GTBank shows strength in Q1 as exchange platform eases lender’s pain

 

Guaranty Trust Bank Plc, Nigeria’s largest lender by market value showed strength in the first quarter of 2017 with 62 per cent spike in profit as analysts see the new foreign exchange platform bolstering lenders’ revenue.

Net income climbed to N41.47 billion from N25.61 billion a year ago, Lagos-based GTBank said in a statement on Wednesday.

Interest income boosted the lender’s profit by 50.63 per cent, taking it to N84.10 billion. This means there are tremendous contributions from interest on loans and advances to customers.

GTBank’s net margin, the largest in the industry, moved to 39.63 per cent in the period under review from 33.73 per cent the previous year. Profit margin is an indicator of a bank’s efficiency.

The Nigerian lender has the strongest price to book ratio, which measures the stock price against the net book value (of assets less liabilities).
GTBank and Stanbic IBTC Holdings are the only banks among the 15 largest lenders in Africa’s largest economy, which are trading above their book values.
Analysts said that the decision of the country’s central bank to let the market determine the exchange rate will ease the flow of dollars to GTBank and other lenders that have been grappling with liquidity crisis and rising Non Performing Loans (NPLs).
The system, called the Investors’ and Exporters’ FX Window, is the central bank’s latest attempt to lure back traders that fled the chequered economy since the past two years.
Experts said that such a policy could woo foreign investor that had jettisoned naira assets in fear of a possible devaluation of the Naira, the local currency.
“We see an improvement in the number of letters of credit, bills being settled and remittances being allowed,’’ said Segun Ajibola, president of the Chartered Institute of Bankers of Nigeria.
Banks stock rallied as a circular relating to the new exchange rate window boosted investor confidence in the economy.
The Nigerian Stock Exchange Banking Index, which measures the performance of the country’s biggest lenders, rose 0.59 per cent to 278.71 as at 2:25 p.m. Wednesday in Lagos.

GTBank and United Bank for Africa (UBA) gained 0.58 per cent and 1.48 per cent on the local bourse on Wednesday. Access Bank gained 1.59 per cent; Zenith Bank, 0.07 per cent; First Bank Holdings, 2.05 per cent. Stanbic IBTC Holdings gained 4.98 per cent at the close of trading on Wednesday.

Further analysis of GTbank’s financial statement showed that loans and advances to customers dropped slightly by 1.28 per cent to N1.56 trillion as deposit liabilities soared by 1.51 per cent to N2.01 trillion.

 

BALA AUGIE