By JULIUS ALAGBE
With nine Euromoney awards in its kitty and countless other iconic acknowledgements of its sterling contributions to the Nigerian banking and business landscape, it will not be out of place to say that Guaranty Trust Bank, (GTBank) is on a roll today.
And it is one trajectory that has been established not just by the hard work that its team has brought to play, it is also one that has its origins right from its beginnings three decades ago.
Indeed, from its founding in 1990 and the consequent commencement of operations in February 1991, it was clear to discerning observers that Guaranty Trust Bank, GTB was one institution that was clearly set to go places.
That initial view has since been confirmed with the bank registering today as undoubtedly, one of the brightest spots in the Nigerian business firmament. And its numbers bear it out.
In the last 10 years for example, the banks total assets expanded from N1.07 trillion in 2009 to N3.287 trillion at the end of financial year 2018. What this means is that GTB has been growing at about 12% annually on the average. Based on this trajectory also, analysts have presently projected that the bank would very likely increase its balance sheet size to N3.6 trillion at the close of the 2019 trading year, and from there move on further to hit the N4 trillion mark in 2020. As they say: the morning tells the day. We have very little grounds to fault them.
Equally, the bank has continually strengthened its equity base. From N198.27 billion in 2009, its shareholders funds hit N575.57 billion at the end of 2018. Significantly, the bank was able to rise to the challenge of appropriately and correspondingly covering and expanding its equity base even as its assets grew which signifies investors confidence in its corporate capacity. At the same time, gross earnings expanded four fold in the last 10 years. In 2009, the bank grossed N100.65 billion at the close of that trading year. From there, it moved to N153 billion and eventually hit N223 billion in 2012. This demonstrated that its earnings capacity was continuing to rise even as it posted increases over the years, while also doing so consistently and on the back of a stable growth trajectory. Little wonder then that GTBank recorded gross earnings of N434.7 billion at the end of 2018.
Most notably, in the last 10 years, the bank has continued to be quite profit-conscious in the manner in which it has used and deployed its assets, with the outcome being that it grew profit before tax at 19.93% on the average annually, moving from N35.01 billion in 2009 to N215.59 billion at the end of 2018. The surge underscores the fact that the bank has demonstrated a quite stable and consistent profitability pattern in the past decade. As can be seen from its books, part of the underlying dynamic behind the GTbank’s success story can be found in its very serious and unflinching commitment to its core business.
This spilled over into sustained and aggressive business development and resolute market penetration at the retail end and terminated in handing over to GTBank a quite strong and sturdy customer base. In figure terms, GTBanks customers deposits expanded from N666.92 billion to N2.273 trillion within the decade under review.
However, a flipside to this story is that in the last three years most notably, the proportion of loans extended as credit has nosedived even as analysts hazard that the bank may have come under renewed pressure to maximize shareholders interest while also using alternative channels to support earnings.
And the figures tend to corroborate this. In 2009, the banks loan book stood at N574.59 billion even as its customers deposit then was N666.92 billion. Then, its loans to deposit ratio was high and was indeed pitched at 86.16%. This signifies that the bank was then making the bulk of its income through interest earnings assets. At the end of 2018 however, GTBanks loans were put at N1.259 trillion compared with total customers deposits of N2.273 trillion. That translated to a loan to deposit ratio of 55.37% which signifies the adoption of a bearish attitude to lending in this period.
But underscoring the increased viability of the brand overall, shareholders have continued to support the company with additional funds, with equity increasing at an average of 11.25% per annum in the coverage period. In 2009, GTB shareholders fund was valued at N198.27 billion. It grew from there to close the financial year end 2018 at N575.57 billion.
Adeola, Aderinokun and Agbaje: A tale of three musketeers
Though there was a somewhat collegial atmosphere that was prevalent at the founding of GTBank in 1990, the buck however still had to stop at the feet of one man: the Managing Director/Chief Executive Officer. And as providence had outlined, the person on whose shoulders the task fell to stand out to be counted as pioneer Managing Director/CEO of what has clearly come to register as one of Nigerias most iconic banking brands was the mercurial Fola Adeola.
The founder of FATE Foundation and current Chairman of MainOne Cable Company Limited, Adeola is an Accountant by training. As founding MD, his brief was clear: the most ambitious team at the bank was looking at running more than a business: they were clearly intent on establishing an institution.
Some of the recorded and oral anecdotal account of how things were done in that founding era has since come to constitute vintage GTBank lore. With an eye on the future, a lot of premium was placed on matters such as customer service delivery, professionalism, high ethical conduct, continuing training and innovation.
Within a year of continuing operations, GTBank was clearly a rising star amongst its peers. It continued on that trajectory in the years that followed and right through the Fola Adeola years.
Three decades later, Adeola should be a content man. He not only did well and passed on the baton, the brand he oversaw its founding continues to literally wax stronger and stronger by the day.
Aderinokun, who served as Deputy Managing Director at GTBank from its founding in 1990, moved up in 2002 when Adeola voluntarily disengaged from the CEO role. He remained CEO until his untimely death in June 2011.
As MD after Adeola, his task was to carry on from where his illustrious predecessor had closed the page.
It is a mark of how well Aderinokun performed that he was to almost seamlessly take the bank through the regulator-imposed challenge that came with the banking consolidation exercise.
Following Aderinokuns demise, Segun Agbaje took up the mantle as MD/CEO at GTBank and has continued to preside over the fortunes of the financial institution till date.
Coming in at a time of growing national and continental assertion, it has been Agbajes lot to chart new paths for the rising star while also navigating the headwinds of technological advancement and digital transformation that has clearly become the lot of any who would do significant business in the world at a time like this.
A banker’s banker, Agbaje who comes from a heavily business-oriented family, had qualiﬁed as an accountant and worked briefly in the US before returning to Nigeria in time to participate in the GTBank dream in its first year of operations.
In the course of his pre-CEO role, he had been an active player in quite a number of the major moves and initiatives that were to crystallize into the bank that we know today. Upon stepping into the saddle as CEO then, Agbaje was all primed and rearing to go: he won the prized African Banker of the Year award just one year into being on the saddle. Some of the other awards that have been garnered by the bank under his watch are laurels for Innovative Banking, Best Mobile Banking and Mobile Money Services, Best Digital Bank and Digital Wallet of the Year award.
With three generations of leadership transition firmly and solidly achieved, the general impression out there is that GTBank has scaled a most critical hurdle in the Nigerian and African business space.
The present is digital
As many have presently come to appreciate, and thanks to a great deal to strides that are continually being recorded in the arena of digital transformation, the world is not going to be the same again. Old notions of professionalism are crashing and the exploration of cross-sectoral creative interfaces rather than traditional straight-jackets has continued to make mince-meat of hitherto prevalent models.
In a London Business School Review profile of Agbaje as a Change maker, Steve Coomber records the GTBank CEO as saying that: Banks are going to become platforms, so we will become a trusted single, integrated platform,
He goes on to explain that the reason behind his statement is that Because the competition for banks has changed, where it was once other banks, now it is ﬁntechs, telcos, Apple Pay, PayPal, payday-loan companies, salary-advance companies, even coﬀee shops. Any bank that stays with the traditional banking model is going to get smaller and smaller. All these other companies will be taking part of your share of business.”
Well, that is already happening. Following upon the initiatives of M-Pesa in East Africa and Facebook’s Libra, MTN Nigeria announced last week that it had presently secured a super-agent financial license from the regulators, while also applying for a payment licence that will automatically make it a bank of sorts.
For Agbaje and his team at GTBank, they had seen this coming and also gone ahead to hedge their prospects in the brave, new world with the launch of the banks Habari mobile platform in November 2018.
As Agbaje explained: What were trying to create is something where, when you come to the bank, however you do that, you are not just coming to pay and receiveYou can come into our ecosystem and do just about everything pay for tickets, book holidays, stream music, buy online, watch videos, and then, because we are a bank, we can provide the payment engine.
Through the years, GTBank has continued to be involved in a slew of Corporate Social Responsibility, CSR initiatives. From writers organizations to the arts community, the bank has over the years come to be acknowledged as an institution that cares. Whether it is through hosting football competitions, or education programmes, the annual conference on autism, the You Read Initiative, the Social Impact Challenge, the #BeattheDistance initiative and the GTCrea8 Convention, the bank is continually looking out for new ways of making a difference in the lives of people and sectors within its area of operations.
GTBanks winning factors
Professionalism, vision, and a strong sense of enterprise were some of the foundational pegs in the making of the GTBank story. Most commendably, the bank has continued to build on them in its three decades of existence.
Every year now, the bank hosts the GTBank Food & Drink Fair, an annual exhibition and sales event aimed at projecting the diverse angles of the food industry the diverse angles of the food industry by connecting various businesses involved in the production and sale of food-related items to a cosmopolitan audience of food enthusiasts.
It is a session that showcases a wide variety of food exhibitors exhibiting and selling food products ranging from fresh organic groceries to dry foods, confectionary and pastries, ready to eat consumables, top quality crockery and wine & champagnes. In addition to the core exhibition and sales activities, the event also offers culinary experiences such as food and wine tastings, cooking master classes with renowned International and Nigerian chefs, outdoor grills and thrilling entertainment.
The 2019 edition was held from April 28 through May 1st the GT Centre Plot 1, Water Corporation Drive, Oniru, Victoria Island, Lagos
The Innoson drawback
In the midst of this run-away success story comes the Innoson burden. And the facts of the matter simply bear restating. In the course of its normal business operations, GTBank had become entangled in a messy three-party transaction involving it, the Nigerian Custom Service and the auto firm, Innoson Group of Companies.
Allegations of fraud, forgery rent the air even as there were conflicting interpretations over court rulings on the issue and what they actually meant. While the last is yet to be heard about the entire saga, there are many analysts who reason that GTBank and its public relations machinery may not have handled the subject as best as it could have, particularly when the public was now left guessing on who exactly was telling the truth in the entire saga, complete with its associated reputational over-hang.
At the moment however, a lot of the hot air has subsided but there is clearly nothing on the table to say that the issue has been finally rested and that some of the negative flak that had rubbed off on the bank on account of that saga has now been scrubbed clean and white.
Notwithstanding this drawback however, the jury remains out and in firm agreement that, all things considered, GTBank has done well and helped blaze the trail that great business institutions can yet be born on Nigerian soil. And that indeed, is a lot to cheer about, particularly at a time like this.
In two years time, Agbaje will very likely be stepping down as MD/CEO at GTBank. Given the now established tradition at the bank, his successor is in all probability already waiting in the wings. But there are issues that both the outgoing and incoming CEOs have to address. The first of these has already been raised: assessing the impact that the new tech-enabled ‘bankers’ like Facebook and MTN are bringing into the field and gauging what GTBank needs to add to Habari to become more competitive in this changing landscape. Related to this somewhat would be the need to reassess GTBank’s continental operations so that it can also now begin to draw more juice from the continent as UBA for example is already doing quite impressively.
One other compelling reason for this re-assessment is the fact that the just introduced African Continental Free Trade Agreement, AfCFTA compels it. Also of note is what an industry insider describes as the need to tackle the incidence of a ‘high rate of dormant accounts.’ And finally, there are issues of declining customer service standards which analysts say may not be unconnected with an overall drop in educational and skills quality in the broader national economy as well as the spike in GTBank’s customer base. While these are not insurmountable hurdles for a clearly most focussed and highly mobile player like GTBank, the fact remains that its leadership must continue to rise to the challenge of riding above them if the eagle is to continue soaring above it’s peers.