Yemisi Izuora
Sterling Bank Plc, is to adopt amicable resolution or when necessary, drastic legal actions to achieve debt recovery outcomes.
According to the Bank, such strategies include restructuring for accelerated payoffs and possible foreclosure or disposal of pledged assets of defaulting debtors. This will ensure a progressive drop in the bank’s Non-Performing Loan (NPL) ratio which has decreased significantly year on year since 2016.
It is becoming common for debtors to exasperate Lenders by their resort to subtle blackmail, unfounded allegations and other underhand tactics which include frivolous litigations to delay or avoid meeting their loan obligations, but financial institutions have adopted effective strategies to counter this ploy and recover on the debts owed.
Commenting on the intensified debt recovery drive, Abiodun Aderoju, Group Head, Credit Collection and Recovery, was quoted in a statement as saying “Sterling Bank witnessed a 383% increase in recoveries between 2016 and 2017. This resulted in a significant improvement in asset quality as reflected in the reduction in non-performing loan ratio by 370 basis points to 6.2% in 2017 from 9.9% in 2016. We are building aggressively on this momentum to ensure that defaulting customers meet their debt obligations to the bank.”
Aderoju added that the bank continues to maintain a disciplined and prudent approach to loan growth in line with its risk management framework. “The impact of our recovery efforts would be felt by the end of the financial year because it will result in a further drop in our Non-Performing Loan portfolio. We are keen on achieving this despite the antics of debtors who take their obligations lightly.”
He said although the bank’s gross loans and advances in 2017 increased by 29.5% to N617.6 billion and net loans and advances by 27.7% to N598.1 billion, the bulk of the increase was primarily driven by cash-backed facilities with limited credit risks.
According to him, net loans and advances between 2013 and 2017 increased at a compound annual growth rate of 16.6%, adding that loans to corporate entities and organisations increased by 31.1% and accounted for 97.6% of overall loans disbursed.
The bank’s Group Head of Credit Collection and Recovery noted that in line with the strategic focus of the bank, agriculture and transportation benefitted from the growth in loans as part of the priority sectors of the bank. other focus areas include health, education and renewable energy.