Guaranty Trust Holding Company or GTCO Plc has the highest return on equity (ROE) among banks in Africa and across the globe, as the lender is efficient at generating profit from money that investors have put in its business.
This rare feat has never been reached by any bank in Nigeria, and GTCO remains a pace setter, as it stands at the top of the lists of most efficient companies in the last decade.
The most capitalised lender (GTCO) in Africa’s largest oil producer recorded return on equity (ROE) of 45.30 percent as at December 2023, the largest number among peer rivals in Nigeria, according to MoneyCentral calculations.
That compares with Credit TURKIYE GARANTI BANKASI of Turkey (43.50 percent); AGRICOLE OF Egypt’s (42.30 percent); UNITED BANK FOR AFRICA of Nigeria (42 percent), and UBS GROUP AG-REG of Switzerland (39 percent).
GTCO has the lowest cost to income ratio in the industry (Nigeria), which validates an improvement in operational performance and excellent cost control policies even amid rising inflation and difficult environment.
While all banks are feeling the pinch of a selloff in shares as investors are afraid of the dilutive impact of a recapitalisation on banks’ earnings per share (EPS), some investors are picking up the stock of GTCO and reinvesting dividend at current price.
For instance, GTCO’s shares have gained 12.19 percent since the start of the year.
That compares to the year to date (YTD) of Zenith Bank’s (-1.94 percent); -United Bank for Africa (-13.06 percent), Access Corporation (-17.93 percent), and FBHN Holdings, (-15.07 percent).
At the current run-rate, analysts at Chapel Hill Denham believe that GTCO is still on the path to deliver double-digit EPS and ROE well above 40 percent in Full-Year 2024.
It appears the above target is a piece of cake for a lender that recorded 105.13 percent ROE in the first quarter of 2024. The lender delivered the largest earnings expansion among peer rivals in the country in the first quarter, and with an excellent strategy, it will continue to record strong earnings growth throughout the year and into the first quarter of 2025.
To strengthen its capital base and meet the new central bank’s capital rules, GTCO plans to raise N400 billion in a public offer.
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