Guaranty Trust Bank’s high profit margins means lender is most efficient  

Guaranty Trust Bank Plc (GTBank) high profit margins means the Nigerian lender is the most efficient in terms of translating top line performance to bottom line growth.

For the first six months through June 2015, GTBank’s net margin, a measure of profitability and efficiency increased to 34.88 percent compared with 33.05 percent as at June 2014.

The 34.88 percent net margin is higher than Access Bank’s 18.50 percent, Zenith Bank’s 23.21 percent, and First Bank’s 14.91 percent which makes GTBank the most efficient among the tier one banks.

GTBank’s net income was up 21 percent to N53.37 billion in the period under review as against N44.08 billion the previous year.

Interest income increased by 14 percent to N113.88 billion for the period.

Despite a 20 percent increase in interest expense caused by regulators tightening policy, the bank’s net interest income moved by 12 percent to N80.11 billion in June 2015 as against N71.56 billion last year.

Analysts say GTBank’s earnings spurt in the year means the lender has overcome the tough operating environment stoked by the multiple regulations of the Central Bank.

These policies have been hurting lender’s profit and causing some foreign investors to shun the country’s economy. Industry players are calling for the relaxation of the regulations that forces banks to place 31 percent of deposits with the regulator.

The CBN increased the Cash Reserve Requirements (CRR) as part of measures to bolster the naira, which fell 18 percent against the dollar in the past year as crude prices slumped.

Ratcheting up the ratio reduces the amount of naira in circulation, helping to bolster its value.

The deposit rules is in addition to the restrictions in foreign-currency trading which analysts say is biggest risk to banks in Africa’s largest economy.

GTBank’s was less aggressive about lending in the review period as loans to deposit ratio reduced to 75.55 percent as against 77.57 percent last year.

Loans and advances to customers jumped by a mere 1 percent to N1.30 trillion in June 2015 from N1.28 trillion the previous year.

Deposits from customers were up by 5 percent to N1.72 trillion in June 2015 compared with N1.64 trillion as at June 2014.

GTBank’s total assets grew by 8 percent to N2.54 trillion in June 2015 as against N2.35 trillion last years.

The bank share price closed at N22.29 on the floor of the exchange while market capitalization stood at N647.48 billion.

 

 

BALA AUGIE