Nigeria has a category-king banking institution. GTBank has demonstrated an enviable level of fiduciary responsibility on the efficiency and utilization of the factors of production in banking. The Q3 2019 unaudited financials continue the trajectory of great operating results. I am not necessarily looking at the profitability since a bank making money in Nigeria does not mean the management is smart: the Central Bank of Nigeria policy guarantees banks good profits.
Yes, if you keep selling treasury bills at close to 14%, no bank will bother to take risks on entrepreneurs and companies when 14% annual return is assured at no risk. Why lend at 17% with associated risks when you can get 14% at no risk? Watch out for the funding of the 2020 national budget – Nigeria will hit the local market, distorting the market equilibrium as it looks for funds. The implication is that at the end, Nigeria government will get most of the funds which commercial banks could have lent to companies for growth!
So, my focus when looking at the books is the cost-to-income ratio: this quarter, GTbank has it at 36.9%. That is industry-leading, not just in Nigeria, but Africa-wide.
Now, the question – can GTBank Management run Nigeria better with that level of efficiency demonstrated in its operations? Of course, there are differences in the asset classes and and desired goals, but I am just thinking out loud. To run Nigeria, the management will have to worry about my village where it does not have a branch, and it has to take note of all the issues in Nigeria.But no matter how you see it, the GTBank process needs to reach state capitals and Aso Rock. We have a case study which someone must take to the public sector: GTBank is well optimized.
The Press Release below
GTBank Releases Q3 2019 Unaudited Results…….. Reports Profit before tax of N170.7 Billion
Guaranty Trust Bank plc has released its unaudited financial results for the period ended September 30, 2019 to the Nigerian and London Stock Exchanges.
A review of the results shows positive performance across all financial indices, reaffirming the Bank’s position as one of the most profitable and well managed financial institutions in Nigeria. Profit before tax stood at N170.7billion, representing a growth of 3.9% over N164.2billion recorded in the corresponding period of September 2018. The Bank’s Loan Book grew by 9.2% from N1.262trillion recorded as at December 2018 to N1.378trillion in September 2019, while customers’ deposit rose by 5.1% to N2.390trillion from N2.274trillion in December 2018.
The Bank’s balance sheet remained resilient with Total assets and Shareholders’ Funds closing at N3.519trillion and N636.8Billion respectively. Full Impact Capital Adequacy Ratio (CAR) remained very strong, closing at 23.6%. In terms of Assets quality, NPL ratio and Cost of Risk (COR) improved to 5.6% and 0.2% in September 2019 from 7.3% and 0.3% in December 2018 respectively. Complementing the improvement noted in NPLs and COR, we maintained adequate Loan Loss coverage of 95.2% for Lifetime Credit Impaired Loans (NPLs). On the backdrop of this result, Post-Tax Return on Equity (ROAE) closed at 32.3% while Post-Tax Return on Assets (ROAA) stood at 5.8%.
Commenting on the financial results, the Managing Director/CEO of Guaranty Trust Bank plc, Mr. Segun Agbaje, said; “The Bank’s 3rd quarter result reflects the strength of our franchise and the quality of our business strategy to deliver sustainable long-term value for our shareholders. Going into the final quarter of the year, we will continue to differentiate ourselves by maintaining a high standard in service delivery and leveraging our resources, expertise and network to enrich the lives of our customers. That’s why, from November 10 – 11, 2019, we are organizing the GTBank Fashion Weekend, the biggest consumer-focused event in Africa’s fashion industry, to give indigenous small businesses the platform and access to new markets and customers that they need to grow.”
Over all, Guaranty Trust Bank plc continues to be best-in-class in the Nigerian banking industry in terms of all financial ratios i.e. Post-Tax Return on Equity (ROAE) of 32.3%, Post-Tax Return on Assets (ROAA) of 5.8%, and Cost to Income ratio of 36.9%. These ratios are testament to experienced Management, efficient Balance sheet structure coupled with operational efficiency of the Bank.