Sterling Bank, a tier-2 commercial bank in Nigeria with a market capitalization of ₦174.76 billion, has increased salaries for its over 3,000 employees to reduce the impact of the rising cost-of- living and inflation. Sources close to the matter disclosed that the adjustment, approximately 7%, was announced via an internal memo in early January 2025.
This move aligns with a broader trend among Nigerian banks, which have been revising compensation to address the economic pressures affecting their employees. In August 2024, Sterling Bank introduced a cost-of-living adjustment (COLA), offering a ₦75,000 stipend to staff from executive trainee to assistant banking officer levels. It remains uncertain whether this stipend will continue alongside the updated salary structure.
The salary increases are grade-specific, reflecting Sterling Bank’s tiered compensation model. Recent adjustments have moved many employees to the top of their respective pay bands. For instance, executive trainees previously earning ₦327,000 monthly will now receive ₦351,000, while senior executives earning ₦500,000 will see their pay rise to ₦527,000.
The bank employs a “notch system” within each grade level, allowing for pay adjustments without formal promotions. This system helps manage compensation during challenging economic periods, enabling salary increases without requiring an upgrade in rank.
“Instead of promoting employees to higher grades during economic downturns, companies may shift them to the upper range of their current grade,” explained Chibuzo Ihentuge-Eric, a human resources professional. “This sideways adjustment acknowledges market realities while retaining talent.”
Despite the pay hike, some employees expressed disappointment, expecting larger raises akin to those implemented by other banks. “Given the inflation rate and the state of the economy, this adjustment feels insufficient,” one employee remarked anonymously.
In comparison, Union Bank and GTBank increased salaries by 40% in late 2024, signaling a competitive effort to retain talent in an industry characterized by high turnover and frequent poaching. Research highlights that competitive pay is vital in reducing employee weakening within Nigeria’s banking sector.
Sterling Bank reported a profit after tax of ₦27.4 billion for the period ending September 2024, a year-on-year increase of 67.07%. The bank is projecting gross earnings of ₦121.8 billion for the first quarter of 2025.
As of September 2024, personnel expenses stood at ₦22.6 billion, accounting for 21.67% of total expenses. If the salary adjustments lead to a typical 10% increase in personnel costs, the bank’s wage bill will rise to an estimated ₦24.86 billion. Despite the increase, Sterling’s wage bill remains one of the lowest in its peer group. Union Bank reported personnel expenses of ₦34 billion, Fidelity Bank ₦43.6 billion, and FCMB ₦56.5 billion.
Sterling Bank’s approach highlights the balancing act between addressing employee needs and maintaining cost efficiency in a challenging economic environment.
