Late last week, at the Nigerian Stock Exchange (NSE), GTBank plc released its audited financial results for the year ended December 31, 2014. The results show positive performance across all financial indices, reaffirming its position as one of the most profitable and well-managed financial institutions in Nigeria.
The group delivered an impressive profit before tax (PBT) of N116.39 billion, an increase of 9.30 billion or 8.7 percent over the N107.09 billion reported in December 2013, and gross earnings of N278.52 billion, an increase of 14.8 percent from the N242.67 billion recorded in the same period of 2013.
In terms of value creation for its shareholders, the bank recorded pre-tax Return On Average Equity (ROAE) of 32.94 percent and Return on Average Assets (ROAA) of 5.22 percent, respectively.
Its balance sheet remains strong with 12.4 percent growth in total assets, from N2.10 trillion in 2013 to N2.36 trillion in the year under review. Loan book growth up by 27.12 percent to close at N1.28 trillion from N1.01 trillion in 2013; driven primarily by growth of the foreign currency loan book, on the back of the 2013 $400 million Eurobond issue. On the back of continued growth of the bank’s retail franchise, customer deposits grew by 13.3 percent from N1.43 trillion in 2013 to N1.62 trillion in 2014.
It maintained a disciplined and prudent approach to loan growth in line with its risk management framework. Its non-performing loans (NPL) ratio remained low at 3.15 percent, down from 3.58 percent in the comparative period of 2013. On the back drop of this result, the GTBank proposed total-year dividend of N1.75k per share (inclusive of the 25 kobo interim dividend paid at half year 2014).
Analysts’ comments
“We remain buyers of GTBank! On the strength of these results, we have revised our model and raised our target price from N30.3 to N35.5. The bank now trades at 7.0x P/E and 1.84x P/BV, still at a considerable premium to peers evidently justified by its superior profitability and efficiency metrics,” said Kayode Tinuoye-led team of financial analysts at United Capital plc.
“We believe Guaranty remains on track for a sustained ROE expansion in the near term, though we look to see a stronger growth in deposit to fuel its renewed appetite for risk asset creation given its narrowing headroom for loan expansion,” United Capital analysts said further.
According to Femi Ademola-led team of research and intelligence analysts at BGL, “the bank’s performance for 2014 was better than our analysts’ expectation. Due to regulatory headwinds during the year which was expected to prevent strong growth in income and to increase expenses, we had projected a gross earnings on N259.65 billion and net income of N91.92 billion for the bank. This projection for both top and bottomline earnings were bettered by the bank by as much as 7.4 percent.
“Buy recommendation retained! Increase in financial intermediation which resulted in positive income growth is an indication that the adopted strategy to grow business and enhance shareholders’ value may be achieving the objectives. We therefore retain our buy recommendation and target price of 28.08, pending further detailed analysis.”
Also, in their first reaction to the GTBank results, Olubunmi Asaolu-led team of financial analysts at Lagos-based FBN Capital Limited, said: “Given that the positive surprise in the results was driven by non-interest income (and in particular FX trading), we do not expect much of the surprise to be carried forward as far as consensus forecasts are concerned. More importantly, these results do not yet reflect the fallout from the worst of the marked decline in oil prices.
“We believe that GTBank will fare better than most banks and should be viewed as a core holding for investors through the challenging times ahead. However, we also acknowledge that growth, particularly for risk assets, is bound to slowdown in 2015. GTBank’s exposure to the oil and gas sector at over 20 percent of its loan book is a slight concern also.”
Management’s comment
The bank’s financial performance in 2014 attests to the inherent soundness of our strategy and resilience of our earnings, Segun Agbaje, managing director/CEO of GTBank, while commenting on the result, said, saying the group has delivered a respectable PBT of N116.39 billion in spite of all the headwinds the industry experienced in 2014.
He expressed his sincere appreciation to customers for their loyalty and staff for their commitment and hard work.
According to him, “we remain committed to maximising shareholder value and delivering superior and sustainable returns. Our objective is to remain a leading player in the financial services sector while expanding our franchise in select, high growth African markets where we believe we have competitive advantage.”
Iheanyi Nwachukwu
