Inside GT Bank’s 2017 results

GT Bank recently released its financial statements for the year ended December 2017. Interest income increased from ₦262 billion in 2016 to ₦327 billion in 2017. Profit before tax rose from ₦165 billion in 2016 to ₦200 billion in 2017, the highest so far in the bank’s history. Profit after tax increased from ₦132 billion in 2016 to ₦170 billion in 2017. Earnings per share also moved upwards from ₦4.67 in 2016 to ₦6.03 in 2017.

GT Bank declared a final dividend of ₦2.40 per share, having paid an interim dividend of ₦0.30 last year. The total dividend paid, thus amounts to ₦2.70, a 44.7% pay-out ratio.

Interest income rose sharply

The sharp rise in interest income was driven largely by income from treasury bills. Interest income from investment securities rose massively from ₦53 billion in 2016 to ₦99 billion in 2017.  The bank hugely increased the volume of securities it held for trading. Bonds held for trading quadrupled from ₦391 million in 2016 to ₦6.9 billion in 2017. Treasury bills held for trading increased from ₦11.6billion in 2016 to ₦17 billion in 2017.

Net trading income also increased massively from ₦5.2 billion in 2016 to ₦11.3 billion in 2017, largely due to income from treasury bills trading. This tripled from ₦1.3 billion in 2016 to ₦4 billion in 2017.

A greater proportion of the interest income was also generated in Nigeria. Nigeria accounted for ₦282 billion of the ₦327 billion made as interest income in 2017.

Impairments fell sharply

GT Bank seems to have bucked the trend regarding impairments, as impairments fell massively from ₦65.2 billion in 2016 to ₦12.1 billion in 2017. Results released so far by Zenith and Stanbic Ibtc showed a sharp increase in impairments.

Other income fell monumentally

Other income fell sharply from ₦107 billion in 2016 to ₦37 billion in 2017. The drop is largely due to the absence of foreign exchange revaluation gains. Foreign exchange rate depreciated in 2016, due to a sharp fall in crude oil income and production volumes.

Corporate banking remains a key driver

Corporate banking remains a key driver in terms of both top and bottom lines. Corporate banking contributed ₦222 billion of the ₦356 billion made as revenue in 2017. It also contributed ₦113 billion of the ₦157 billion made as profit by the bank in 2017.

Corporate banking also had the largest growth segment-wise, compared to the corresponding period of the prior year. Profit after tax from corporate banking increased from ₦87 billion in 2016 to ₦113 billion in 2017.  SME banking also showed strong growth with profit after tax from this segment rising from ₦1.8 billion in 2016 to ₦2.7 billion in 2017.

Surprisingly, retail banking had the least growth year on year, in terms of profit. Retail banking grew from ₦26.5 billion in 2016 to ₦28 billion in 2017.

Nigeria remains another major driver

Across countries, Nigeria remains another key driver, generating ₦182 billion of the ₦200 billion made as profit before tax. Profit before tax for the rest of West Africa improved from ₦11.5 billion in 2016 to ₦15.7 billion in 2017. The rest of West African operations comprises Ghana, Gambia, Sierra Leone, Liberia, and Cote D’Ivoire.

Profit before tax for East African operations showed a massive decline from ₦1.6 billion in 2016 to ₦705 million in 2017. East African operations comprise Kenya, Uganda, Rwanda and Tanzania.

Customers’ deposits grew slightly

Deposits from customers grew marginally in 2017. Customer deposits increased from ₦1.98 billion in 2016 to ₦2 billion in 2017. This could mean that customers saved less within the period under review, or the bank attracted fewer new customers.