GT Bank records exponential loan loss expenses at 209.7% year on year to N6.77 billion

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…undisclosed increases in marketing expenses during the bank’s conference call

The management of Guaranty Trust Bank plc released half year results yesterday evening through the Nigerian Stock Exchange to the investing community. The operational performance results showed that the bank recorded a relative decline in earnings as a deterioration of its still industry-best efficiency led to a moderate decline in profitability.

Nevertheless, the bank proposed an interim dividend of N0.30 per share, which translates to a dividend yield of 1.2%, based on a market price of N25.66 as at September 2, 2020.

Other indicators showed are: Interest income which grew by 3.2% year on year to N153.71 billion with supported by growth in income from loans and advances to customers stood at 6.2% year on year, investment securities stood at 6.9% year on year, both of which masked declines across interest income from cash decline to 57.4% year on year, loans to other financial institutions decline by 45.3% year on year while assets pledged as collateral also declined by 14.7% year on year. But there was a strong growth recorded in risk assets by 8.2% Year To Date to N1.62 trillion which likely responsible for the acceleration in interest income from loans to customers.

On the other hand, interest expense pared by 20.0% year on year to N26.09 billion, despite an increase in deposits by 18.5% Year To Date to N3.00 trillion, as the bank has seemingly continued to improve its CASA-low-cost deposits: current and savings accounts- mix during the year. Consequent on the strong balance sheet management, net interest income growth was strong, expanding by 9.7% year on year to N127.62 billion.

Non-interest income grew moderately during in the period, settling at1.0% higher year on year to N72.18 billion, with major lines recording declines save for, gains from FX trading by 43.6% year on year to N7.65 billion and FX revaluation  also stood at 723.1% year on year to N21.90 billion. While NII grew at a slower pace than might otherwise been expected, given revised charges and weaker transactions flows occasioned by the global pandemic, the positive impact of revaluation gains should lead to a positive year-on-year performance in non-core income. Given the growth in income, and despite the exponentially larger loan loss expenses which stood at 209.7% year on year to N6.77 billion, the bank recorded an expansion in operating income of 4.0% year on year.

Operating expenses expanded by 19.2% year on year to N83.31 billion, with the most pressure exerted by regulatory charges – AMCON levy grew by 11.1% year on year to N17.20 billion while NDIC premium stood at 105.0% year on year to N8.26 billion. Consequent on the OPEX growth relative to operating income growth, cost-to-income ratio settled higher at 43.2% relative to 40.6% and 37.6% in the prior quarter and the corresponding period of the prior year respectively.

Consequently, profitability was weaker, with profit-before-tax settling 5.2% lower year-on-year, while profit-after-tax settled 4.9% lower, given the decline in income tax expense which stood at 7.3% year on year to N15.44 billion.

GTBank recommended an interim dividend of 30 kobo per share same as what was paid the previous year,

The head-to head analyst of the bank results also showed gross earnings of N150.48 billion, up from N146.5 billion in the corresponding period of 2019.Net interest income rose from N116.365 billion to N127.615 billion, while net fee and commission income fell from N33.843 billion to N22.294 billion. However, loans impairment charges jumped by 209 per cent from N2.186 billion to N6.77 billion.

According to …research’s Comments sayings while the bank’s performance came under pressure as expected the reason for the relative earnings decline was not expected. We should get more clarity regarding the increases in marketing expenses during the bank’s conference call. From the numbers posted, we have started to see the impact of much-increased risk asset creation, which has also affected LLEs. We expect pressure on that line in 2020FY, even without significant NPLs growth, given regulatory forbearance expected due to the impact of COVID-19 on the economy. Nonetheless, we expect the bank to record a decent performance in the year, supported by non-core earnings (FX revaluation gains).

AmehNews recalls Segun Agbaje’s successor Plans have led to the Boardroom crisis in the Bank and if not settled in time may foundation more poor performance in the future plus current situation in the country and across the globe.

The report has it that the internal unrest borders on the succession of the current managing director and chief executive of the bank, Mr. Segun Agbaje, whose tenure ends in June 2021.

According to inside sources, Agbaje is said to be backing two executive directors believed to be his close associates to succeed him as managing director and deputy managing director, ahead of other most qualified directors in the bank.

The source further divulged that the executive directors, Miriam Chidiebele Olusanya (Wholesale Banking Division) and Babajide Okuntola (Financial Technology Division).

While Okuntola is being positioned as the head-honcho, Olusanya is said to be favoured by Agbaje as deputy managing director of the bank.

The decision, which AmehNews learnt, did not go down well with other members of the board who opposed the emergence of the two EDs on the premise that there were more senior and experienced executive directors in the financial institution.

The point was back up with a heated argument between Agbaje and other members of the board at a meeting held on Wednesday July 22, 2020 at the bank’s headquarters in Lagos.

The bank CEO said to be enjoying the blessings of the bank’s chairman, Osaretin Demuren, had insisted on his candidates.

Above all, the interest of the shareholders and other stakeholders must be the paramount to any candidate that may succeed segun and have the adequate experience and technical skills to run the bank whose total assets and shareholders’ funds stood at ₦4.057trillion and ₦661.1billion respectively at end of the first quarter of 2020.


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