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Background
Guaranty Trust Bank Plc, Nigeria’s most profitable bank, was incorporated in 1990 and began operations in 1991. It later converted to a public limited company and listed on the Nigeria Stock Exchange in 1996.
The bank is also listed on the London Stock Exchange through the listing of its $750 Million Global Depository Receipts in July 2007. The bank has a network of 212 branched and an asset base of N1.9 trillion as at December 2013.
One of the few Nigeria banks to place emphasis on international recognition and world standards in corporate governance as a deliberate corporate strategy, the bank’s primary business is corporate banking; however, since 2005 it has placed an increasing emphasis on expanding its retail business.
GT Bank has 29.43 billion shares outstanding, with shareholder funds standing at N332.35 billion at the end of December, 2013.
Financial Performance for Year Ended December 2013
GT Bank, Nigerian’s biggest lender by market value released has just released its audited financial statement for the year ended 31 December 2013.
The bank, despite being beset by harsh operating environment such as tightening of interest rate by the Central Bank of Nigeria (CBN), recorded impressive results in both top and bottom line performance.
The bank in the twelve months period through December 2013 grew gross earnings by 9 percent to N242.66 billion from N223.06 billion in the corresponding period of 2013.
Interest income rose by 9 percent to N185.38 billion in FY13 as against N170.3 billion as at FY12, while net interest income climbed by 5 percent y/y to N136.94 billion from N130.68 billion same periods of 2012.
Profit before tax for the year ended 31 December 2013 (FY) grew by 4 percent to N107.1 billion compared to N103.02 recorded in the erstwhile period of 2012.
GT Bank also in the review period had its administrative expenses climb by 6 percent y/y to N82.42 billion from N78.1 billion FY12, while loan loss expenses surged 291 percent to N 2.88 billion as against N738.78 million in 2012.
Based on BusinessDay analysis, the Bank’s return on equity (ROE) for FY13 dropped to 27.09 percent as against 30.75 percent as at FY12, which is higher than its cost of capital. Return on assets (ROA) dipped to 4.28 percent FY13 from 5 percent as at FY12.
Earnings per share EPS for the year ended 31 December, 2013 were up by 4 percent y/y to 317k compared to 306k recorded FY12.
The bank impressively expanded its Loan growth as Loans and advances in the FY13 jumped by 29 percent to N1.07 trillion from N783.91 billion as at FY12.
The customer and other deposits were up 23 percent YoY to N1.44 trillion in Q4’13 as against N1.17 trillion recorded in corresponding period Q4’12.
The bank in the in the twelve months period through December 2013 recorded an 18 percent increase in total equity y/y to N332.52 billion as against N281.82 billion in the corresponding period of Q4 2012
GT Bank’s total assets were up 21.3 percent Year on Year (y/y) to N2.10 trillion in the period from N1.73 trillion recorded in the erstwhile period of 2012.
Share Performance and Outlook
The value of shares, of the largest lender by market value (GT Bank) has increased by 7 percent in one year -as at March 17the 2013- to close at N22.67 on the floor of the Nigeria Stock Exchange (NSE).
The bank’s ability to translate top line performance into bottom line growth is having a positive impact as its price to book ratio stood at 2.0 xs, meaning that investors are paying a high premium for its shares more than some peer rival banks such as Zenith which trades at a price to book ratio of 1.32 xs.
It also in the period under review recorded an estimated P/E Ratio of 7.054.
GT Bank has a market capitalization of N685.7 billion on the same day.
