N147bn profit: GTB’s unaudited 9-month financial performance shows CBN’s LDR policy is still a concern

Segun Agbaje, MD GTBank
  • GTBank's profit grows by 3.4% to N147 billion in 9 months for financial year 2019.
  • Segun Agbaje, the CEO of Guaranty Trust Bank, said the financial performance shows the bank's commitment to delivering good results despite a challenging market environment.
  • Presently at 60.7%, the bank will need to grow its lending to the current benchmark (loan to deposit ratio at 65%) or face additional regulatory sanctions.

Nigeria's tier-1 bank, Guaranty Trust Bank Plc, has posted N147.99 billion in the last 9 months ended September 30, 2019.

According to the unaudited 9-month financial statement released to the Nigerian Stock Exchange (NSE) on Wednesday, October 16th, the figure shows a 3.4% growth in profit from N142.22 billion recorded in the same time frame.

Segun Agbaje, GTB's CEO, said the financial performance shows the bank's commitment to delivering good results despite a challenging market environment and a rapidly changing competitive landscape.

Here's a quick look at key financial performance in GTBank's 9-month report:

  • Profit before tax (PBT) stood at N170.65 billion up 3.9% from N164.245 billion from the previous year.
  • Profit after tax (PAT) grew by 3.4% to N146.989 billion as against N142.224 billion in 2018.
  • Gross earnings dropped by 3% to N324.262 billion from N334.711 billion in the corresponding period of 2018.
  • Interest income declined by 5.6% to N224.19 billion within the period under review.
  • Net customer loans increased by 8.5% year-on-year
  • Loans impairment charges increased from N1.736 billion to N2.761 billion.
  • Capital Adequacy Ratio (CAR) - 23.5%
  • Return on Equity (ROAE) - 33.7%
  • Return on Assets (ROAA) at 5.8%
  • Total Equity increased by 10.6% to N636.75bn from N575.57bn in Q3 2018.

What does this mean for GTB shareholders

On Wednesday, GTB stock gained 1.3% as All Share Index (ASI) dipped by 0.2% to 26,513.65, while market capitalisation trended southward by N21.3 billion to N12.9 trillion.

In the last three months, the stock dipped 10.5% and 26.6% in the 12 months.

Analysts at Stanbic IBTC Bank Group maintained a buy rating for GTBank at N57.40 target price despite a bearish outlook on the equities market.

A note to the case, for the 9-month end, GTBank's NPL increased by 5.61%.

GTBank and CBN’s LDR policy

Early this month, the Central Bank of Nigeria (CBN) sanctioned 12 banks for failing to give out 60% of their deposits as loans. The apex bank debited the sum of N25.14 billion as an additional Cash Reserve Ratio (CRR) from GTB during the period.

Analysts believe that the Loan to deposit ratio (LDR) policy by the Central Bank is causing banks to compete for more customers at competitive rates but at the risk at higher loan default.

In September 2019, the CBN increased the LDR minimum to 65% (from 60%), setting compliance deadline at 31st of December 2019.

Implication: By the last day of December 2019, GTBank will have to grow its loan book to the real sector of the economy or face additional sanction which is currently at 60.7%.


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