Published On: Sun, Apr 8th, 2018

GT Bank rebases 2018 Profitability forecast

By OKEY ONYEWEAKU

 

Against the backdrop of healthier economic growth projection for the Nigerian economy in 2018, GT Bank, Nigeria’s most popular millennial banking service provider has set fresh targets for the institution going into the second quarter of the year.

With the economy expected to grow by between 2.6 and 2.8 per cent in 2018 (as against 1.92 per cent in 2017), analyst believe the banking sector generally should be a major beneficiary as manufacturers and retailers previously slow in repaying their debts find increased elbow room to grow revenues and cover short term bank liabilities. GT Bank, therefore, expect that its gross earnings in 2018 should rise to N205 billion with a loans and advances growth of about 10 per cent. The plan also plans to increase its liquidity ratio to 47 per cent or 17 per cent higher than the officially required rate of 30 per cent while the bank also hopes to keep its capital adequacy ratio at about 22 per cent. In line with an industry-wide drive to reduce operating expenses GT Bank’s managers are keen on seeing the bank’s cost-to-income ratio nestling at a comfortable 40 per cent.

Speaking to business editors in Lagos, Group Managing Director of the bank, Mr. Segun Agbaje said the projections are conservative as the bank possesses the ability to out-perform the targets.

Agbaje who noted that the economy was still fragile with a GDP growth of 1.9 per cent, explained that the year 2018 would be tough for business entities, including banks, but would still provide room for corporate growth.

GT Bank Plc climbed the back of economic recovery to grow its profit-before-tax (PBT) by 21.3 per cent to ₦200.2 billion in 2017 as investors smile to the bank with improved dividend income of N2.40 per share compared to N2.00 received in 2016. The bank had earlier declared a 30 kobo interim dividend in June 2017.

A review of GT’s 2017 financial statement shows a marginal growth in its gross earnings by 1.1 per cent to ₦419.2 billion from ₦414.6 billion in 2016; driven primarily by growth in interest income as well as e-payment revenues.

The Bank’s loan book dipped by 8 per cent from ₦1.590 trillion recorded as at December 2016 to ₦1.449 trillion in December 2017 while customer deposits increased by 3.8 per cent to ₦2.062 trillion from ₦1.986 trillion in December 2016.

The Bank’s balance sheet remained strong with a 3.9 per cent growth in Total Assets and Contingents as the Bank closed the year ended December 2017 with Total Assets and Contingents of ₦3.845 trillion and Shareholders’ Funds of ₦625.2 Billion.

In terms of Assets quality, NPL ratio increased to 7.7 per cent in December 2017 from 3.7 per cent in the contemporary period of 2016 largely as a result of classification of a single exposure within the Nigerian Telecommunications Industry.

However, non-performing loans seemed to be moderate at 4.6 per cent, which was 40 basis points below the regulatory threshold of 5 per cent. Overall, the bank’s asset quality has remained stable with adequate coverage of 119.6 per cent, with Capital adequacy remaining strong with a ratio (CAR) of 25.7 per cent (as against the regulatory threshold of 15 per cent). Equity and assets yields, Return on Average Equity (ROAE) and Return on Average Assets (ROAA) closed at 35.4 per cent and 6.2 per cent respectively.

Commenting on the financial results, the Managing Director/CEO the bank, Mr. Segun Agbaje, noted that, “2017 was a pivotal year for the bank. We delivered a strong result in a challenging environment; achieving record growth in earnings, carefully managing cost margins and leveraging our digital-first customer-centric strategy to deliver world-class services that are simple, cheap and easily accessible.”

He further stated that “The result demonstrates the fundamental strength of our franchise as well as the progress we are making in transforming our organization into a platform on which our customers could build their businesses, connect with their own consumers and access all the resources that they need to make their lives better.”

G T Bank Plc has been consistent in demonstrating its superiority over its peers in the banking industry. The bank, in fact, has sustained its position as the highest valued banking stock. Even though, the bears have a stronghold on the market, G T bank stock is trading at 51% higher than the stock of Stanbic IBTC which is the second highest priced. The bank’s stock closed at N26.80 per share last Thursday, March 23, 2017.

As a result of its successes, many organizations have tried to model their operations after G T Bank. Its compact disposition appears to have yielded fruit.  Some believe that the bank’s management style has even generated envy among its peers. Any time there is comparison among the banks, the argument tends to favour G T Bank more. This has truly mystified its operations and brand name over the years. Interestingly, Harvard Business School in United States of America (USA) and Crainfield Business School have both conducted researches on the effectiveness and uniqueness of the G T brand.

Its modest success may have shown that quality actually pays in the long-run. This may explain the bank’s generally recognized efficiency and effectiveness. Indeed, the financial sector analysts note that the bank typically adopts fresh and unique perspectives to service evolution as exemplified by the successes of its digitization platforms.

G T Bank is one of the bluest of blue-chip companies listed on the Nigerian Stock Exchange (NSE). Many investors have earned decent returns on the banks equity. The bank has been quite generous to its shareholders in respect of both capital appreciation and dividend yields.

It paid 28kobo in 2001; 75kobo in 2002; 95kobo in 2003; 70kobo in 2004; 45kobo in 2005; 70kobo in 2006; 75kobo in 2007; 70kobo in 2008; 100kobo in 2009 and 75kobo in 2010 in addition to bonus of 1 for 4. The bank also paid 125 kobo in 2011, 155kobo in 2012, 170 kobo in 2013, 175 kobo in 2014 and 177 kobo in 2015, 200kobo in 2016 and 200k in 2017.

 

 

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