Holdco structure to bring about GTBank’s diversity, improve shareholders returns — CEO

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The Chief Executive Officer, Guaranty Trust Bank plc (GTBank), Mr. Segun Agbaje has said the proposed holding structure by the management of the bank is to bring about diversity and boost shareholders returns on their investments.

Speaking with some finance journalists in Lagos on Wednesday, he noted that the competitive landscape in the banking sector has changed, stressing that technology via Fintech has transformed the sector.

According to him, “The universe of competition for banking has changed compared to 10 years ago. We had focused on our banking business and it was a wise decision then.

“We went from number seven in profit to number one. But when you look at the competitive landscape of today, it is time to diversify our earnings and the only way of diversifying earnings in Nigeria today is to go into Holdings.”

He expressed that GTBank aims to compete in the FinTech space which is the business for the future, noting that the financial institution also aims to compete in the asset management business and Pension Fund Administration (PFA) business.

He said the lender’s strategy is to become leading bank in profitability, improved on dividend payment to shareholders and diversify into other business space.

According to him, “We never have no strategic objective of becoming the biggest bank in the country. The strategic objective of GTBank is very clear which is to become number one in profitability. Number one in Return on Assets (ROA) and number one in Cost to income.

“We believe that size is not what matters to shareholders but returns on the absolute money you make.

“What is the point of been the biggest bank and not making the biggest money? For us, we only wanted to add value and not play in the game of size.

“What we believe in the banking is the scale. Once you have enough scale, you probably do the big enough to do transactions and what concerns people is how much profit you put on the table.

“If you look at our branch network, our peers have over 500-700 branches, we have about 227 branches because we bet years ago that you don’t need bricks and mortar but you need brand equilibrium between alternative channels and bricks and mortar.

“Hopefully, COVID-19 happening in the last eight months has shown we have made the right bets and that going to brick and mortar strategic was not the right decision.

“We have grown customers’ base. In 2011, we had 3.3 million customers and end of 2019, we grown to 21.5million customers’.”

He explained further that, “I think part of the success of GTBank today is the fact that we have been able to build a strong retail franchise as its cover 55-56 per cent of our total deposit base. People have asked we don’t do retail loans.

“That is not true-about 12 per cent of our loan book is retail. We are very happy in what we have done in retails and continue to push it.

“One of the things we wanted to achieve in the last 10 years is to become one of the top five banks in Africa by profit- we never looked at size. We didn’t achieve that as we are around number eight or nine. People are doing banking businesses on their phone today as they don’t want to come into banking hall.

“Customers want a bank to provide everything, such as lending, pension, insurance, investment and advisory.”