GTCO Takes Almost 30% of Nigeria Bank Profit

Guaranty Trust Holding Company (GTCO) Plc captured almost 30 percent of all Nigeria banks’ profit in the first nine months of 2024, reaping the benefit of cost controls and the central bank’s monetary policies.

The lender earned N1.08 billion in profit after tax (PAT)-about 27.87 percent of industry profit, according to data compiled by MoneyCentral.

This analysis is based on the financial statements of the most liquid and capitalised firms on the NGXASI index.

If this trend continues in the next five years, the lender is going to become one of the largest financial institutions among developing and emerging markets.

Most big banks have benefited from rising interest rates, which allow them to juice margins by imposing higher rates on borrowers more quickly than they pass them on to depositors.

Of course, GTCO is the goliath of goliaths, as it has the highest return on average equity (ROAE) in the industry, which means it would leave a lot of money for shareholders if its assets were liquidated and used to pay off its debts.

Zenith Bank has ROAE of 37.80 percent; Access Holdings, 22.0 percent; United Bank for Africa, 24.90 percent, and FBN Holdings Plc, 32.80 percent.

These figures show how chief executive Segun Agbaje has been proactive and nimble in taking strategic decisions that helped deliver higher returns to shareholders.

His hot pursuit of a Holding Company structure is pivotal to the success of the Bank in recent times, as he ensures that all business segments contribute to Group earnings.

To help people send money seamlessly to each other electronically, GTCO established its financial technology firm Habari Pay in August 2021. Backed by innovative technology, the payment platform helps people send and receive funds from different parts of the world at little or no cost.

“We are also leveraging our large network of merchants and presence in multiple markets to offer a more flexible and secure way to move money locally and internationally,” said the Bank.

HabariPay’s revenue increased by 21 percent to N2.81 billion in June 2024 from N2.31 billion as at June 2023.

“The Payments arm of the Group saw an increase in the number of entities that switched transactions through the PayCo, a testament to the acceptance of HabariPay as a fast and reliable partner within the Payments Industry,” adds the Bank.

It is important to note that GTCO forayed into the pension industry with the acquisition of 100 percent shares in Investment One Pensions Managers Limited in 2022.

The pension business has asset under management (AUM) of N90.11 billion as at six months 2024, which is 12.90 percent higher than 2023’s N79.79 billion.

“We asked the management of GTCO about the growth plans for their pension business segment and their response was that the immediate strategy is to grow organically and cross sell instead of rushing into further acquisition,” said analysts at Chapel Hill Denham Limited in a research report.

“However, over the medium term, GTCO will take advantage of inorganic growth if the opportunity arises, given that the pension business is adequately capitalised,” said analysts at Chapel Hill Denham.

Speaking at a “Facts Behind the Offer” presentation to investors, regulators, and stakeholders on the main floor of the Nigerian Exchange Group (NGX), seen by MoneyCentral, chief executive officer Agbaje said that the Assets under Management (AuM) in Guaranty Trust Holding Company’s (GTCO), wealth management business has hit over N600 billion from N27 billion two years ago.

This is a rare feat and a record that is practically difficult to break as the lender’s innovative products are being accepted by customers who are addicted to them because they meet their needs.

“Our wealth management is the Jewel in the crown for us, the business is really on fire. It’s growing at around 635 percent a year,” said Segun Agbaje.

The Bank says it is going to be the first lender to hit the $1 billion profit mark after it had successfully raised fresh capital to bolster its balance sheet against macro shocks.

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