capital market

GTCO to reduce creating new loans in 2023

Published

1 year ago

April 26, 2023

The Group’s Chief Executive Officer, Mr. Segun Agbaje, has said at the GTCO’s investors and Analyst conference which held on April 19, 2024 that Nigeria is still the primary source of loan growth, but the Group is cautious about loan growth in Nigeria due to the challenges in the environment.

The loan growth is linked to deposits, and the Group grew its deposit by 12 per cent and its loan book by 5 per cent in Nigeria based on what they saw in Nigeria. The Group is not going to change its approach in Ghana.

The Group adopted a cautious approach to loan growth due to macroeconomic headwinds that increased credit risk across all jurisdictions of operation. Other Tier-1 banks in the same environment had remarkable growth in their loan books in the same period (2022FY), with Access Holdings, UBA, and Zenith Bank growing their loan books by 24.98 per cent, 21.36 per cent and 19.61 per cent, respectively.

After the release of its audited financial results for the year ending December 31. The results showed that the Group’s total loans grew to N1.886 trillion in 2022, representing about 5 per cent YoY growth, which is below its 2022 guidance.

GTCO grew its loans book by 4.61 per cent YoY to N1.886 trillion in 2022; missing its 2022 loan growth guidance by 10 per cent

The Group also missed its 2022FY deposits growth (+25 per cent) and loan to deposits ratio (+50 per cent) guidance.

On the back of the foregoing and coupled with higher growth in interest expense and impairment losses, the Group’s net interest margin printed at 6.68 per cent; about 17 per cent below the 2022FY net interest margin projection.

In terms of loan growth, Nigeria is still where the loan growth is still going to come from. We are always very careful even about loan growth in Nigeria because we still believe there are challenges in the environment.

“The loan growth is what we do in terms of deposits and one pulls the other. There is no point in us going with 25 per cent deposit growth if all we are going to do is packaged it into CRR or special bills. So we grew the deposit by 12% and grew the loan book by 5 per cent in Nigeria because that is what we saw in Nigeria. In terms of Ghana, we are not going to change… We are not going to be long.”

In addition to the loan growth strategy, GTCO also faced margin compression due to the low yield environment seen in 2022, which could not outpace the cost of funds. This was disclosed during the Group’s 2022 full-year investor presentation.

“The Group grew its Investment Securities Portfolio by 9.5 per cent (N124.2 billion) to N1.435 trillion from N1.311 trillion during the same period but this did not translate to the desired revenue, owing to the sub-optimal yield environment that pervaded Nigeria, Gambia, Kenya and Cote D’Ivoire, e.g.

GTBank Ltd continued to suffer from huge holdings of the CBN’s Special Bills – N561.5 billion, constituting 56.0 per cent of its Fixed Income Securities portfolio which it held at an average rate of 0.48 per cent vs 1.24 per cent cost of Funds as at FY-2022.”

The Group is optimistic that 2023 will present a better net interest margin than 2022, especially in Nigeria due to the expected higher fixed-income yield environment and the Cash Reserve Requirement (CRR).

The Group also confirmed that its funding base is strong, increasing by 15.8 per cent to N6.019 trillion in FY2022. The funding base comprises customer deposits (77 per cent), equity (15 per cent), customer escrow balances (6 per cent), and other borrowed funds (2 per cent from 3 per cent in FY-2021).

While shareholder return, quality service delivery to customers, and the firm’s value are essential, the Group posted a Pre-tax Return on Average Assets of 3.6 per cent and a Pre-tax Return on Average Equity of 23.6 per cent despite the muted net interest margin/loan growth and challenges in the operating environment, which had negative implications for individuals, households, and businesses.

GTCO is a dividend-paying company that has paid out N422.34 billion in dividends over the past five years, representing a CAGR of 2.80 per cent a year. Following its reasonable performance, the bank has proposed a final dividend of N2.80 per share to be paid on May 11, 2023, to shareholders whose names appear on the Register of Members as of May 1, 2023.

The Group’s share price has gained 8.70 per cent this year YtD as of the last trading day in April 2023, in contrast to last year, which saw the share price lose 11.54 per cent of its value as of the close of trading on December 31, 2022. It appears that these positive developments are beginning to be priced in.

capital market

FG lists N4.214bn April savings bonds on NGX

Published

2 days ago

May 16, 2024

NewsDirect

The Federal Government has listed its April 2024 Savings Bonds worth N4.214 billion on the Nigerian Exchange Limited platform.

This was disclosed in the market bulletin signed by Godstime Iwenekhai, Head, Issuers Regulation Department of NGX.

According to the bulletin, “Trading License Holders are hereby notified that the April 2024 Issue of the Federal Government of Nigeria (FGN) Savings Bonds was listed on Nigerian Exchange Limited (NGX) on May 13, 2024.”

Details of the Bonds include FGS April 2026, 1.228 million units valued at N1.228 billion at a coupon rate of 17.046 percent, while FGS April 2027, 2.986 million units amounted to N2.986 billion at a coupon rate of 18.046 percent.

The bonds are backed by the full faith and credit of the Federal Government of Nigeria and charged upon the general assets of Nigeria, according to the debt office.

FGN Savings Bond is issued monthly in tenors of two and three years with quarterly payment of coupons (interest) at a rate predetermined and published by the DMO every month.

The retail savings bond product was introduced by the Debt Management Office (DMO) on behalf of the Federal Government in 2017 to democratise its activities in the bond market by making it easily accessible to Nigerians to ensure continuous development of the domestic market and bridge infrastructure deficit which has been a constraint to economic growth.

capital market

LCFE inducts 23 commodities brokers

Published

2 days ago

May 16, 2024

NewsDirect

As part of its capacity building functions, Lagos Commodities and Futures Exchange (LCFE), has onboarded and inducted another 23 Commodities Brokers, the fourth edition in the series, to increase the number of professionals to specialise in various asset classes in the Nigerian commodities ecosystem.

On the list of those inducted last week were the Managing Director, Dynamic Portfolio Limited, Mr Remi Lasaki and many Chief Executive Officers of stockbroking companies in Nigeria.

In his welcome address, LCFE’s Managing Director and Chief Executive Officer, Mr Akin Akeredolu-Ale, urged the inductees join hands with The Exchange to build a virile commodities market that shall be beneficial to all.

“LCFE is working hard to build a market that will benefit the entire Capital Market and its brokers. Each broker can select a commodity and dedicate their focus on it, thereby enhancing your company’s wealth, your individual skill set and contributing to the growth of the Nigerian Economy.

“Together, let us seize this opportunity to build a vibrant and dynamic marketplace that unlocks new possibilities for investors, enhances economic prosperity, and positions Nigeria as a leader in commodities trading.

“The Exchange is actively engaging with the Securities and Exchange Commission to obtain approval for more products like Lithium, diamond and Oil and Gas commodities. Just yesterday, we signed an MOU with a Global Certification Agent Bureau Veritas to certify lithium and other Solid Mineral commodities to be traded on LCFE. Additionally, we have made significant strides in the Cashew ecosystem, signing an MOU with the Cashew Association of Nigeria (CAN), aggregators, and a major cashew processor.

“Eko Gold also represents a pioneering investment opportunity within our commodities ecosystem, leveraging stability and transparency to diversify options, attract capital, and create value across the value chain. LCFE is fully committed to supporting its growth and providing brokers with the tools and guidance needed for effective promotion of the asset classes,” said Akeredolu-Ale.

Corroborating him, the Chairman, Securities Dealing Houses of Nigeria (ASHON), Mr Sam Onukwue, noted LCFE was established for total transformation of commodities exchanges in Nigeria and boost the country’s Gross Domestic Product (GDP).

“The underpinning drive for establishing the exchange was the need to transform and reposition the commodities market and harness opportunities in the commodities ecosystem. This drive will enhance and crate value for all stakeholders in the ecosystem,” he said.

The newly elected President of Chartered Institute of Stockbrokers (CIS), Mr Oluropo Dada, congratulated the inductees and advised them to uphold the ethical standard of the profession and operate with skills and integrity.

Akeredolu-Ale also congratulated the new board and management of Securities and Exchange Commission (SEC), under the new Director General, Dr Emomotimi Agada.

In July last year, the Pan African Exchange inducted 33 commodities brokers, including the first female office holder at Chartered Institute of Stockbrokers (CIS), Mrs Fiona Ahimie.

capital market

Tinubu asks Senate to confirm four board members of SEC

Published

2 days ago

May 16, 2024

NewsDirect

President Bola Tinubu has asked the Senate to screen and confirm four persons appointed as board members of the Securities and Exchange Commission (SEC), the apex regulator of Nigeria’s Capital Market.

The President’s request was contained in a letter read by the Senate President, Godswill Akpabio during the plenary on Wednesday.

The appointed members of the SEC are Emomotimi Agama, Frana Chukwuogor, Bola Ajomale and Samiya Hassan-Usman.

While Agama was appointed as Director-General, Mr Chukwuogor will serve as Executive Commissioner (Legal and Enforcement) of the Security and Exchange Commission. Ajomale was appointed as Executive Commissioner (Operations) while Hassan-Usman was appointed as Executive Commissioner (Corporate Services).

In April, President Tinubu approved the appointment of seven persons as members of the SEC pending their confirmations by the Senate. But, only four names were transmitted to the Senate for confirmation and Tinubu did not give reasons for not including the names of the other three professionals.

In the letter, the President explained that the appointment complied with the provisions of section (1) of the Investment and Security Act of 2007.

“Confirmation of appointment of the Director-General and Commissioners of the Securities and Exchange Commission.

“By the provision of sections 3 and 5 (1) of theInvestment and Securities Act 2007. I am pleased to present for confirmation by the Senate the under-listed four nominees as Director-General and Commissioners of Securities and Exchange Commission,” he said.

The president urged the lawmakers to expedite the screening and confirmation process.

The Senate President thereafter referred the request to the Senate Committee on Capital Markets to report back to the Senate within two weeks.