Guaranty Trust Bank (GTBank) in its nine-month unaudited report posted an 8.2 per cent increase in operating expenses, an indication of rising challenges in the industry.
Also, although it recorded 59.6 per cent increase in profit after tax to N119.9 billion from N75.2 billion in the corresponding period of 2015, its cost-to-income ratio, which moderated to 28.5 per cent in the period under review is said to be high too.The bank’s Profit Before Tax also rose from N92.06 billion to N140.84 billion, an increase of 53 per cent.
The improved performance, according to the bank, was attributable to its aggressive pursuit of outlined key objectives for the year, as well as benchmarking the bank in line with global standards.
Its loan book grew by 19.6 per cent, from N1.372 trillion recorded in December 2015 to N1.640trillion in September 2016, while Total Assets of the bank stood at N3.093 trillion, with shareholders’ funds of N483.4billion.
Meanwhile, the lender also recorded a 28.7 per cent increase in total deposits from N1.6 trillion in 2015 to N2.1 trillion in the same period of 2016.
Notwithstanding the increased deposit base, its interest expense (paid) declined by seven per cent, showing that it negotiated lower interest rate payment to customers.
The development, which led to moderated yearly cost of fund to three per cent for the bank, from 3.1 per cent in the first half of 2016, showed how banking industry has been out-pricing its customers, especially when compared with high interest rates charged on lending.
According to Afrinvest Securities, the decline in interest expense was broadly due to the lower debt servicing cost; and interest expense on debt securities, which fell 5.8 per cent as total borrowings declined by 0.5 per cent in the period.
Similarly, gross earnings expanded 43.6 per cent year-on-year from N229.4 billion in third quarter of 2015 to N329.3 billion in the corresponding period representing 44 per cent rise.
This is majorly driven by 5.2 per cent year-on-year growth in interest income and massive 161.2 per cent year-on-year expansion in non-interest income.
The growth in interest income was on the back of 15.2 per cent rise in interest from loans and advances, up from N122 billion in 2015 to N140.6 billion in 2016, which accounted for 77.3 per cent of total interest income.
The rise in non-interest income, which moved from N6.8 billion in 2015 to N93.6 billion in 2016 corresponding period, was majorly driven by the 1281.3 per cent surge in gains from the flexible foreign exchange framework, which CBN inaugurated in June this year.
The bank’s E-business income also jumped 75.1 per cent to N23.2 billion from N13.2 billion in prior period, accounting for the major component of its fee and commission income, which increased by 27.1 per cent from N39.7 billion to N50.4 billion in the period under review.
The bank also defied the challenging environment and rising level of Non-Performing Loans in the industry, growing its risk portfolio further by 19.5 per cent.
Specifically, the double digit expansion in total loans and advances rose from N1.3 trillion to N1.6 trillion in the period under review and consequently, credit impairment charge surged 570.3 per cent to N57.1 billion from N8.5 billion in the same period of 2015.
The Managing Director of the bank, Segun Agbaje said: “Recognising that we operate in challenging business environments, we set high goals, benchmark ourselves against global standards and aggressively pursue our key objectives for the year, which are focused mainly on adding value to all stakeholders and improving the customer journey.”
He further stated that the bank would continue to leverage on collaborations and technology to drive customer engagement, improve the overall customer experience and grow the business for long term sustainable returns.