HoldCo transition: NGX suspends trading in GTBank shares
The Nigerian Exchange Limited (NGX) has halted trading in the shares of Guaranty Trust Bank (GTBank) Plc, as the bank moves to its transition to a holding company.
The transaction is to enable Nigeria’s biggest lender by market value consolidate its businesses into a single group, set up payments and asset management subsidiaries.
“The suspension is necessary to prevent trading in the shares of the bank in preparation for the eventual delisting of Guaranty Trust Bank Plc from the Daily Official List of the NGX and listing of the Holding Company, Guaranty Trust Holding Company Plc on NGX,” the bourse said in a report.
GTBank is optimistic the metamorphosis will help bolster profitability at a time when lenders are seeing drops in earnings from core banking business, forcing rivals like Access Bank and Sterling to also see a holdco structure as the way to go.
GTBank’s outstanding shares of 29.431 billion units will be swapped on a one-for-one basis for the shares in the succeeding holding company, just as its global depository receipts will be exchanged in the same way once the transformation is completed.
The lender will be delisted from the NGX and the London Stock Exchange and re-registered as a private limited liability company, towing the path of FBN Holdings Plc and Stanbic IBTC Holdings Plc.
It has in place the approval in principle of the Central Bank of Nigeria (CBN) and a no objection of the Securities and Exchange Commission.
The shareholders of GTBank had approved the holding company structure for the bank as they expressed excitement over the benefits they would derive from the new structure.
At the court-ordered meeting held recently, the investors gave their approval to the company for the transfer of the 29,431,179,224 ordinary shares of 50 kobo each in the issued and paid-up share capital of the bank held by them to Guaranty Trust Holding Company.
The bank’s gross earnings expanded 4.58 per cent year-on-year to N455.23 billion in 2020 on the back of a relatively strong growth in non-interest income.
In 2020 financial year, the bank’s non-interest income swelled up 11.06 per cent above the amount reported in financial year 2019. Interest-related income surged marginally at 1.53 per cent as a result of low interest rates’ environment in the Nigerian economy.
Lender’s net interest margin (NIM) contracted, albeit slightly, to 9.26 per cent from 9.28 per cent in 2019, supported by efficiency in deposit mix.
In a new report, analysts at Meristem Securities said the bank’s non-interest income was buoyed by FX revaluation and financial instruments trading gains, as fee-based income (net) declined significantly by 14.80 per cent.
Meanwhile, other than the spike in impairment charges, costs were largely kept in check with cost-to-income ratio at 38.24per cent – below management guidance of 40 per cent – from 36.11 per cent in 2019.
The bank’s improved current and savings account (CASA) mix and low cost of funds that dropped to 1.19 per cent from 2.30 per cent in 2019 helped mitigate the impact of higher operating expenses.
Our correspondent gathered that the shares of GTBank dropped by 0.35 per cent last week, closing at N28.55 per unit on its last trading day on Friday from N28.90 it opened for trading.
