Guaranty Trust Bank Plc, Nigeria’s largest lender by market value, said first quarter profit climbed 14.92 percent after loans and advances faltered.
Profit was N26.56 billion as at the first quarter of 2014, compared with N23.11 billion the previous year, the Lagos-based company said in an e-mailed statement on the website of the NSE.
Gross earnings moved by 17.34 percent to N78.09 billion as loans and advances rose by a single digit 2.36 percent to N1.27 trillion. Deposits grew reduced by 1.78 percent to N1.65 trillion.
The bank is aggressive about lending while creating risk assets as loans to deposits ratio to 77.02 percent in 2015 as against 68.18 percent in 2014.
Lenders see the restriction in foreign currency trading as hurting and crimping their growth potentials as Africa largest economy struggle against a slump in oil price.
GTbank and other lenders may face further liquidity squeeze as the Central Bank increased foreign currency curbs to protect reserves and stabilize the naira.
The Abuja Based Bank has banned importers from using the from the foreign-exchange market for some goods in Africa’s biggest economy.
Analysts however see the recent decision of the Central Bank to harmonize the CRR on private and public sector deposits to 31 percent as broadly positive for banks earnings as they foresee stocks rise in reaction to the new policy.
“We expect banks to have more funds available for lending to drive interest income growth as about N500bn will be freed in terms of banks reserves with the CBN, by our estimates. Thus, we could see bank stocks rally over the next couple of days,” said Ibrahim, analyst with Chapel Hill Denham in an email statement to BusinessDay.
While Niger’s banks are groaning under tough operating environment, GTBank remains the most efficient as its return on equity (ROE) of 29.03 percent is the highest in the industry. The ratio is higher than the 26.98 percent recorded the previous year.
GTBank’s interest income jumped by 13.25 percent to N54.95 billion in 2015 from N48.55 billion last year.Interest expense grew by 13.34 percent to N15.78 billion in 2015 as against 13.80 billion last year fueled by hike interest rate.
GTBank’s cost to income ratio reduced to 44.50 percent in 2015 compared with 46.01 percent last year. The lower cost to income means the lender is reducing costs while increasing profit.
Total assets rose by 5.53 percent to N2.48 trillion in the review period from N2.35 trillion the preceding year.
GTBank has healthy assets portfolio as Non Performing Loans (NPL) declined to 3.06 percent in 2015 from 3.40 percent in 2014. Cost of risks moved to 27 percent in the period under review as against 12 percent last year.
Net margin, a measure of profitability and efficiency grew to 48.30 percent in 2015 compared with 47.60 percent in 2014.
The bank’s liquidity ratio was 42.47 percent as the start of the year, which is higher than the 30 percent regulatory minimum while capital adequacy remained well above the minimum statutory requirement of under 15 percent with capital adequacy ratio of 23.34 percent in the period under review.
GTBank’s share price closed at N27.01 on the floor of the exchange while market capitalization was N794.64 billion.
Source : BusinessDay