Published On: Sun, Aug 19th, 2018

Interim Dividends: Naira rain at GT Bank

By OKEY ONYENWEAKU

With its year on year yield at 9.98 per cent, GT Bank Plc has become the toast of local investors as its stock price bounced from N24 per share at the start of 2017 to a more recent price of N38. Audited accounts for the bank released last week saw gross earnings rise 5.85 per cent between half year (H1) 2017 and H1 2018. Gross earnings grew from N214 billion in H1 2017 to N226.6 billion in H1 2018.

The Nigerian Stock Exchange

Although analysts are worried about the -21 per cent fall in year to date yield of the bank (as against the markets overall -8 per cent year to date yield for the year), GT Bank still has an attractive trailing twelve month (TTM) dividend yield of 7.1 per cent and a price earnings (P/E) ratio of 5.8 times. With an interim div payout of 30 kobo per share the stock still attracts strong investor interest.

The bank has shown strong potential earnings as H1 profit before tax (PBT) rose by 14 per cent. Strong earnings before tax has sustained traders continued long position on the stock, despite a steep fall in the lenders share price from N48 per share at the beginning of the year to just under N40 per share more recently.

The banks profit growth has happened despite a slow down in gross earnings which rose by a weak 5.8 per cent from N214billion in H1 2017 to N226.6billion in H1 2018. Nevertheless, GT showed strength in its  fee and commission incomes which rose bY 14 per cent from N22.7billion in H1 2017 to N25.9billion in H1 2018.

The money centre banks loan impairment charges dropped by a thundering 260 per cent from N7.2 billion in H1 2017 to N2billion in H1 2018, analysts reckon this helped in boosting the bank’s profit and made up for the slide in Net interest income which slipped by 8.9 per cent from N129.5billion in H1 2017 to N117.9billion in H1 2018.

However, the bank which has a tradition of strong customer services and pristine corporate governance has become the cynosure of market rivals.

GT carefully cut down loans and advances to customers from N1.448 trillion to N1.291 trillion in H1 2018, but ramped up credit to banks from N750.3 billion in H1 2017 to N1.902billion in contemporary period of 2018.

Despite the shrinking economy, the lenders deposit from customers rose 9.9 per cent from N2.062trillion to N2.268 trillion. At the close of business period in June 2018, G T Bank’s income tax expenses declined from N17.421billion to N14.051billion.

Lagos based financial analyst, Mr. David Adonri lauded the interim dividend of 30kobo.

Gt Bank had articulated optimistic target for the leading financial institution in the rolling  year.

The leading financial institution expects to rake in gross earnings of N205billion in 2018 and  targets a loan growth of 10 per cent. With strong liquidity of 47 per cent, GT bank targets a conservative capital adequacy ratio of 22 per cent in the year as its cost to income ratio is expected to vest at 40 per cent.

Group Managing Director, Mr. Segun Agbaje had said the projections were conservative as the bank possesses the ability to slip pass the figures.

GTB CEO Mr Segun Agbaje

However, 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 and not only banks.

Whereas, some economic indicators are feebly positive such as the inflation at 11.14 per cent, price of crude at 70 and above and FAAC allocation reasonably high, does not mean that unemployement is not still high and worsening every day; Insecurity increasing every day; Election fever strongly reeking of fear and high subsidy payment. These are conditions that may tame the ambitions of some firms this year, industry experts have said. GTBank is not an exception.

Guaranty Trust 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 the GT’s 2017 financial statement showed 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 N38.05 pershare as at Thursday August 16, 2018. This is higher  other bank stocks except the stock of Stanbic IBTC which is the highest priced at N50 per share.

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. Curiously, the reputable Harvard Business School in United States of America(USA) and Crainfield Business School had as a result carried out a deep research on the effectiveness and uniqueness of the G T brand.

Its modest success has shown that quality actually pays in the long-run. This may be the reason why the bank has run a modest, focused, tight and qualitative organization. In fact, the bank believes in doing its own thing rather than join the fray of aggressive competition that pervades the Nigerian banking industry.

GT Bank is one of the blue-chip companies on the Nigerian Stock Exchange. Many have earned a living by investing in the bank’s shares. The bank has been generous to its loyal share with impressive dividends.

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 270 kobo in 2017.

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