GT Holdings to Invest N98bn in Technological Infrastructure
By Esther Agbo
In a bold move towards digital transformation, Guarantee Trust Holding Company Plc (GTCO) has announced a significant investment of N98 billion in technological infrastructure. This strategic initiative, unveiled by Group Managing Director and CEO Mr. Segun Agbaje during the “Facts Behind the Offer” presentation at the Nigerian Exchange Group (NGX), underscores GTCO’s commitment to advancing its technological capabilities and enhancing shareholder value.
During the presentation, Agbaje emphasized the importance of technological innovation in GTCO’s growth strategy. The N98 billion investment will focus on upgrading both software and hardware systems, which is expected to streamline operations, improve service delivery, and support the bank’s expansive growth plans. This move aligns with GTCO’s broader objective to remain a low-cost operator while maximizing profitability and efficiency.
He said “Then in terms of technology, I told you we’re changing our software, we’re changing our hardware. That will be about N98bn billion, and working capital for all these great industries will be about
N133 billion, which will give the bank about N370 billion, and the rest will put in our war chest for the PFA acquisition.”
According to Agbaje, GTCO’s business model, segmented into GT Bank Nigeria, regional operations in West and East Africa, and the UK, along with funds management, pension management, and payment fintech, has demonstrated robust performance. The bank’s Nigerian operations account for 77 percent of group profit, with a remarkable 162 percent profit growth last year. West Africa contributes 17 percent of group profit, while East Africa and the UK represent smaller but significant portions.
GT Holdings has also demonstrated impressive returns on equity (ROE), surpassing industry averages across its operational regions. The company’s focus on maintaining a strong capital adequacy ratio (above 23 percent) and a dominant Tier 1 capital base underscores its commitment to financial prudence and stability.
“Then we have pension management, and we have our payment fintech. This is how we look at our business operation. It’s worked very well for us, and a lot of the results you’ll see is because we have split the businesses.It allows us to dive. If you look at Nigeria, Nigeria is 77 percent of group profit, and profit last year grew by 162 percent. West Africa is 17 percent of group profit and growing very strongly.
“East Africa, which is part of where we think we need to knuckle down a bit more, is 2.3 percent of group profit. UK is 1.9 percent of group profit, and the three businesses we bought are 1 percent. Most people say 1 percent is small, but when you live in a guaranteed trust type profitability, 1 percent is actually a lot of money to have achieved in one and a half years, so we’re very proud of the new businesses.
“All the balance sheets are strong. We have always tried to maximize shareholder value. In Nigeria, the ROE is about 48 percent.
In West Africa, the ROE is 51 percent. In East Africa, the ROE is 20 percent. In UK, the ROE is 35 percent, which is very unusual for a developed economy, and all the new businesses are all doing very, very well in terms of ROE, so I think we have a business model that has always rewarded the people who have taken a chance on us who are the shareholders.
“The last three years in Nigeria have been very difficult. If you had gone aggressive on your load book, my belief is in the next couple of years, you are going to be providing for those loads, because there were different macro environments, so we were careful. We instead did fixed income growth, which was about 40 percent, and we continued to grow our deposits, which was about 35 percent.
“All this resulted in about 65 percent increase in profitability for us. We also grew the core business, which you see when you look at net interest income, which grew by about 43 per cent. In terms of ratios, our capital adequacy ratios are about 23 per cent, 24 per cent, which is a lot higher than 21percent, Agbaje asserted.
Agbaje highlighted that the investment in technological infrastructure is crucial for GTCO’s future expansion, particularly in the underbanked regions of Nigeria and other African countries. The bank plans to launch an aggressive branch rollout in Nigeria, Senegal, Côte d’Ivoire, Ghana, and Kenya, enhancing its retail and SME banking segments. With only 2.9 million SME customers currently, GTCO sees immense potential in tapping into this largely underbanked market.
He said, “People have said what are Nigerian banks going to do with the capital? Well I don’t know about the people but we know what we are going to do with the capital. First of all we are underweight branches in Nigeria for those who know us and bank with us. So we’re going to go for a very aggressive branch rollout in the next 12 to 24 months with the money you give us.
“That’s going to allow us to play the retail segment better and the SME segment better. We’re about 35 retail customers, 2.9 million SME customers. Everybody in Nigeria is an SME.
“So if we only have 2.9 million we’ve only just started scratching the surface. Even when we look at what is our core business which is a corporate banking business, we still see a lot of growth. The food and beverage industry is on the bank.
“Oil and gas where we’re strong in, there’s still opportunity there. Infrastructure, there’s opportunity there, agriculture, there’s opportunity. So when people say what are we going to do with the capital, you assume that Nigeria is a mature banking environment.
“Nigeria is actually not completely underbanked. We might be in certain areas where you see concentration and clusters but this is an underbanked environment and so we’re going to go. There’s a lot of growth still to be had in Nigeria.”
The technological upgrade is also expected to bolster GTCO’s payment fintech and wealth management businesses, which have shown impressive growth since their acquisition in 2022. The fintech has been particularly successful, growing profits by 35 percent last year and poised to double this year. Similarly, the wealth management business, acquired for ₦27 billion and now managing over ₦600 billion in assets, is expanding at an extraordinary rate of 635 percent annually.
“I’ll tell you that the assets on the management is over 600 billion and guess what, we bought this thing at 27 billion.
This thing is growing about 635 percent a year. The final one, the PFA. We know the PFA is a very regulated business, runs on fees.
“And so when we were going to buy it, we recapitalized it to a tune of 10 billion, even though all that was needed was 5 billion. And that was deliberate. And that’s because we knew that for us to succeed in that business, we would have to do an acquisition, ” Agbaje said.
Agbaje addressed the challenging macroeconomic environment in Nigeria, including high inflation and exchange rate volatility. He commended the government’s shift towards orthodox monetary policies, which have stabilized interest rates and exchange rates, fostering a more predictable economic landscape for businesses.
Despite these challenges, GTCO’s strategic investments and prudent financial management have yielded strong results. The bank’s capital adequacy ratios remain high, with a cost-to-income ratio of about 16% and net interest margins (NIMs) expected to reach 11 percent this year. The return on equity (ROE) for the first quarter stands at an impressive 44 percent, reflecting the bank’s operational efficiency and profitability.
GTCO’s N98 billion investment in technological infrastructure marks a significant milestone in its journey towards digital transformation. By enhancing its technological capabilities, expanding its branch network, and tapping into new growth opportunities, GTCO is well-positioned to deliver sustained value to its shareholders and maintain its competitive edge in the dynamic banking landscape.
“This is an incredible investment. Our balance sheet is strong, our business model is sound, and we are committed to maximizing shareholder value through strategic growth and innovation,”Agbaje concluded.
