GT Bank declares windfall dividend
Banking sector investors got to put smiles on their faces over the weekend as Guaranty Trust Bank, Nigeria’s largest commercial bank by market capitalization, paid out a dividend per share of N2.00. This was 13 per cent higher than its dividend payout of N1.77 in 2015, and represents a dividend yield of 8 per cent on current market price of N25.
Both Income and Value investors hemmed up by low capital gains from the Banking sector as a whole in the course of the year have gotten some reprieve from GT Banks overall performance on a year-on-year basis with capital gains (or a price increase) of 88.73 per cent (from N17 in May 2016 to N25 in April 2017) and a year-to-date (or first quarter 2017) gain of 1.21per cent.
Shareholders expressed great pleasure at the banks performance at it’s recently held Annual General Meeting (AGM) in Lagos as they poked fingers and backslapped praising the bank for paying just slightly under 50 per cent of its current earnings per share as dividends to existing stockholders. GT’s dividend payout over the last five years on a compound annual growth rate basis comes to a modest paced 6.6 per cent per annum (or 8.6 per cent per annum on a ten year basis), the fastest- in- class dividend growth rate for the sector.
Sunny Nwosu, President, Independent Shareholders Association of Nigeria, hailed the board and management of the banking for putting in a sterling performance in the 2016 financial year, in spite of a debilitating recession, saying returns on investment (ROI) in GTB has become an, ‘incredibly satisfying corporate tradition’.
“We are happy that interest income increased by 14.51 percent to N262.5 billion and the bank succeeded in reducing interest expenses by 3.17 percent to N67.09 billion,” he enthused.
He also expressed shareholders’ delight at the spread of the company’s social sustainability products, which covered education, health, agricultures, arts etc, but urged the bank’s management to intervene more in the agricultural sector.
Chief Timothy Adesiyan, chairman, Zonal Shareholders Association of Nigeria lauded the bank for its performance and interventions through sustainability products throughout the country.
GTB’s gross earnings rose by 37.4 percent to N414.6 billion in 2016 from N301.9 billion in 2015, while its Profit Before Tax surged by 36.8 percent to N165.1 billion in 2016 compared with N120.7 billion in 2015.
A sizeable chunk of the bank’s revenue came from its corporate banking division, which contributed 51.8 percent of its total earnings, the retail segment of its operations raked in 29.2 percent of earnings and commercial and SME segments brought in 12.1 percent and 4.5 percent of the revenue respectively. Public sector was the smallest contributor to the bank’s earnings in 2016, contributing 2.3 percent.
The bank’s performance was buoyed by the 1580. 05 percent rise in its foreign exchange revaluation gain to N87.29 billion in 2016 instead of the N5.2 billion in the previous year.
However, its impairment charges also ballooned to N65.29 billion during the period under review compared to N12.41 billion in 2015, indicating a whopping 426.19 percent increase.
This prompted shareholders to tasked GTB management to work hard to improve on its non-performing loans.
The bank explained that “The significant collective impairment resulted from increase in the probability of default on forex denominated usance facilities due to marked depreciation of the naira against the dollars. Of the total collective impairment charge of the N50.64 billion, the sum of N40.46 billion resulted from such facilities.”
Segun Agbaje, GTBank’s Managing Director, explained that the bank is fulfilling its mandate to always add value to investors’ funds.
“We promise to add value to your stocks, which is why there is an appreciation in the dividend paid compared to that of last year,” he further stated.
He added that the company was in no competition with any other bank on dividend payment, adding that the bank made enough money to give more dividends, but decided to ply it back into its reserves as retained earnings.
The bank boss also noted GTB’s performance in 2016 did not only reflect the resilience of the company’s franchise, but demonstrated the fundamental strength of its businesses to deliver sustainable long-term growth.
Looking ahead, Agbaje noted that although the challenges in the macroeconomic environment were likely to persist, the bank’s commitment to staying positive, delivering exceptional financial services to its customers, and adding value to all stakeholders has never been stronger.
“With the repositioning of our business structures and significant investment in our digital abilities, we are confident in our capability to deliver differentiated products and services to our customers whilst enhancing cost-efficiency and reducing risk,” he said.
According to him, GTB would continue to focus on strengthening these relationships in order to ensure long-term franchise value and deliver sustainable returns to our shareholders.
The CEO asserted, “This strategy which has served us well in the past and is serving returns to our shareholders, we believe, will continue to serve us well into the future.”
Mrs Osaretin Demuren, Chairman, GTB board of directors said, “In spite of the stiff competition posed by attractive yield curve on treasury bills, customers’ deposits grew by 23.3 percent from N1.61 trillion in 2015 to N1.99 trillion in 2016. We also maintained our position as the most efficient bank in Nigeria by recording a Cost to Income Ratio (CIR) of 40.8 per cent in 2016.”
She said though the year ahead is clouded with challenges and uncertainties with regards to the political, regulatory, and economic and business environment, the bank is optimistic that it has a strong foundation and excellent franchise to give value to its customers.
GTB is currently the most capitalized bank in the Nigerian Stock Exchange with N735.8 billion capitalization of the total N1.9 trillion of the banking sector capitalization of the entities market.
The bank closed the week at a market price of N25 per share reflecting its sustained superior operating performance making it the most highly priced bank on the floor of the Nigerian Stock Exchange (NSE), thus explaining why shareholders were more than satisfied with the banks management and could afford a few racy congratulatory remarks despite the dim weather which in a way mirrored the gloom in the broad economy.