit substitutes etc)
Loans and advances are summarised as follows:

Dec 2009 Sept 2008 Dec 2009 Sept 2008
N'000 N'000 N'000 N'000
Performing 73,906,611 67,262,798 73,527,804 66,145,828

Non-Performing
Substandard 2,086,534 49,480 2,085,534 49,480
Doubtful 10,131,846 640,746 10,131,846 640,746
Lost 10,624,426 6,506,340 10,071,702 6,506,340
TOTAL 96,749,417 74,459,364 95,816,886 73,342,394
(f) Performing but past due loans
Loans and advances less than 90 days past due are considered performing, unless other information is available to indicate the
contrary. Gross amount of loans and advances by class to customers that were past due but performing were as follows:
Group
Retail Corporate Financial Institutions SME Total
As at 31 December 2009 Dec. 2009 Dec. 2009 Dec. 2009 Dec. 2009 Dec. 2009
N'000 N'000 N'000 N'000 N'000
Not yet due 58,541,532 9,752,814 - - 68,294,346

Past due 0 - 30 days 1,981,076 1,768,976 - - 3,750,052
Past due up to 30 - 60 days 390,444 137,207 - - 527,651
Past due up to 60 - 90 days 445,895 888,667 - - 1,334,562
61,358,947 12,547,664 - - 73,906,611
Bank
Retail Corporate Financial Institutions SME Total
N'000 N'000 N'000 N'000 N'000
Not yet due 58,162,725 9,752,814 67,915,539

Past due 0 - 30 days 1,981,076 1,768,976 - - 3,750,052
Past due up to 30 - 60 days 390,444 137,207 - - 527,651
Past due up to 60 - 90 days 445,895 888,667 - - 1,334,562
60,980,140 12,547,664 - - 73,527,804
81
(g) Non-performing loans by industry

Dec. 2009 Sept. 2008 Dec. 2009 Sept. 2008
N'000 N'000 N'000 N'000
Agriculture 65,651 47,638 65,651 47,638

Oil and gas 2,063,961 1,518,012 2,063,961 1,518,012
Capital market 10,833,531 88,406 10,279,807 88,406
Consumer credit 1,089,188 88,406 1,089,188 88,406
Manufacturing 2,082,614 1,172,503 2,082,614 1,172,503
Mortgage 64,221 46,736 64,221 46,736
Real Estate and Construction 699,129 227,849 699,129 227,849
Finance and Insurance 32,699 172,640 32,699 172,640
Other Public Utilities 2 6,089 2 6,089
Transportation 722,003 448,969 722,003 448,969
Communication 81,440 204,930 81,440 204,930
Education 34,073 10,129 34,073 10,129
Others 5,074,294 3,164,259 5,074,294 3,164,259
Total 22,842,806 7,196,566 22,289,082 7,196,566
Non-performing loans by geography

2009 2008 2009 2008
N'000 N'000 N'000 N'000
South South 1,071,825 840,789 1,071,825 840,789

Lagos/South west 19,485,738 5,457,714 19,485,738 5,457,714
South East 1,719,056 144,818 1,165,332 144,818
North West 251,864 258,472 251,864 258,472
Abuja/North Central 314,323 494,773 314,323 494,773
North East - - -
TOTAL 22,842,806 7,196,566 22,289,082 7,196,566
82
(h) Concentration of risks of financial assets with credit risk exposure
(i) Geographical sectors
The following table breaks down the Group’s main credit exposure at their carrying amounts, as categorised by
geographical region as of 31 December 2009. For this table, the Group has allocated exposures to regions based on the
region of domicile of our counterparties.
Group
Due from Loans Advances under Debt Total
banks & Other facilities finance lease Instruments
N'000 N'000 N'000 N'000 N'000
South South - 5,130,141 817,617 - 5,947,758

Lagos/South west 57,833,221 80,280,312 3,552,408 - 141,665,941
South East - 2,052,314 63,705 - 2,116,019
North West - 2,839,632 49,484 - 2,889,116
Abuja/North Central - 6,640,764 72,049 23,355,641 30,068,454
North East - 156,254 1,206 - 157,460
57,833,221 97,099,417 4,556,469 23,355,641 182,844,748
Group
banks finance lease Instruments
As at 30 September 2008 Sept. 2008 Sept. 2008 Sept. 2008 Sept. 2008 Sept. 2008
N'000 N'000 N'000 N'000 N'000
South South - 6,258,692 1,273,618 - 7,532,310

Lagos/South west 84,799,102 60,402,907 1,915,702 - 147,117,711
South East - 1,678,979 107,590 - 1,786,569
North West - 3,235,311 625 - 3,235,936
North East - 493,173 9,646 - 502,819
84,799,102 74,459,364 3,404,286 28,649,689 191,312,441
83
Bank
banks & Other facilities finance lease Instruments
N'000 N'000 N'000 N'000 N'000
South South - 5,130,141 817,617 - 5,947,758

Lagos/South west 56,592,146 79,347,781 2,913,427 - 138,853,354
South East - 2,052,314 63,705 - 2,116,019
North West - 2,839,632 49,484 23,355,641 26,244,757
Abuja/North Central - 6,640,764 72,049 - 6,712,813
North East - 156,254 1,206 - 157,460
56,592,146 96,166,886 3,917,488 23,355,641 180,032,161
Bank
banks finance lease Instruments
As at 30 September 2008 Sept. 2008 Sept. 2008 Sept. 2008 Sept. 2008 Sept. 2008
N'000 N'000 N'000 N'000 N'000
South South - 6,258,692 1,273,618 - 7,532,310

Lagos/South west 80,847,858 59,285,937 1,907,521 - 142,041,316
South East - 1,678,979 107,590 - 1,786,569
North West - 3,235,311 625 - 3,235,936
North East - 493,173 9,646 - 502,819
80,847,858 73,342,394 3,396,105 28,590,282 186,176,639
84
Group
Industry Sectors
Due from banks Loans Advances under Debt Total
& Other facilities finance lease Instruments
N'000 N'000 N'000 N'000 N'000
Agriculture - 723,314 1,579 - 724,893
Oil and Gas - 8,414,941 383,115 - 8,798,056
Capital market - 15,912,987 3,056 - 15,916,043
Consumer Credit - 4,601,680 1,208,912 - 5,810,592
Manufacturing - 12,510,073 36,204 - 12,546,277
Mining and quarrying - - 143,289 - 143,289
Mortgage - 3,772,952 612,029 - 4,384,981
Real Estate and Construction - 16,412,008 543,208 - 16,955,216
Finance and Insurance 57,833,221 5,623,300 202,750 - 63,659,271
Government - 4,751,811 212,552 23,355,641 86,153,225
Other Public Utilities - 45,833 1,571 - 47,404
Transportation - 4,396,926 293,898 - 4,690,824
Communication - 467,567 8,722 - 476,289
Education - 261,735 19,133 - 280,868
Power - 94 - - 94
Others - 19,204,196 886,451 - 20,090,647
Total 57,833,221 97,099,417 4,556,469 23,355,641 240,677,969
Group
Advances under Debt
Due from banks Loans finance lease Instruments Total
As at 30 September 2008 Sept 2008 Sept 2008 Sept 2008 Sept 2008 Sept 2008
N'000 N'000 N'000 N'000 N'000
Agriculture - 726,161 - - 726,161

Oil and Gas - 7,146,930 4,105 - 7,151,035
Capital market - 13,945,033 773,421 - 14,718,454
Consumer Credit - 11,099,446 16,460 - 11,115,906
Manufacturing - 12,711,336 - - 12,711,336
Mining and quarrying - - 592,258 - 592,258
Mortgage - 1,623,470 - - 1,623,470
Real Estate and Construction - 4,858,410 - - 4,858,410
Finance and Insurance 84,799,102 752,757 31,710 - 85,583,569
Government - 10,397 1,244,682 28,649,689 29,904,768
Other Public Utilities - 54,753 - - 54,753
Transportation - 3,081,935 15,339 - 3,097,274
Communication - 713,263 136,961 - 850,224
Education - 179,579 46,486 - 226,065
Others - 17,555,894 542,864 - 18,098,758
84,799,102 74,459,364 3,404,286 28,649,689 191,312,441
85
(ii) Industry Sectors

Bank
Due from banks Loans Advances under Debt Total
& Other facilities finance lease Instruments
As at 31 December 2009 2009 2009 2009 2009 2009
Dec. 2009 Dec. 2009 Dec. 2009 Dec. 2009 Dec. 2009
Agriculture - 723,314 1,579 - 724,893
Oil and Gas - 8,414,941 383,115 - 8,798,056
Capital Market - 14,904,311 3,056 - 14,907,367
Consumer Credit - 4,601,680 1,208,912 - 5,810,592
Manufacturing - 12,510,073 36,204 - 12,546,277
Mining and Quarrying - - 143,289 - 143,289
Mortgage - 3,772,952 612,029 - 4,384,981
Finance and Insurance 56,592,146 5,919,961 202,750 - 62,714,857
Government - 4,751,811 212,552 23,355,641 28,320,004
Other public utilities - 45,833 1,571 - 47,404
Transportation - 4,396,926 293,898 - 4,690,824
Communication - 467,567 8,722 - 476,289
Education - 261,735 19,133 - 280,868
Others - 18,983,680 247,470 - 19,231,150
Power - 94 - - 94
56,592,146 96,166,886 3,917,488 23,355,641 180,032,161
Bank
Advances under Debt
Due from banks Loans finance lease Instruments Total
As at 30 September 2008 2008 2008 2008 2008 2008
N'000 N'000 N'000 N'000 N'000
Agriculture - 726,161 4,105 - 730,266
Oil and Gas - 7,146,930 773,421 - 7,920,351
Capital market - 13,461,249 16,460 - 13,477,709
Consumer Credit - 11,099,446 - - 11,099,446
Manufacturing - 12,711,336 592,258 - 13,303,594
Mining and quarrying - - - - -
Mortgage - 1,623,470 - - 1,623,470
Finance and Insurance 80,847,858 752,757 521,951 - 82,122,566
Government - 10,397 - 28,590,282 28,600,679
Other Public Utilities - 54,753 15,339 - 70,092
Transportation - 3,081,935 136,961 - 3,218,896
Communication - 713,263 46,486 - 759,749
Education - 179,579 20,913 - 200,492
Others - 16,922,708 1,236,501 - 18,159,209
Total 80,847,858 73,342,394 3,396,105 28,590,282 186,176,639
86
Analysis by Portfolio Distribution and Risk Rating
As at 31 December Group Group Bank Bank

Dec 2009 Sept. 2008 Dec 2009 Sept. 2008
Risk rating N'000 N'000 N'000 N'000
RR1 - RR2 4,881,208 52,387 4,881,208 52,387

RR3 - RR4 62,569,236 62,994,509 63,688,003 62,994,509
RR5 - RR6 6,456,167 4,215,902 4,958,593 3,098,932
RR7 2,086,534 49,480 2,085,534 49,480
RR8 10,131,846 640,746 10,131,846 640,746
RR9 10,624,426 6,506,340 10,071,702 6,506,340
96,749,417 74,459,364 95,816,886 73,342,394
(i) Report on market and liquidity risk management
Market Risk
Market risk is the probability that changes in the financial market prices, Interest Rates, Exchange Rates, Market
Volatilities and Correlations could adversely affect the bank's condition.
Sterling Bank's Market Risk Management policy, approved by the Board, is the primary reference document for creating
and managing market risk exposures in the bank. The policy outlines the framework for risk identification, analysis,
approval, administration and reporting of market risk exposure.
Market risk management in the Bank covers the following areas;
1. Liquidity and Interest Rate Risk from deposit taking and lending activities of all the business units resulting from
mismatch of maturing assets and liabilities.
2. Foreign Exchange Risk, both in the trading book and the denomination of Bank's assets and liabilities in foreign
currencies.
Liquidity Risk
The ultimate responsibility for liquidity risk management rests with the Board, who had developed a robust liquidity risk
management framework for the management of the bank's short term, medium and Long term funding liquidity management
requirements. The objective of the framework includes;
1. Proactively identifying the bank’s liquidity needs

2. Identifying primary sources that will be used to fund those needs
3. Establishing procedures for monitoring liquidity
4. Providing minimum liquidity management requirements
87
Liquidity risk management process & objective

The Bank's liquidity management process is the primary responsibility of Assets and Liability Committee (ALCO). This
function is delegated to Assets and Liability Management (ALM) Department, within the Treasury Group and is responsible
for daily liquidity management. Net daily funding requirements are predetermined by regular interaction with business
units and dealing room to ascertain pipe line deals requiring funding, determine daily settlement requirements, and regular
interactions with large depositors to understand and manage draw down requirements.
The bank’s liquidity management policy objective includes;
1. Effective monitoring of the Bank’s liquidity position at all times.

2. Ensuring that an adequate liquidity cushion is maintained such that all maturing obligations (both on and off balance
sheet) are met on an on-going basis.
3. Controlling the Bank’s dependence on wholesale funds , by building an effective contingency funding plan.
4. Ensuring that timely information is available for liquidity decisions.
5. Maintaining a liquidity posture, consistent with regulatory requirements.
6. Complying with all regulatory liquidity reporting requirements.
Funding approach
The bank has a number of liability generating instruments and products. However due to the fact that the various sources
of funding change in line with the market and regulation, the bank at every point, diversifies its sources of funding in
terms of currency, product, customer and tenor.
Interest Rate Risk

The major objective of Interest Rate Risk Management is to minimize reduction in net income and reductions in the
bank's economic value of equity resulting from changes in future interest rates.
Interest rate risk is managed using a static re-price gap cumulative analysis, by ensuring that the bank maintains a
“balanced re-pricing cumulative gap” position. In line with the limits set by the Board, re-pricing gap reports are prepared
to monitor level of compliance.
Foreign Exchange Risk

The bank is exposed to changes of current holdings and future cash flows denominated in other currencies. Instruments
that are exposed to this risk include; foreign currency denominated loans and deposits, foreign currency denominated
securities, future cash flows in foreign currencies arising from foreign exchange transactions.
Market risk exposures for currency trading activities are consistently monitored by limit structures for Overnight &
Intraday spot and forward limits for dealers and global position. The Net Open position is strictly monitored to ensure
strict compliance with regulatory requirements.
Further initiatives on the application of Value-at-Risk (VaR) on the daily holding position using the historical simulation
method is in progress to estimate the potential loss on a given holding period for a specified confidence interval, after
taking account of historical correlations and volatilities of market prices.
88
Operational risk management

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people, systems and external
events. This definition includes legal risk but excludes reputational risk and strategic risk.
Sterling Bank is committed to the management of operational risks in the Bank.
Operational risk management philosophy & principles

Operational risk management in Sterling Bank operates through the creation and sustenance of a strong risk culture
which is anchored on the following principles:
· Bank-wide assimilation of the impact of operational risk events and activities.

· Individual accountability and transparency on operational risk issues at all levels.
· Mutual understanding and support across all business groups and supporting Units.
Monitoring and managing operational risk

Various tools and techniques are deployed in managing operational risk in Sterling Bank. These tools and techniques
incorporate Risk Identification, Risk Assessment and Implementation of adequate control measures to reduce the
impacts of risks. They include:
Risk and control self assessment

This incorporates the use of Checklists, Questionnaires and Workshops to identify and assess inherent risks. The benefits
derived from the use of this tool in Sterling Bank Plc are:
· Empowering employees and increased accountability.

· Provides employees with a better understanding of business risks and internal controls.
· Assists in identifying important issues faster.
· Helps employees to be proactive.
· Reduces audit exposures that may result in losses.
Loss data collection and tracking:

This is the backward review of events that have occurred and enables monitoring of trends to prevent re-occurrence. It
also enables assessment and monitoring of risks to ensure that timely corrective actions are taken.
Key Risk Indicators (KRIs):

KRIs are used to highlight current risk levels by providing a measure of the status of an identified risk and the effectiveness
of its control. They also serve as early warning signals and act as escalation triggers when set tolerance levels are exceeded.
89
Operational risk co-ordinators
The Bank has Operational Risk coordinators in each Business Unit and Branch. Their functions include the following:
· To coordinate collection of data on loss events within the business units/area and report to the Operational Risk
Management Unit on these events, the details and amounts.
· Monitor results and work with their respective Units on identified issues.
· Facilitate, partake and verify the results of the self-assessment process.
· Consult and advise the business units on ways to mitigate OR.
· To identify gaps on OR management issues pertaining to the business area and report to Operational Risk
Management Unit.
Management and board ovesight
Our governance structure is a combination of the principles of the top-down approach and the bottom-up approach. This
is to ensure that management of Operational Risk is adequately covered at both policy and operations level.
The Board of Directors through the Board Risk Management Committee and the Management Risk Committee is
responsible for approval of policies and strategy in managing operational risk. These would be used as guidelines to
constantly evolve plans in operations that lend support to the management of operational risk at the business unit level
and narrowed down to the operational level.
90
Foreign exchange risk
The Group takes on exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on its financial position and cash
flows. The Board sets limits on the level of exposure by currency and in aggregate for both overnight and intra-day positions, which are monitored
daily. The table below summarises the Group’s exposure to foreign currency exchange rate risk at 31 December 2009. Included in the table are the
Group’s assets and liabilities at carrying amounts, categorised by currency.
Group
31 December 2009 Naira Dollar GBP Euro Others Total
Dec 2009 Dec 2009 Dec 2009 Dec 2009 Dec 2009 Dec 2009
N'000 N'000 N'000 N'000 N'000 N'000
Assets:
Cash and balances with central banks 7,519,971 527,556 188,668 337,479 - 8,573,674
Treasury bills 9,607,738 - - - - 9,607,738
Due from other banks 44,283,557 12,396,460 178,986 974,218 - 57,833,221
Loans and advances to customers 71,967,723 6,031,579 3,024 33,508 - 78,035,834
Other facilities - 350,000 - - - 350,000
Advances under finance lease 4,020,564 528,193 - - - 4,548,757
Investment securities 27,471,971 33,831 - - - 27,505,802
Investment in subsidiaries - - - - - -
Investment in associates 43,377 - - - - 43,377
Investment properties 12,584,288 - - - - 12,584,288
Other assets 12,363,704 57,141 663 19 - 12,421,527
Deferred tax asset 4,601,074 - - - - 4,601,074
Property and equipment 5,212,873 - - - - 5,212,873
Total financial assets 199,676,840 19,924,760 371,341 1,345,224 - 221,318,165
Liabilities:
Customer deposits 149,885,689 10,876,288 255,191 259,727 - 161,276,895
Due to other banks 2,500,000 150,000 - - - 2,650,000
Current income tax 1,026,117 - - - - 1,026,117
Other liabilities 19,080,843 1,085,692 179,566 328,573 - 20,674,674
Retirement benefit obligations 54,945 - - - - 54,945
Deferred tax liabilities 10,428 - - - - 10,428
Long-term borrowing - 14,201,550 - - - 14,201,550
Total liabilities 172,558,022 26,663,530 434,757 588,300 - 200,244,609
Net on-balance sheet financial position 27,118,818 (6,738,770) (63,416) 756,924 - 21,073,556
Off balance sheet 19,433,968 5,764,350 - - - 25,198,318
30 September 2008 Naira Dollar GBP Euro Others Total

N'000 N'000 N'000 N'000 N'000 N'000
Total financial assets 223,049,525 25,630,998 456,595 709,703 - 249,846,821
Total financial liabilities 189,882,095 27,388,459 822,117 313,093 - 218,405,764
91
Bank
Concentrations of currency risk – on- and off-balance sheet financial instruments

31 December 2009 Naira Dollar GBP Euro Others Total
N'000 N'000 N'000 N'000 N'000 N'000
Assets:
Cash and balances with central banks 7,519,531 527,556 188,668 337,479 - 8,573,234
Treasury bills 9,607,738 - - - 9,607,738
Due from other banks 43,042,482 12,396,460 178,986 974,218 - 56,592,146
Loans and advances to customers 72,071,987 6,031,579 3,024 33,508 - 78,140,098
Other facilities - 350,000 - - 350,000
Advances under finance lease 3,389,295 528,193 - - 3,917,488
Investment securities 25,704,683 33,831 - - 25,738,514
Investment in subsidiaries 2,467,622 - - 2,467,622
Investment in associates 260,093 - 260,093
Investment properties 60,000 - 60,000
Other assets 10,705,056 57,141 663 19 - 10,762,879
Deferred tax asset 4,081,815 - 4,081,815
Property and equipment 5,089,200 - - - - 5,089,200
Total financial assets 183,999,502 19,924,760 371,341 1,345,224 - 205,640,827
Liabilities:
Customer deposits 149,079,175 10,876,288 255,191 259,727 - 160,470,381
Due to other banks - 150,000 - - - 150,000
Current income tax 393,405 - - - - 393,405
Other liabilities 6,284,855 1,085,692 179,566 328,573 - 7,878,686
Retirement benefit obligations 54,811 - - - - 54,811
Deferred tax liabilities - - - - - -
Long-term borrowing - 14,201,550 - - - 14,201,550
Total liabilities 155,812,246 26,663,530 434,757 588,300 - 183,498,833
30 September 2008 Naira Dollar GBP Euro Others Total

N'000 N'000 N'000 N'000 N'000 N'000
Total financial assets 209,705,627 25,630,998 456,595 709,703 - 236,502,923

Total financial liabilities 177,740,376 27,388,459 822,117 313,093 206,264,045
92
Sterli
Togeth
Maturity Profile - On Balance Sheet

Group Up to 1 1-3 3-6 6 - 12 1-5 Over 5
31 December 2009 month months months months years years
Assets: N'000 N'000 N'000 N'000 N'000 N'000
Cash in hand and balances with CBN 7,461,371 - - - - 1,112,303

Treasury bills 1,107,738 1,500,000 3,500,000 3,500,000 - -
Due from other banks 51,623,269 3,209,952 3,000,000 - - -
Loans and advances to customers 47,959,105 7,130,107 4,836,170 7,434,417 24,841,782 4,547,836
Other facilities - - 350,000 - - -
Advances under finance lease 698,058 39,430 243,139 1,463,975 2,111,867 -
Investment securities 2,157,936 - - 1,904,826 5,602,944 17,156,245
Investment in associates - - - - - 43,377
Investment properties 60,000 - - - - 12,524,288
Other assets 10,869,815 17,979 81,961 206 3,453,974 8,000
Deferred tax assets - - - - - 4,601,074
Property and equipment - - - - - 5,212,873
Total assets 121,937,292 11,897,468 12,011,270 14,303,424 36,010,567 45,205,996

Liabilities
Customers' deposits 117,973,777 27,146,369 2,356,139 4,952,610 8,848,000 -
Due to other banks 150,000 - - 2,500,000 - -
Current income tax payable - - 832,715 193,402 - -
Other liabilities 10,850,144 - 116,699 623,424 9,084,407 -
Other facilities - - - - 350,000 -
Defined contribution obligations 54,945 - - - - -
Deferred tax liabilities - - - 6,781 3,647 -
Long-term borrowing - - - - 14,201,550
Total liabilities 129,028,866 27,146,369 3,305,553 8,276,217 32,487,604 -
Gap (7,091,574) (15,248,901) 8,705,717 6,027,207 3,522,963 45,205,996

Sterli
Togeth
Bank
31 December 2009 Up to 1 1-3 3-6 6 - 12 1-5 Over 5
month months months months years years
N'000 N'000 N'000 N'000 N'000 N'000
Assets:
Cash in hand and balance with CBN 7,460,931 - - - - 1,112,303
Treasury bills 1,107,738 1,500,000 3,500,000 3,500,000 - -
Other facilities - - 350,000 - -
Advances under finance lease 698,058 39,430 243,139 1,463,975 1,472,886 -
Investment securities 1,380,050 - - 1,454,125 5,224,491 16,995,997
Investment in subsidiaries - - - - - 2,467,622
Investment properties 60,000 - - - - -
Other assets 10,865,007 - - - 1,204,382 -
Total assets 122,214,387 9,292,161 11,503,318 13,852,517 32,523,025 34,554,866
Liabilities:
Customers' deposits 120,144,633 27,146,369 2,356,139 1,975,240 8,848,000 -
Due to other banks 150,000 - - - - -
Current income tax payable - - 393,405 - - -
Other liabilities 7,878,686
Other facilities - - 350,000
Defined contribution obligations 54,811
Long-term borrowing - - - - 14,201,550
Total liabilities 128,228,130 27,146,369 2,749,544 1,975,240 23,399,550 -
Gap (6,013,743) (17,854,208) 8,753,774 11,877,277 9,123,475 34,554,866

Sterli
Togeth
Group
30 September 2008 Up to 1 1-3 3-6 6 -12 1 - 5 years Over 5
month months months months years
Maturity Profile - On Balance Sheet N'000 N'000 N'000 N'000 N'000 N'000
Assets:
Cash in hand and balances with CBN 16,150,062 - - - - -
Treasury bills 192,164 6,661,667 9,000,000 5,525,000 - -
Advances under finance lease 11,869 2,866 181,067 477,518 2,730,966 -
Investment securities - - - 320,000 17,181,502 18,885,548
Investment properties - - - - - 1,945,651
Other assets 13,585,888 29,375 333 - 3,787 8,833
Deferred tax assets - 8 - - 23,372 1,135,294
151,268,843 15,721,433 21,253,400 11,355,518 28,004,627 31,353,266
Liabilities
Customers' deposits 154,804,935 11,947,651 204,023 27,987 194,369 9,737,179
Due to other banks 5,418,920 - - - - -
Current income tax payable - - 1,750,366 - - -
Other liabilities 22,730,531 434,000 - - - -
Deferred tax liabilities - - - - - 15,714
Long-term borrowing - - - - - 11,073,200
Total liabilities 183,021,275 12,381,651 1,954,389 27,987 194,369 20,826,093
Gap (31,752,432) 3,339,782 19,299,011 11,327,531 27,810,258 10,527,173

Sterli
Togeth
Bank
Maturity Profile - On Balance Sheet
30 September 2008
Up to 1 1-3 3-6 6 -12 1 - 5 years Over 5
N'000 N'000 N'000 N'000 N'000 N'000
Assets:
Cash in hand and balances with CBN 16,149,550 - - - - -
Treasury bills 192,164 6,661,667 9,000,000 5,525,000 - -
Due from other banks 72,847,858 - 8,000,000 - - -
Advances under finance lease 11,869 2,866 181,067 477,518 2,722,785 -
Investment securities - - - 320,000 17,181,502 14,125,981
Investment in associates - - - - - -
Investment properties - - - - - 154,276
Other assets 9,565,972 - - - - -
Total assets 143,280,413 14,591,838 21,253,067 11,355,518 27,969,287 24,393,827
Liabilities:
Customers' deposits 162,619,000 11,947,651 204,023 27,987 194,369 9,737,179
Due to other banks - - - - - -
Current income tax payable - - 1,157,102 - - -
Other liabilities 8,802,795 434,000 - - - -
Long-term borrowing - - - - - 11,073,200
Total liabilities 171,488,534 12,381,651 1,361,125 27,987 194,369 20,810,379
Gap (28,208,121) 2,210,187 19,891,942 11,327,531 27,774,918 3,583,448

Ster
Toget
Maturity profile - Off Balance Sheet
Group and Bank

31 December 2009 Up to 1 1-3 3-6 6 -12 1-5
N'000 N'000 N'000 N'000 N'000
Bonds, guarantees and indemnities 1,792,395 5,791,493 1,161,498 6,281,816 4,406,766

Letters of credit 1,545,162 4,208,400 - - -
Bankers acceptance - - - - -
Forward Purchase - - - - -
Others 10,788 - - - -
3,348,345 9,999,893 1,161,498 6,281,816 4,406,766

Ster
Toget
Maturity profile - Off Balance Sheet
Group and Bank

30 September 2008 Up to 1 1-3 3-6 6 -12 1-5
N'000 N'000 N'000 N'000 N'000
Bonds, guarantees and indemnities 7,660,816 6,523,000 1,314,864 7,111,277 4,988,643

Letters of credit 5,565,190 7,254,000 - - -
Bankers acceptance/Guaranteed Commercial
Papers 18,104,695 13,398,824 70,750 94,289 8,081,000
Forward Purchase 11,012,060 - - - -
Others 1,525 - - - -
42,344,286 27,175,824 1,385,614 7,205,566 13,069,643

Capital management
The Group’s objectives when managing capital, which is a broader concept than the ‘equity’ on the face of the balance sheet, are:
a. To comply with the capital requirements set by the regulators of the banking markets where the entities within the Group operate;
b To safeguard the Group’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for
other stakeholders; and
c. To maintain a strong capital base to support the development of its business.
Capital adequacy and the use of regulatory capital are monitored regularly by the Group’s management, employing techniques based on the
guidelines developed by the Central Bank of Nigeria (CBN), for supervisory purposes. The required information is filed with the CBN on a
monthly basis.
The CBN requires each bank to:

(i) Hold the minimum level of the regulatory capital of N25 billion, and
(ii) Maintain a ratio of total regulatory capital to the risk-weighted asset at or above the minimum of 10%.
The Group’s regulatory capital as managed by its Financial Control and Treasury Units is divided into two tiers:
a. Tier 1 capital: share capital, retained earnings and reserves created by appropriations of retained earnings.
b. Tier 2 capital: preference shares, minority interests arising on consolidation, qualifying debt stock, fixed assets revaluation reserves, foreign
currency revaluation reserves, general provisions subject to maximum of 1.25% of risk assets.
Investments in unconsolidated subsidiaries and associates are deducted from Tier 1 and Tier 2 capital to arrive at the regulatory capital.
The risk-weighted assets are measured by means of a hierarchy of five risk weights classified according to the nature of – and reflecting an
estimate of credit, market and other risks associated with – each asset and counterparty, taking into account any eligible collateral or
guarantees. A similar treatment is adopted for off-balance sheet exposure, with some adjustments to reflect the more contingent nature of the
potential losses.
The table below summarises the composition of regulatory capital and the ratios of the Group for the period ended 31 December.
99

Dec. 2009 Sept. 2008 Dec. 2009 Sept. 2008
N'000 N'000 N'000 N'000
Tier 1 capital
Share capital 6,281,545 6,281,545 6,281,545 6,281,545

Share premium 12,314,019 12,314,019 12,314,019 12,314,019
Statutory reserves 3,718,368 1,761,422 3,718,368 1,761,422
SMEEIS reserve 234,503 234,503 234,503 234,503
Share reserve 5,276,423 5,276,423 5,276,423 5,276,423
Retained earnings (7,321,736) 2,638,933 (6,214,608) 1,702,107
Less: Intangible asset (deferred tax assets) (4,601,074) (1,158,674) (4,081,815) (1,163,816)
Total qualifying Tier 1 capital 15,902,048 27,348,171 17,528,435 26,406,203
Tier 2 capital
Preference shares - - - -
Non controlling interest - 169,036 - -
Convertible bonds - - - -
Revaluation reserve - investment properties 486,000 534,092 486,000 534,092
Capital reserves 38,690 96,317 - -
Translation reserve 45,744 177,821 45,744 177,821
General provision 489,417 728,156 - 702,022
Other reserves - 1,956,946 - 1,956,946
Total qualifying Tier 2 capital 1,059,851 3,662,368 531,744 3,370,881
Total regulatory capital 16,961,899 31,010,539 18,060,179 29,777,084
Risk-weighted assets:
On-balance sheet 128,999,124 112,732,171 115,436,949 104,851,918

Off-balance sheet 12,593,765 65,464,483 12,593,765 65,464,483
Total risk-weighted assets 141,592,889 178,196,654 128,030,714 170,316,401
Risk weighted Capital Adequacy Ratio (CAR) 11.98% 17.40% 14.11% 17.48%
100
Statement of Value Added
Group:
Dec. 2009 Sept. 2008
N'000 % N'000 %
Gross earnings 46,717,490 36,129,278

Interest expense - local (20,613,620) (10,240,379)
Fee and commission expense - -
26,103,870 25,888,899
and joint ventures (111,667) -
Exceptional income - 4,774,732

Exceptional charge - (3,081,993)
Loan loss expenses (12,532,003) (2,146,593)
Allowance on other risk assets (3,024,310) (985,068)
Bought-in-materials and services -local (13,926,638) (7,892,072)
Value added (3,490,748) 100 16,557,905 100
Applied to pay:
Employee as wages, salaries and pensions 6,415,855 (184) 6,140,104 37
Government taxes (2,612,826) 75 1,398,669 8
Retained in business:
Depreciation on properties and equipments 1,725,825 (49) 1,169,103 7
Depreciation on equipment on lease - - 30,053 -
To pay proposed dividend - 1,256,309 8
To augment reserve (9,019,602) 258 6,563,667 40
(3,490,748) 100 16,557,905 100
101
Statement of Value Added

Bank:
Dec. 2009 Sept. 2008
N'000 % N'000 %
Gross earnings 43,464,716 32,777,845

Interest expense (20,134,503) (10,457,211)
Fee and commission expense - -
23,330,213 22,320,634
Exceptional income - 4,774,732

Exceptional charge - (3,081,993)
Loan loss expenses (11,513,630) (2,134,555)
Allowance on other risk assets (1,455,264) (122,661)
Bought-in-materials and services -local (11,921,491) (5,996,010)
Value added (1,560,172) 100 15,760,147 100
Applied to pay:
Employee as wages, salaries and pensions 5,857,029 (376) 5,584,317 35
Government taxes (2,412,502) 155 1,266,571 8
Retained in business:
Depreciation on properties and equipments 1,655,707 (105) 1,099,744 7
Depreciation on equipment on lease - - 30,053 -
To pay proposed dividend - 1,256,309 8
Profit for the year including statutory reserves (6,660,406) 427 6,523,153 42
(1,560,172) 101 15,760,147 100
102
Group Financial Statements for the period ended 31 December 2009
together with Directors' and Auditor's Reports
31 December 30 September 30 September 30 September 29 December
2009 2008 2007 2006 2005
N'000 N'000 N'000 N'000 N'000
Bank
ASSETS
Cash in hand and balances with CBN 8,573,234 16,149,550 - - -
Treasury bills 9,607,738 21,378,831 13,721,471 17,038,334 12,175
Due from other banks 56,592,146 80,847,858 44,633,790 22,639,039 5,003,948
Loans and advances to customers 78,140,098 65,787,520 45,957,835 38,945,949 1,722,851
Other facilities 350,000 - - - -
Advances under finance lease 3,917,488 3,362,144 2,222,007 1,590,466 989,887
Investment securities 25,738,514 31,451,241 5,602,394 6,877,448 222,489
Investment in subsidiaries 2,467,622 1,550,405 1,550,405 1,550,405 1,728,677
Investment in associates 260,093 232,500 - - -
Investment properties 60,000 154,276 19,173,155 4,137,000 1,737,456
Other assets 10,762,879 9,207,117 4,760,856 5,555,186 5,661,262
Deferred tax assets 4,081,815 1,163,816 376,326 40,831 204,093
Property and equipment 5,089,200 5,217,665 4,864,389 7,217,445 2,152,451
Equipment on lease - - 30,053 42,025 -
Goodwill - - 3,081,993 4,030,299 -
TOTAL ASSETS 205,640,827 236,502,923 145,974,674 109,664,427 19,435,289
LIABILITIES
Customers' deposits 160,470,381 184,730,209 106,933,727 75,026,350 12,379,926
Due to other banks 150,000 - - - -
Current income tax payable 393,405 1,157,102 606,413 684,735 168,446
Other liabilities 7,878,686 9,236,795 11,634,139 7,634,014 3,633,951
Defined contribution obligations 54,811 66,739 - - -
Deferred tax liabilities - - - - 286,240
Long-term borrowing 14,201,550 11,073,200 - - -
TOTAL LIABILITIES 183,498,833 206,264,045 119,174,279 83,345,099 16,468,563
NET ASSETS 22,141,994 30,238,878 26,800,395 26,319,328 2,966,726

Share capital 6,281,545 6,281,545 5,276,423 5,276,423 2,386,986
Share premium 12,314,019 12,314,019 13,319,141 13,319,141 1,886,937
Share reserve 5,276,423 5,276,423 5,276,423 5,276,423 -
Other (Deficit)/ Reserves (1,729,993) 6,366,891 2,928,408 2,447,341 (1,307,197)
SHAREHOLDERS' FUNDS
Other Commitments and 22,141,994 30,238,878 26,800,395 26,319,328 2,966,726
Contingents. 25,198,318 91,180,933 54,121,619 32,437,199 9,991,073
PROFIT AND LOSS ACCOUNT

2009 2008 2007 2006 2005
15months 12 months 12 months 12 months 12 months
N'000 N'000 N'000 N'000 N'000
Gross earnings 43,464,716 32,777,845 21,057,246 12,444,596 1,611,280

Profit/(loss) before tax (9,072,908) 7,789,724 605,277 429,357 (4,968,377)
Taxation 2,412,502 (1,266,571) 15,381 532,288 147,819
Profit/(loss) after tax (6,660,406) 6,523,153 620,658 961,645 (4,820,558)
103
Group Financial Statements for the period ended 31 December 2009
together with Directors' and Auditor's Reports

GROUP: 2009 2008 2007 2006 2005
N'000 N'000 N'000 N'000 N'000
Cash in hand and balances with CBN 8,573,674 16,150,062 6,234,795 7,022,527 2,890,959
Treasury bills 9,607,738 21,378,831 13,721,471 12,866,613 12,175
Due from other banks 57,833,221 84,799,102 42,806,336 10,964,794 2,580,635
Loans and advances to customers 78,035,834 66,882,520 47,113,606 38,544,411 4,055,297
Advances under finance lease 4,548,757 3,366,161 2,233,323 1,590,466 222,489
Investment securities 27,505,802 36,210,808 24,510,756 9,951,043 3,061,518
Investment in subsidiaries - - - - -
Investment in associates 43,377 258,661 - - -
Investment properties 12,584,288 1,945,651 5,836,513 7,600,006 3,209,053
Other assets 12,421,527 12,309,161 5,618,158 11,764,699 2,070,286
Deferred tax assets 4,601,074 1,158,674 460,087 40,831 988,772
Property and equipment 5,212,873 5,387,190 5,088,764 7,347,747 2,250,612
Equipment on lease - - 30,053 42,025 -
Goodwill - - 3,081,993 4,030,299 -
TOTAL ASSETS 221,318,165 249,846,821 156,735,855 111,765,461 21,341,796
LIABILITIES
Customers' deposits 161,276,895 176,916,144 99,218,069 68,945,862 12,315,216
Due to other banks 2,650,000 5,418,920 1,412,223 117,096 428,139
Current income tax payable 1,026,117 1,750,366 1,326,703 1,037,564 343,383
Other liabilities 20,674,674 23,164,531 26,330,824 15,401,219 5,234,128
Defined contribution obligations 54,945 66,889 197,048 75,801 -
Deferred tax liabilities 10,428 15,714 24,203 3,823 286,240
Long-term borrowing 14,201,550 11,073,200 - - -
200,244,609 218,405,764 128,509,070 85,581,365 18,607,106
Net Assets 21,073,556 31,441,057 28,226,785 26,184,096 2,734,690

Share capital 6,281,545 6,281,545 5,276,423 5,276,423 2,386,986
Share premium 12,314,019 12,314,019 13,319,141 13,319,141 1,886,937
Share reserve 5,276,423 5,276,423 5,276,423 5,276,423 -
Other (Deficit)/ Reserves (2,798,431) 7,400,034 4,069,537 2,178,254 (1,640,391)
Non-controlling interest - 169,036 285,262 133,855 101,158
SHAREHOLDERS' FUNDS 21,073,556 31,441,057 28,226,786 26,184,096 2,734,690
Other Commitments and Contingents. 25,198,318 91,180,933 54,121,619 54,121,619 9,991,073
PROFIT AND LOSS ACCOUNT

2009 2008 2007 2006 2005
15months 12 months 12 months 12 months 12 months
N'000 N'000 N'000 N'000 N'000
Gross earnings 46,717,490 36,129,278 23,864,197 12,857,675 1,823,659

Profit/(loss) before tax (11,632,428) 7,982,548 2,226,708 728,181 (5,593,599)
Taxation 2,612,826 (1,398,669) (288,699) 345,601 191,603
Profit attributable to equity holders
of Banks (9,019,602) 6,583,879 1,938,009 1,073,782 (5,401,996)
104
Sterling Bank
20, Marina
P.M.B 12735
Lagos
Tel: +234 1 260 0420-9

260 0850-9
URL: www.sterlingbankng.com

Sterling Bank 2009 Annual Report

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What are the main committees of the board and their roles?

What are the main committees of the board and their roles?

What are the key financial highlights from the financial statements?

What are the key financial highlights from the financial statements?

Sterling Bank Plc and subsidiary companies

Group financial statements for 15 months

Together with Directors' and Auditor's Reports

Corporate governance report 2 - 5

Directors' responsibility statements 12

Audit Committee's Report 13

Statement of significant accounting policies 16 - 27

Consolidated profit and loss accounts 28

Consolidated balance sheets 29

Statements of cash flow 30

Notes to the financial statements 31 - 100

Value added statements 101 - 102

Five-year financial summaries 103 - 104

Board Composition and Committee

Board Credit Committee

Attendance No. of Meetings

Board Finance and General Purpose Committee

Attendance No. of Meetings

1 Captain Harrison Kuti Chairman 4 4

Board Establishment Committee

Attendance No. of Meetings

Board Risk Management Committee

Attendance No. of Meetings

Attendance No. of Meetings

Attendance at Board meetings for the period ended 31 December 2009

Director Attendance No of Meetings

1 Executive Committee (EXCO)

2 Assets and Liability Committee (ALCO)

3 Management Credit Committee (MCC)

4 Management Performance Review Committee (MPR)

5 Criticised Assets Committee (CAC)

6 Computer Steering Committee (CSC)

7 Management Risk Committee (MRC)

Whistle Blowing Process

Change in accounting year end

Principal activity and business review

Group Group Bank Bank

Gross earnings 46,717,490 36,129,278 43,464,716 32,777,845

(Loss)/profit before taxation

(Loss)/profit before taxation (11,632,428) 7,982,548 (9,072,908) 7,789,724

(Loss)/profit after taxation (9,019,602) 6,583,879 (6,660,406) 6,523,153

(Loss)/profit attributable to group (9,019,602) 6,563,667 (6,660,406) 6,523,153

Transfer to statutory reserve - 1,956,946 - 1,956,946

(9,019,602) 6,563,667 (6,660,406) 6,523,153

Total non-performing loan 22,842,806 7,196,566 22,289,082 7,196,566

Earnings per share (kobo) - Basic (72)k 52k (53)k 52k

Name Designation Date appointed Interest represented

Directors interests in shares

Range of shares Number % Number %

1 - 1,000 32,717 35.31% 14,914,384 0.12%

The following shareholders have shareholdings of 5% and above as at 31 December 2009:

December 2009 September 2008

State Bank of India 14.76 14.75

Details of donations Purpose N'000

Lagos Monarch Community Hall Project Cultural Development 5,000

Property and equipment