GTBank is Nigeria’s biggest bank by market capitalization. But things have not been fascinating when you look at its market cap in the Nigerian Stock Exchange. GTBank delivers industry-leading cost-to-income ratio (CIR). CIR is a “gold standard” in ascertaining the efficiency in the utilization of factors of production in banking. In Nigeria, no bank comes close to GTBank’s number: last one was sub-40%.
Yet, GTBank, despite its legendary efficiency and record profits, continues to lose market cap. It was valued at about N1.3 trillion two years ago; today, it is less than N800 billion (see chart) [among the big banks, others have also seen erosion of value]. My question to the community is thus: what is happening to GTBank?
I have some pointers: perception of disruption from MTN, and broad fintech to the banking sector. Gross margin spread between banks and fintech, and broad positioning across African markets as integration hits. If that integration happens, banks like UBA with operations in 20 African countries will become dominant to anchor trades and commerce out of Nigeria. Also, besides banks, investors have fintech as options to invest in the financial sector.
And the smiling curve – watch the video here. You can deepen this perspective why a category-king bank that does largely most things right is not getting love from markets.
[ Please see this as an academic endeavor, not an attack. GTBank is one of my company banks].