OKEY ONYENWEAKU and FELIX OLOYEDE |
Guaranty Trust Bank Plc has outperformed analyst expectation and excited investor interest as the orange bank continues to push towards new earnings boundaries and investor valuation. The banks recently published audited half year result indicates that the bank will pay a 30 kobo interim dividend per ordinary share for period ended June 30, 2017.
The banks improved performance was reflected in a 51.11 per cent increase in its interest income to N165.88 billion underpinned basically by growth in investment securities as well as income from risk assets, resulting in a 2 per cent rise in gross earnings to ₦214.1billion from ₦209.9billion.
A review of the half year result showed a significant -80.79 per cent drop in impairment provision on bad loans to N7.21 billion from N37.55 billion in the corresponding period in 2016, bolstering profit for the period almost 18 per cent to N101.1 billion.
Mr. Segun Agbaje, the Managing Director/CEO of Guaranty Trust Bank Plc, said, “Our strong performance in the first half of 2017 reflects the strength of our businesses, the quality of our past decisions and the success of our efforts towards becoming a digital-first customer-centric Bank that offers simple and easily accessible products and services.”
“Despite the challenging environment of slow economic growth, we focused our resources on strengthening relationships with our customers, creating business platforms that seek to add value across all customer segments, whilst consolidating our leading position in all the economies in which we operate,” he added.
The bank’s interim dividend for H1 2017 was 5 kobo better than the 25 kobo it declared in the same period last year. Business Hallmark had recently reported that GTBank would give an improved interim dividend in half year, after the bank stated its intention to audit its H1 2017 result.
Meanwhile, fee and commission income was down -22.31 per cent to N28.03 billion (H1 2016: N36.08 billion), on the back of massive -61.37 per cent decline in E-business income and -46.35 per cent cut in transfer related charges.
Other income of the bank dipped -46.35 per cent to N1.41 billion induced by -90.11 per cent drop in foreign exchange revaluation gains to N6.06 billion compared to N61.25 billion in H1 2016.
Income expenses climbed 17.57 per cent to N18.37 billion and personnel cost and other operating expenses were also rose up 5.78 per cent to N8.18 billion and 36.73 per cent to N23.73 billion respectively during this period.
The Bank’s loan book dipped by 6 per cent from ₦1.590trillion recorded as at December 2016 to ₦1.491trillion in June 2017 and customer deposits decreased by 1 per cent to ₦1.966trillion from ₦1.986trillion in December 2016.
GTB closed the half year ended June 2017 with Total Assets and Contingents of ₦3.75trillion and Shareholders’ Funds of ₦538Billion. On the backdrop of this result, Return on Equity (ROAE) and Return on Assets (ROAA) stood at 38.8% and 6.4% respectively.
The Bank has continued to report the best financial ratios for a Financial Institution in the industry with a return on equity (ROE) of 38.8% and a cost to income ratio of 40.2% evidencing the efficient management of the banks’ assets. Overall, the Bank has enshrined its position as a clear leader in the industry.
The lender which the most capitalized in the country’s financial sector, has seen its shares appreciate 60.20 per cent in the last one year, closing at N37.10 last week.
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, there are signs of market recovery, G T bank stock has gained 64.5% year to Date from N24.5 per share on January 3, 2017 to N39.50 last Friday August 18, 2017. The bank’s stock closed at N39.50 per share last Friday, August 18, 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. 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.
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 US$350million S 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 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, 177 kobo in 2015 and 170 kobo in 2016.