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By Okey Onyeweaku

One bank whose brand has done significantly well in changing, boosting and projecting the image of Nigeria to the outside world is GT Bank. In all its outlets in the regions where its management has very carefully chosen to operate are footprints of impressive and commendable services culminating in the image of a staunch, solid and high flying bank almost all the way.

‘It is GT Bank of course,’ is now almost always the response to the question: which bank is the best in Nigeria? And this recognition has hardly been challenged in the banking industry in the last 30 years.

Broken down, GT Bank has enjoyed this status affirmation not only on account of its relatively impressive numbers over the years but also its spectacular service orientation and deliberate niche market positioning.

Accordingly then, G T Bank Plc has been consistent in demonstrating its superiority over its peers in the banking industry. The bank, in addition has also sustained its position as the highest valued banking stock before now. For example, despite the pervasive volatility in the market, GT Bank’s stock grew by 21.06 per cent from N29.20 by January 2, 2020 to N35.35 per share in November 20, 2020. The share price in fact, closed on Friday February 18, 2022 at N26.20 per share, slightly below Zenith Bank which closed the week at N26.80 per share.

Its numbers in other respects have also been generally quite impressive. For instance, in the last twelve years, the bank has grown its major measurement indices including the top and bottom lines to some daunting heights. Its profit before tax has grown by 587.636% from N34.657billion in 2008 to N234.095billion 2020. At the same time, Total Asset also grew by 437.174% from N920.493billion in 2008 to N4.944trillion in 2020. And at the end of the same twelve years span, its Net interest income jumped by 503.999% from N50.311billion in 2008 to N253.668billion in 2020.

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.

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. This has prompted the likes of the Harvard Business School and Cranfield Business School to, as a result, carry out deep research on the effectiveness and uniqueness of the G T brand.

From the early 1990’s the bank has tirelessly set the pace for other Nigerian financial institutions in terms of service quality, product functionality and excellent customer service. However, that quality of service may be waning now given the increased number of customers prompted by those migrating from the rescued banks. This has put more pressure on its capacity to maintain its quality.

After listing at the stock exchange in 1996, it was the first Nigerian financial institution to undertake a US$350million $ Eurobond issue and a US$750million Global Depository Receipts (GDR) offer. The listing of the GDRs on the London Stock Exchange in July 2007 made the bank the first Nigerian Company and African Bank to attain such a landmark achievement.

G T 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 shareholders with impressive dividends payouts.

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 a bonus of 1 for 4. The bank also paid 125 kobo in 2011, 155kobo in 2012, 170 kobo in 2013, 175 kobo in 2014, 177 kobo in 2015, 177 kobo in 2016, 205 kobo in 2017, 270 kobo in 2018, 275 kobo in 2019 and 280 kobo in 2020.

But the bank’s continuous profit decline in the three quarters of 2021and the loss of its leadership position in the price of stock to Zenith bank may be raising some eyebrows. Financial sector watchers appear to be asking questions regarding the development. In fact, after the wonderful performance of the years leading to 2020, GT Bank though still making good profit, is seemingly now on the decline as evidenced in the outcome of its numbers in almost all the quarters of 2021.

The NEW HOLDCO

GT Holdco, known as the best bank in service delivery reported profit before tax of N53.7 billion for the first quarter of 2021, ended March 31, representing a 7.8% decline compared to the N58.2billion recorded in the corresponding period of 2020. In its half year 2021 results, it reported a profit before tax of N93.1billion, representing a dip of 15.2% compared to N109.7billion recorded in the corresponding period of June 2020.

The Group also reported profit before tax of ₦151.9billion, representing a drop of 9.2% over ₦167.4billion recorded in the corresponding period of September 2020. However, GT is not the only Holdco whose profit is declining. Corresponding numbers for example show that Stanbic IBTC may even be worse hit in terms of the drop in profit.

ANALYSTS’ PROGNOSIS ON GT

The above performance notwithstanding the bank is still a strong bank which business operation is stable and reliable.
Commenting on the bank’s performance, Managing Director of Highcap Securities ltd, Mr. David Adonri says: ‘’Ordinarily the profit of a bank may not be declining because it is well established and deep rooted. There is no indication that its business operations may have been distorted in any way. However, there is something I am suspecting and that is that the bank may have encountered some business strain for which the bank is making some huge provision in case one of those threats crystalises. I think one of them is that of its soured transactions with INNOSON MOTORS. There may also be more in addition to that which the bank may want to provide for. So other than these, there is nothing that may be stopping the steady growth of the profit the bank just like other banks are enjoying.

‘’On its stock, from time we have always known GT Bank to be higher in terms of price than Zenith in spite of the fact that Zenith is actually a bigger bank and a more profitable bank but investor confidence in GT Bank has always been higher and that has been a propelling factor and it is also because the core majority ownership of GT bank is diversified much more than Zenith because Zenith is more or less a one man show. So investor confidence has always propelled GT Bank higher than Zenith Bank. But it is now like that investor confidence is being eroded one way or the other making Zenith to surpass and hold the leadership position in the market.’’

The financial analyst, Olisa Egbunike of Renaissance Group places the current decline on two specific planks: ‘’The bank made a substantial investment in 2021. That must have impacted their bottom line. You should also know that the operating environment has been tough presently.’’

Bringing more context to this, analysts have said that the transition to the Holdco model may also be part of the challenge. In this, minimising tax, central control and concentration of property assets have been fingered to be part of what firms crave in voting for the more flexible arrangement.

Achieving growth flexibility, development and succession planning have also been known to be better suited to the structure of Holding companies.

These attractions among other benefits have suddenly become trendy in Nigeria especially among the banks.

A holding company the experts say is a corporation that owns a controlling interest in one or more banks. However, the technical snag is that the Holdco does not itself offer banking services.

No doubt, more financial institutions seem to be in a hurry to join the likes of First Bank of Nigeria Holding Company and Stanbic IBTC to become holding companies.

These were, analysts agree, partly GTCO’s reasons for becoming a Holding Company and the firm recently, announced that it has completed the acquisition of 100 percent shareholding in two subsidiaries of Investment One. The two subsidiaries are Pension Managers and Investment One Funds Management, the company said. Investment One Financial Services Limited was incorporated in 2008 as GTB Asset Management, a wholly-owned subsidiary of Guaranty Trust Bank Plc. But in 2012, GTB divested its GTB Asset Management Ltd in line with a 2010 CBN directive.

THIRD QUARTER RESULT

The bank reported a profit before tax of N151.91bn for the third quarter of 2021, representing 9.23 per cent decline from N167.35bn in the same period of 2020.
The holdco said its revenue dropped by 3.46 per cent to N214.77bn in Q3 2021 from N222.47bn in the corresponding period of 2020.

Its unaudited financial statements for Q3 2021 filed showed that its earnings per share also dropped to N4.54 from N5.02.

GTCO, on the flip side, grew its assets from N4.94tn to N5.14tn, while cash and cash equivalents rose to N757.75bn from N592.66bn. The Group Chief Executive Officer of Guaranty Trust Holding Company Plc (GTCO Plc), Mr. Segun Agbaje, said; “Our performance validates the resilience of our balance sheet in spite of the challenges in the operating environment and, further justifies our decision to diversify our earnings by going beyond banking in creating long-term value for our discerning stakeholders. Looking forward, we will replicate our digital-first, customer-centric banking strategy in the wealth management and payment spaces to rapidly scale our service offerings in line with our long-term strategy.”

He also said, “As businesses and households continue to recover from the lingering impact of covid-19 pandemic, our resolve to stand with our customers and communities through the recovery process is yielding the desired results. Ultimately, we aim to improve the lives of our stakeholders and build partnerships with our communities.”

THE CHALLENGE OF TECHNOLOGY

The disruptive force of technology is sending every business back to the drawing board and GTBank and other banking sector players are well aware of this. More recently, there has been an upsurge in the number and range of fintechs and telcos that are presently taking sturdy steps into the financial services products arena.

Should GTBank be bothered? Analysts reason that the answer would be yes and no. Yes because like every business in the field, it has been proven time and time again that you ignore developments like new technological infusions at your own peril. And no because the bank has actually been abreast of the issues already and is clearly in a far more comfortable position in this regard than many of its peers.

Says Henry Ezeh: ‘GTBank has one of the best USSD platforms in the country amidst DMBs. It also has a tech foundry of its own. The bank anticipates the future and has its sights set on the curved fiscal ball.’

THE BRAND CHALLENGE

One of the things that got GTBank to occupy a high place in the consciousness of the Nigerian banking public was its noted strong drive and reputational integrity. It was one of the places that young finance professionals wanted to work in.

While this has been largely sustained over the years, there have indeed been a few dents here and there, including the damage down to its reputation on account of its messy loan book contention with Innoson Motors.

The Man, Segun Agbaje

Scion of an illustrious Lagos family of notable bankers and entrepreneurs, Segun Agbaje attended St Gregory’s College, Obalende Lagos State and St Augustine Academy, Kent for his secondary education then proceeded to University of San Francisco in America where he gained both a BSc in Accountancy and a master’s degree in Business Administration.
He started his career working for Ernst & Young, San Francisco, USA and left in 1991 to join GTBank as a pioneer staff. He rose through the ranks to become an Executive Director in January 2000, and Deputy Managing Director in August 2002.

Agbaje was appointed Acting Managing Director in April 2011 and confirmed as substantive MD in June 2011.

Awards he has won as the Managing Director includes Best Bank in Nigeria by Euromoney; African Bank of the Year by African Banker Award; Best Bank in Nigeria by World Finance UK; Most innovative Bank by EMEA Finance; Best Banking Group by World Business Leader Magazine and Best Bank in Nigeria award by the Banker Awards.

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