GTBank remains efficient amid slowing economic growth

Nigeria’s largest lender by market value Guaranty Trust Bank (GTB) have remained efficient given its high returns on investment to shareholders and increased profitability amid a slow growing economy that have weakened domestic markets.

For the first nine months through September 2015, net income increased by 13 percent to N75.16 billion as against N66.74 billion last year. Gross earnings moved by 15 percent to N229.37 billion despite the tepid system of liquidity in the system in the period under review.

BusinessDay’s calculations shows the bank got a revenue boost from a 17 percent increase in interest income to N172.96 percent despite the harmonization of the CRR to 31 percent in May 2015.

GTBank’s net income, a measure of profitability and efficiency moved to 34.11 percent, from 33.45 percent last year. The 33.45 percent net margin is the highest in the industry hence making the lender the most efficient bank in the country.

Industry analysts have praised the bank’s savvy management for maintaining a growth momentum evidenced by a consistent double digit growth at both the top and bottom lines amid a weak naira, rising inflation and falling oil price.

Nigeria’s central bank has imposed restriction on foreign exchange trading as it seeks to stabilize the economy and protect foreign reserves that has been receiving as a result of almost 60 percent drop in oil price. Oil accounts for 80 percent of government revenue and 90 percent of export earnings.   Lenders say the FX restrictions and refusal of the CBN to devalue the currency is causing liquidity squeeze that has also become a drain on the bottom line.

Economic growth slowed to 2.8 percent on an annualized basis in the third quarter from 6.2 percent a year earlier. Inflation rose to 9.40 percent, according to NBS data. Foreign reserves have increased 0.5 percent in the past month to $30.3 billion as the central bank sold fewer dollars.