Guaranty Trust Bank Plc (GTBank) has returned the unaudited numbers for Q3 2020: they look really good. Profit before tax is N167.4 billion. Yes, GTBank made more than the 2020 budget of Abia state in 9 months as profit; in 2020, Abia State has planned to spend N137. 419 billion but of course the actual expenditure would be off by billions due to revenue issues. Update: the state revised the budget to N102 billion.
What is the point? GTBank made as profit everything Abia state would spend in a year and will still have more than N65 billion to spare, before taxes! Interestingly, Abia state is not even one of the least yoyo states; it has Aba which has a fair solid economic activity. Go down the state table, and you will be shocked: the power is in the hands of these Lagos bankers, well ahead of the Excellencys. Practically, by the time you remove debt servicing and public sector emoluments, the governor of Abia state may not have more than N10 billion to spend! Simply, until we understand the power of markets in Nigeria, many things will not align.
A Nigeria that supports markets and companies will advance the wellbeing of the citizens because markets will remain the key path to liberate many economically. Great private companies have typically preceded the strengthening of public institutions. Why? Governments use the taxes and fees on companies to build public institutions! In other words, you cannot expect good roads, great schools, etc if there are no companies with capacities to pay taxes to make such possible. Nigeria Will Have GREAT Private Companies Before Good Public Institutions.
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For GTbank, Covid-19 paralysis impacted one metric: cost to income ratio. That gold standard in banking dropped for GTBank; from 36.9% in Q3 2019 to 40.2% Q3 2020. Even at that, that ratio is enviable for a business operating in the hardest terrain of markets.
Congrats GTBank Team; now, the stock has to respond as the paradox has been extensive.
Nigeria Will Have GREAT Private Companies Before Good Public Institutions
The full press below…
Lagos Nigeria – November 19, 2020 – Guaranty Trust Bank Plc (“GTBank”), (Bloomberg: GUARANTY:NL/Reuters: GUARANT.LG), provider of diversified financial services, announces its unaudited Financial Results for the period ended 30 September 2020 and declares a PBT of N167.4bn.
Commenting on the financial results, the Managing Director/CEO of Guaranty Trust Bank plc, Mr. Segun Agbaje, said; “Our 3rd Quarter result is a reflection of how we have appropriately positioned our balance sheet to cope with current economic realities and the challenging business environment. It is also testament to the enduring loyalty of our customers, the hard work and dedication of our staff and the unwavering support we continue to enjoy from all our stakeholders in our drive to deliver best-in-class financial services and superior and sustainable returns.”
He further stated that; “As an organization, we will continue to build on our commitment to enriching lives by leveraging our digital-first customer-centric strategy to improve customer experience and maintain a high standard in service delivery, and going beyond banking to create and drive innovative financial solutions that add value to our customers in all aspects of their lives.”
Financial Highlights
· Sustained Earnings
– Profit before tax of N167.4bn; representing a decrease of 1.9% over N170.7bn recorded in 30 September 2019 and an improvement on the 5.2% dip posted in H1-2020 relative to H1-2019.
– Profit after tax decreased by 3.2% to N142.3bn from N147.0bn of 30 September 2019.
– Earnings per share of 502kobo compared to 519kobo per share of 30 September 2019.
· Improved Revenue
– Interest Income of N228.2bn (30 September 2019: N224.2bn) up 1.8% as a result of 2.0% growth in interest income on loans and advances and 7.3% increase in interest income on fixed income securities.
– Non-Interest Income of N101.7bn (30 September 2019: N101.8bn) down 0.1% largely as a result of 22.7% dip in fee and commission income, partly offset by N3.8bn increase in net trading income at Parent level and 3.5% growth in Other Income line.
– Net interest margin remained strong at 9.5% (30 September 2019: 9.4%).
· Balance Sheet
– Total assets of N4.574trn (31 December 2019: N3.759trn) up 21.7%
– Net loans and advances of N1.569trn (31 December 2019: N1.502trn) up 4.5%.
– Deposits from customers of N3.191trn (31 December 2019: N2.533trn) up 26.0%.
– Restricted deposits and other assets which comprise largely of restricted deposits with central banks increased by 102.8% to N1.171trn in September 2020 from N577.4bn in December 2019.
· Credit Quality
– Non-performing loans to total loans at 6.5% (31 December 2019: 6.5%).
– Coverage for Lifetime Credit Impaired Loans at 123.3% (31 December 2019: 126.6%)
– Cost of Risk at 0.6% (31 December 2019: 0.3%).
· Continued focus on efficiency
– Cost to income of 40.2% (30 September 2019: 36.9%). Increase influenced by rise in inflation rate.
· Subsidiaries
– Contribution to PBT from subsidiaries increased to 16.3% from 15.1% in September 2019.
September 2020 Financial Analysis and Ratios
|
Key Financials (N’ billion) |
Q3-2020 |
Q3-2019 |
?% |
|
Interest Income |
228.2 |
224.2 |
1.8% |
|
Net Interest Income |
189.7 |
172.9 |
9.7% |
|
Operating Income |
279.8 |
270.3 |
3.5% |
|
Operating expenses |
112.4 |
99.6 |
12.9% |
|
Profit before tax |
167.4 |
170.7 |
-1.9% |
|
Profit After Tax |
142.3 |
147.0 |
-3.2% |
|
Earnings per share (in Naira) |
5.0 |
5.2 |
-3.3% |
|
Q3-2020 |
FY-2019 |
?% |
|
|
Total Assets |
4,573.7 |
3,758.9 |
21.7% |
|
Net Loans |
1,569.1 |
1,502.1 |
4.5% |
|
Customer Deposits |
3,191.2 |
2,532.5 |
26.0% |
|
Key Ratios |
Q3-2020 |
Q3-2019 |
|
ROAE(post-tax) |
26.3% |
32.3% |
|
ROAA(post-tax) |
4.6% |
5.8% |
|
ROAE (pre-tax) |
30.9% |
37.5% |
|
ROAA (pre-tax) |
5.4% |
6.7% |
|
Net interest margin |
9.5% |
9.4% |
|
Cost-to-income ratio |
40.2% |
36.9% |
|
Q3-2020 |
FY-2019 |
|
|
Net Loans to deposits |
47.5% |
56.9% |
|
Liquidity ratio |
38.8% |
49.3% |
|
Capital adequacy ratio |
23.9% |
22.5% |
|
NPL/Total Loans |
6.5% |
6.5% |
|
Cost of risk |
0.6% |
0.3% |
|
Coverage (with Reg. Risk Reserves) |
123.3% |
126.6% |
19 November 2020
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Maybe some other companies outside banks need to return this sort of numbers, so that the impact will be felt more, and people will appreciate why you need big organisations with massive capabilities.
Many are obsessed with government and politics, simply because the private sector hasn’t risen, else not many people would care to know the name of their governor.
In most states in the country, aside from government and bank employees, you barely have working class people who earn decent salaries; you cannot run modern society like that, you only scale poverty.
These things are not complicated, but you first need to have people who can think, build and run big things; that way, all the paralyses facing most states will disappear.
Our human capital development is still grossly deficient, that’s why almost everything looks complicated and insurmountable here.