THUR, MARCH 07 2019-theG&BJournal- Guaranty Trust Bank (GTBank) Plc has hit a milestone in its long year effort to get cost under control.
Fourth quarter expenses totalled about 36.30 percent of revenue, a ratio that has been ebbing in the last five years.
That helped push profit above analysts’ estimates, and lower impairment charge spurred earnings to record. Net interest income got a bigger boost than expected from a reduction in interest expense, and non-interest revenue.
For the year ended December 2018, GTBank’s net income increased by 10 percent to N184.64 billion, this compares with N167.91 billion in 2017, and the 2018 figure is nearly double N94.43 billion recorded in 2014, data gathered by Government Business Journal, (GBJ).
The lender has made net income of N678.70 billion in profit in five years.
Total revenue or gross earnings was up a meagre 3.39 percent to N434.70 billion; the drop in top lines was due to a reduction in interest income as low yield environment continues to undermine revenue.
Part of the success of the Bank came from net gains on financial instruments classified as held for trading, fees and commission income, exceptional items and an excellent risk management strategy.
For instance GTBank made N10.38 billion from item classified as recoveries and others, a sub component of N50.18 billion other incomes.Also, foreign exchange trading gains surged by 171.51 percent to N19.28 billion as at December 2018.
The 2018 audited financial statement of GTBank showed a 59.68 percent reduction in impairment on financial assets to N4.90 billion added impetus to profit, as the lender has slow down on the pace at which it writes off bad loans.
Total operating expenses was up 1 percent to N127.10 percent to N127.10 billion as at December 2018, lower than the 11.37 percent inflation for figure for the month of January
“In 2018, our focus on staying nimble, strengthening customer relationships and driving our digital first strategy paid off,” said Segun Agbaje, Managing Director/Chief Executive Officer, GTB.
“We successfully navigated the pressures of our challenging and radically changing business environment, recorded growth across key financial indices and reaffirmed our position as one of the best-performing and well-managed financial institutions in Africa,” said Agbaje.
The largest lender by market capitalization in Nigeria turned each Naira invested in sales into higher profit as net margins increased to 42.50 percent in December 2018 from 40.10 percent as at December 2017.
Return on average equity, another measure of profitability, increased to 30.90 percent in December 2018 from 29.87 percent in 2017, 28.80 percent in 2016, and 25.50 percent in 2015.
However, GTBank has refused to turn the tap on lending as the uptick in treasury yields is more profitable than extending credit to an economy that is susceptible to local and foreign macroeconomic shocks.
Total loans and advances were down to N1.26 trillion in December 2018 from N1.45 trillion the previous year while loans to deposit ratio fell to 53.50 percent in December 2018 from 67.50 percent the previous year.
Deposits from customers were up 10.27 percent to N2.27 trillion in the period under review as against N2.06 trillion the previous year.
GTBank is using its electronic business to deepen financial inclusion while at the same time ensuring that banking product reaches customers wherever they are.
Income from electronic banking was up 28.24 percent to N9.58 billion in the period under review as against N7.47 billion as at December 2017.
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