GT Bank’s 2018 PBT guidance of N205bn implies PBT growth of just 2.4% (excluding recoveries).

Modest 2018 PBT growth guidance

· 7% cut to earnings and price target: GT Bank’s 2018 PBT guidance of N205bn implies PBT growth of just 2.4% (excluding recoveries). If that figure is achieved, it would mark the weakest year of PBT growth since 2010, although close to the 4% in 2013 and 2015. In the last two years, the bank has surpassed its (minimum) PBT guidance handsomely, by 32% in 2016 and 19% in 2017. We believe 2018 is likely to be closer to the 2014-15 period when the bank met or only slightly beat expectations. Management stated on the earnings call that it is confident that fees will grow by 20% to replace significant fx-revaluation gains which boosted 2017 PBT. Notwithstanding, the guidance supports an ROAE of >25%, making the bank one of the most consistent on this metric. We are encouraged to see an attempt to offset pressure on NIMs with loan growth (guid. of 10% vs -9% in 2017). Concerns regarding a doubling in the NPL ratio to 7.7% in 2017 are tempered by the fact that this was driven by just one exposure (9mobile, for which a 30% provision has been taken), and a coverage ratio (group) of > 100%. An additional 20-30% charge on 9mobile is likely in 2018, but this will be charged straight to equity. We have cut our 2018-19E earnings forecasts by around 7% to leave them close to the bank’s guidance, and our price target by a similar percentage to N46.0, close to where the shares are trading. We retain our Neutral recommendation.

· Strong double-digit growth in Q4 2017 PBT: GT Bank’s Q4 2017 PBT grew by 85% y/y to N50.2bn. Although non-interest income which grew by 736% was the main driver behind the strong earnings growth, a 54% y/y decline in loan loss provisions also helped. Funding income declined by -9% y/y. However, the strong performance in non-interest income completely offset the weakness here, resulting in a 31% y/y expansion in pre-provision profits. Further down the P&L, PAT grew even faster at 227% y/y, due to a -56% reduction in income tax (tax rate of 10.6% compares with 44.0% in Q4 2016) and a significant increase in other comprehensive income (OCI); the latter was mainly driven by fair value gains on available for sale securities. Sequentially, while PBT was up by around 3% q/q, PAT grew by 16% q/q, thanks to the positives on the tax and OCI lines. Compared with our forecasts, PBT beat by 20% largely because of the positive surprises in non-interest income and loan loss provisions. However, the surprise on the PAT line was greater at 73% because of the positive surprises in tax and OCI (for which we had no forecast). Our PBT forecast was close to consensus.

GT Bank reports Q4 2017 results

Event: GT Bank reports Q4 2017 results

Implications: Slight positive reaction once the market has digested the figures properly

Positives: PBT grew by 85% y/y, thanks to a 736% y/y growth in non-interest income

Negatives: Funding income declined by 9% y/y; we est. NPL ratio rose to c.8% from 3.9% in Q3

GT Bank’s (GTB) Q4 2017 results which were published this morning came in strong. The results showed that PBT grew by 85% y/y to N50.2bn. Although non-interest income which grew by 736% was the main driver behind the strong earnings growth, a 54% y/y decline in loan loss provisions also helped. Funding income declined by -9% y/y. However, the strong performance in non-interest income completely offset the weakness here, resulting in a 31% y/y expansion in pre-provision profits. Further down the P&L, PAT grew even faster at 227% y/y, due to a  -56% reduction in income tax (tax rate of 10.6% compares with 44.0% in Q4 2016) and a significant increase in other comprehensive income (OCI); the latter was mainly driven by fair value gains on available for sale securities. Sequentially, while PBT was up by around 3% q/q, PAT grew by 16% q/q, thanks to the positives on the tax and OCI lines. Compared with our forecasts, PBT beat by 20% largely because of the positive surprises in non-interest income and loan loss provisions. However, the beat on the PAT line was greater at 73% because of the positive surprises in tax and OCI (for which we had no forecast). Our PBT forecast was close to consensus.

On a full year basis, GTB’s PBT and PAT were up by 21% y/y and 26% y/y respectively. Management has proposed a dividend of N2.40 per share, higher than our N2.09 estimate. The proposed dividend imply a yield of 5.2% and a payout ratio of 39.7%. One negative in the results is an uptick in the bank’s NPL ratio which we estimate to be c.8%, up from 3.9% in Q3 2017. The cumulative provisions set aside for these NPLs are also down y/y. Pending management’s comment on the asset quality metrics, we believe this could be because GT Bank had substantial regulatory risk reserves of c. 200% as at Q3 2017. It would appear that the bank did not book any (material) additional provisions relating to 9mboile in Q4 beyond the N6bn it had set aside as of H1 2018, in line with comments made on the H1 conference call.

Despite the better-than-expected results and dividends, the shares are weak today (-5% vs ASI -0.5%). This could be due to a combination of profit-taking (ytd the shares are up 16.7% vs ASI’s 12.6%), concerns as to the sustainability of the non-interest income line going into 2018 (at least N22bn of the N29.8bn recorded in Q4 non-interest income are one-off in nature) and the asset quality trends we discussed already.

Our estimates are under review. We rate GT Bank shares Neutral.

Conference call details: TBC

GT Bank Q4 2017 results: actual vs. FBNQuest Capital Research estimates (N millions)

GTBank sweeps 5 awards at 2017 “Banker Africa–West Africa” awards

GTBank Ghana, the Digital Bank of the Year, has swept five prestigious awards at the recently concluded CPI Financial’s Banker Africa–West Africa Banking Awards.

The awards came after an intensive voting exercise involving more than 13,000 votes across the banking industry in the West African region. This year’s awards saw GTBank Ghana being named as the ‘Most Innovative Bank in West Africa’ for the second (2nd) consecutive year in recognition of the various products and services introduced onto the market to offer customers an array of services to employ in their day-to-day businesses.

The bank also won the ‘Best Online Platform, Ghana’ award for the second (2nd) year running, a reinforcement of its superiority in the area of electronic banking in Ghana. This went to applaud GTBank’s reliable online banking services, which allow customers to make and receive payments online and carry out transactions from the comfort of their homes, offices or wherever they find themselves without having to visit the banking halls.

GTBank went on to win the ‘Best Commercial Bank, West Africa’, ‘Best Commercial Bank in Ghana’ and ‘Best Corporate Bank, Ghana’ awards during the same ceremony, in recognition of its unique offering of tailor-made products and services to serve customers better.

Managing Director of Guaranty Trust Bank (Ghana) Limited, Mr. Lekan Sanusi, expressed profound joy at the resounding victory of GTBank at the 2017 Banker Africa Awards. “This is all the proof we need that, indeed, the efforts of GTBank have been well-received and appreciated by our intended patrons – and that we always work diligently to ensure we provide the best of services, especially in an environment as competitive as the one we operate in.”

He continued further: “The awards are dedicated to the committed men and women who work day and night in GTBank to come up with innovative ideas on how to please our customers, and make their banking experience with us pleasurable and memorable. We also dedicate the awards to our cherished customers who believe in us and give us the opportunity to serve them. Without them there would be no GTBank”.

The CPI Financial Banker Africa Awards, touted as the most prestigious event in Africa’s banking and finance sector, is an annual programme designed to recognise the reforms, rapid modernisation, consolidation, integration and expansion of Africa’s banking and finance sector. The awards aim to reward achievements, commend best practices, and celebrate excellence in African banking.

Chief Executive Officer of CPI Financial – publisher of Banker Africa – Mr. Robin Amlôt congratulated GTBank Ghana on its success at the awards. “Our awards programmes are designed to reward and promote excellence and competition in the drive to set new standards in the industry.  The financial institutions that won one or more awards this year are those offering best-in-class services that meet and exceed the expectations of their customers. They are truly winners and we specially congratulate GTBank Ghana for their massive win this year.”

In June this year, GTBank Ghana was for the fourth year running adjudged the ‘Technology Advanced Bank of the Year’ at the Ghana Information Technology and Telecoms Awards, thereby cementing its undisputed lead in the use of technology to make banking easy and convenient for its customers and the general public.

It was also named ‘Digital Bank of the Year’ and ‘Best Bank in Mobile Financial Service’in recognition of the various platforms and channels deployed to enhance banking on the go.

These awards cemented an earlier international recognition of GTBank’s superiority in e-banking when the U.K.-based Capital Finance International awarded it the ‘Best Digital Banking – Ghana 2017’ award in March this year.

Guarantee Trust Bank plc (GTBank) Plans to grow its Loan Book to 10 percent in the next five years

Digital banking stimulates GTBank’s target of 10% loan book

In its full year 2017 guidance, Guarantee Trust Bank plc (GTBank) plans to grow its loan book to 10 percent in the next five years, where digital banking would play a significant role towards achieving the target.

This is coming after the bank achieved 15.8 percent loan growth in its 2016 financial result. Having achieved 29.0 percent deposit growth, the bank looks forward to achieving 15 percent in 2017.

Segun Agbaje, managing director/CEO of the bank who disclosed this in Lagos at an interactive session with business editors also said the bank would achieve N168 billion Profit Before Tax in 2017 from the N165 billion position in 2016.

The bank’s Non-Performing Loan (NPL) to total loan which stood at 3.7 below the regulatory threshold is expected to remain below five percent in 2017. 

Sharing with shareholders on how digital technologies have changed the banking sector competitive landscape, Agbaje noted that digital Technologies have dissolved the boundaries between industry sectors and Banking has not been spared from this disruption. “Non-bank digital players could become as integral in the banking value chain as we are to our customers, and competition from these non-bank players could erode as much as one-third of traditional retail banking revenues in the coming years”.

“As a Bank that intends to continue to win and dominate, we will need to move beyond our traditional role as enablers of financial transactions and providers of financial products, to playing a deeper role in the digital and commercial lives of our customers, building and positioning our Bank in the centre of an extended ecosystem that offers customers benefits, beyond banking. We are however, mindful of the inherent competitive advantages that we possess in the digital world and we have created new divisions and aligned our structure to ensure that we are positioned to take advantage of the opportunities birthed by the digital revolution”.

Agbaje further said, “We are investing and building our digital capabilities, and also actively seeking to collaborate with FinTech companies. Whether we compete or collaborate, we will be aggressively pursuing these digital opportunities to strengthen our traditional businesses, and going beyond being a bank to becoming a platform that enriches the lives of all the customers that it serves”.

In 2016, the bank posted strong capital ratios, where Capital adequacy ratio (CAR), computed under Basel II requirement remained strong at 19.8 percent despite increase in Risk Weighted Assets (RWA) for Credit Risk owing to impact of foreign exchange devaluation.

CAR at group level stood at 21 percent, well above the 15 percent regulatory limit. Others comprise of additional investments in subsidiaries, increase in intangible assets (software), deferred tax assets and changes in fair value reserve.

“Going into 2017, we know that challenges in our macroeconomic environment are likely to persist, but our commitment to staying positive, delivering exceptional financial services to our customers, and adding value to all stakeholders has never been stronger. With the repositioning of our business structures and significant investment in our digital abilities, we are confident in our capability to deliver differentiated products and services to our customers whilst enhancing cost-efficiency and reducing risk”, Agbaje added.

Shareholders laud GTB’s improved performance

Shareholders laud GTB’s improved performance

For strict adherence to corporate governance principles, shareholders of Guaranty Trust Bank Plc (GTBank) has applauded the management for efficiently running its affairs, even as they approved a final dividend of N1.75 kobo for the 2016 financial year.

Reviewing its performance, the Chairman of the bank, Mrs Osaretin Demuren, noted that the final dividend per share of N1.75, as proposed by the board aggregated with the 25 kobo interim dividend bringing the total dividend for the year to N2 per share.

According to her, “This is a 13 per cent increase over N1.77 paid in 2015 which represents a dividend yield of 8.16 per cent at a market price of N24.61.”

She pointed out that the subsidiaries steady growth continued to resonate the success of the bank in Africa. “Worthy of mention are the achievements of GTBank Gambia, and GTBank Sierra Leone, emerging as the most profitable bank in their respective countries.”

The Chairman told shareholders the Bank’s Gross Earnings grew by 37.4 per cent from N301.9 billion in 2015 to N414.6 billion in 2016, and Profit Before Tax by 36.8 per cent to N165.1 billion in 2016 from N120.7 billion in 2015.

“Customer Deposits grew by 23.3 per cent from N1.61 trillion in 2015 to N1.99 trillion in 2016. We also maintained our position as the most efficient bank in Nigeria by recording a Cost to Income Ratio (CIR) of 40.8 per cent in 2016.

She assured shareholders that the bank is well positioned to leverage opportunities that exist in the industry, and deliver strong and sustainable returns to shareholders.

The Managing Director, GTBank, Segun Agbaje, said the 2016 improved performance reflects the bank’s strong business fundamental in delivering long term sustainable growth, while leading in the areas of payment with the ‘Bank 737’, a USSD based platform that provides easy payment services for customers.

According to him, within a year of introducing the service, the bank recorded an uptake of over three million customers with over N1 trillion in transactions on the platform.

“As part of strategy to grow retail business, we are continuously making our banking processes and touch points simpler, easier and faster, irrespective of where, and when our customers choose the bank,” adding that customer base tripled over the last five years to 9.68 million customers by the end of last year.

Agbaje noted that although the challenges in the macroeconomic environment were likely to persist, the bank’s commitment to staying positive, delivering exceptional financial services to its customers, and adding value to all stakeholders has never been stronger

“We promise to add value to your stocks, which is why there is an appreciation in the dividend paid compared to that of last year. With the repositioning of our business structures and significant investment in our digital abilities, we are confident in our capability to deliver differentiated products and services to our customers whilst enhancing cost-efficiency and reducing risk,” he said.

GTBank to Reward Mobile Banking Customers with 100k

GTBank to Reward Mobile Banking Customers with 100k

Foremost financial Institution; Guaranty Trust Bank (GTBank), has launched the #GTBankMobileWin100k competition to reward its mobile banking customers by availing them a chance to win N100,000 weekly in the mBank January rewards. The competition will run throughout the month of January 2016 and ten lucky customers will win N100,000 weekly during the period.

To participate in the competition, customers are required to perform two banking transactions weekly on the GTBank Mobile App, such transactions include funds transfers, airtime purchases, bills payments and purchases on the SME MarketHub. Multiple entries are allowed and winners will be notified by telephone or email.

The GTBank Mobile App is a versatile mobile application that merges the bank’s internet banking and mobile money service offerings to allow customers enjoy 24/7 flexibility in carrying out banking transactions without having to visit the Bank’s offices. Using the mobile app, customers can confirm transactions, transfer funds, pay bills and check balances from the comfort of their mobile devices.

The app also host other amazing features such as the SME MarketHub; an online e-commerce platform that allows businesses owners create online stores to sell and promote their offerings to millions of buyers online.

Commenting on the launch, Segun Agbaje, Managing Director / Chief Executive Officer of GTBank said: “Understanding that customers are always on the go; mobile banking puts us in the palm of our customers and provides a unique opportunity to offer quick and more efficient ways of providing banking services. As a Bank, we remain firm on our objective to deliver value adding services that are tailored to meet the diverse needs of our ever-growing customer base by leveraging technology to make banking more convenient for all our customers.”

GTBank has consistently played a leading role in Africa’s banking industry. The GTBank brand is regarded by industry watchers as one of the best run financial institutions across its subsidiary countries and serves as a role model within the financial service industry due to its bias for world class corporate governance standards, excellent service quality and innovation.

Guaranty Trust Bank a leading provider of e-payment gateway solutions has launch its Virtual Prepaid MasterCard.

Foremost African financial institution, Guaranty Trust Bank plc has reaffirmed its position as a leading provider of e-payment gateway solutions with the recent launch of its Virtual Prepaid MasterCard. The card which is issued instantly via Internet Banking, provides an added comfort for security conscious online shoppers who prefer not to use their regular debit/credit cards when making online payments.

The GTBank Virtual card has all the security features of a physical card and can be used to make both international and local online payments. It also serves as a fall back option for customers who have forgotten or lost their card, but need to perform urgent online purchases. The introduction of the virtual card has bridged the gap between traditional e-wallets and bank accounts by providing a low cost alternative to physical debit cards. Customers also have the option of converting the virtual card to a physical card.

Commenting on the launch, Segun Agbaje, Managing Director / Chief Executive Officer of GTBank said: “This marks another milestone in our quest to make banking more seamless for our customers. As a Bank, we remain firm on our objective to deliver value adding services that are tailored to meet the diverse needs of our ever-growing customer base by leveraging technology to make banking more convenient for all our customers.”
He further stated that “the launch of this product, attests to our commitment towards encouraging a cashless culture in our country by promoting the use of alternative payment channels for transacting both locally and internationally. Our desire to be at the frontier of banking excellence enables us to pioneer innovative products aimed at making banking more simple and attractive to the unbanked and unserved.”

Guaranty Trust Bank plc is one of the biggest issuers of payment cards in Nigeria. In Partnership with Mastercard, the Bank has rolled out all variants of GTBank Mastercards in all countries where it has business presence and continues to offer rewards and priceless experiences to its cardholders. One of such promos will include the POS Cash Back Promo; a loyalty reward scheme where customers can earn cash for paying for products and services on POS terminals using their MasterCards. The Bank also rewards Card Holders with shopping and movie vouchers. POS Merchants are also rewarded with several incentives to encourage patronage of the Bank’s POS terminals.

GTBank Launches Virtual Arts Gallery

Leading African financial institution, Guaranty Trust Bank plc, has announced the launch of ART635 (art635.gallery), a Virtual Arts Gallery created to reignite interest in African art and drive the growth and development of the local art industry.

Art635 is a foremost online repository of African artworks and is set to serve as a leading platform for the promotion of indigenous artists across the continent. At the moment, most budding indigenous artists in Nigeria and across Africa have little or nowhere to showcase their works and make a substantial living from their works. The Gallery will significantly expand the exposure of these artists, provide an enabling platform for the marketing of their works and serve as a much needed motivation for the further development of their artistic skills and talents.

The launch of ART635 is the latest of the Bank’s sustained efforts to promote African arts locally and internationally. Arts is one of the four pillars of GTBank’s Corporate Social Responsibility policy and the Bank’s support for Arts over the years ranges from collecting art work from Nigerian artists, to partner with Tate and other Art institutions to promote the value of African Art in Africa and the international markets through project-lead initiatives.

With ART635, the bank aims to further its support for African arts by helping African artworks become not just more seen and appreciated, but also to turn them into a much more profitable and commercially viable venture for indigenous artists who currently earn very little from their works. This is in line with the Bank’s initiative to go beyond the traditional understanding of Corporate Social Responsibility as corporate philanthropy by intervening in economic sectors to strengthen small businesses through capacity building initiatives that serve to boost their expertise, exposure and business growth.

Commenting on the launch of ART635, Mr Segun Agbaje, the Managing Director of Guaranty Trust Bank plc, said; “At GTBank we see art as an avenue for unlocking people’s creative potential and by creating ART635 we aim to expand the opportunities for art education as well as broaden the reach and viewership of the works of indigenous artists.”
He further added that “Although African art goes back several centuries, the art industry in the continent is still young and largely untapped and we hope that with ART635 we can drive its evolution into a lucrative and vibrant economic sector.”

GTBank has consistently played a leading role in Africa’s banking industry. The Bank is regarded by industry watchers as one of the best run financial institutions across its subsidiary countries and serves as a role model within the financial service industry due to its bias for world class corporate governance standards, excellent service quality and innovation.