Leading commercial bank, Sterling Bank Plc, has said it would always adopt amicable resolution or when necessary, take drastic legal actions to achieve debt recovery outcomes.
Such strategies, the bank said, included restructuring for accelerated payoffs and possible foreclosure or disposal of pledged assets of defaulting debtors. it said this would 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,” said Abiodun Aderoju, Group Head, Credit Collection and Recovery, Sterling Bank.
Aderoju said, “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.”
He added that the bank continued 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,” said he.
He explained that although the bank’s gross loans and advances in 2017 increased by 29.5 per cent to N617.6 billion and net loans and advances by 27.7 per cent 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 per cent, adding that loans to corporate entities and organisations increased by 31.1 per cent and accounted for 97.6 per cent 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.