GTB plans to grow earnings from loan yields, ex operations in 2018

Guaranty Trust Bank (GT Bank), Nigeria’s second largest bank by branch network, plans to grow its earnings from loan yields and also from operations outside of Nigeria.

This was disclosed to BusinessDay on Tuesday, 14th August 2018, during the bank’s half year conference call with Chief Executive Segun Agbaje.

The bank expects to boost loans to compensate for a drop in yields from Treasury bills investments. It believes it can earn a yield of about 7-9 percent on loans compared with cash deposits in foreign banks earning 2 percent.

Agbaje said the bank would take $700 million to $800 million out of its placements with foreign banks and deploy that into loans.

“Since yields have come down on Treasury bills one’s protfolio is probobably down with about 400 basis points. We are going to try and lift some of our foreign placemnt which is yielding around 2 percent and move some of that to loans and the yield on loan shoudl be around 7-9 percent, that will increase the interest income.”

Meanwhile the bank’s loans fell 11 percent in the six months to June following a 9 percent decline last year, as compiled by BusinessDay.
The CEO said the bank plans to use some of its cash deposits to help grow its loan book by 10 percent by the end of the year after credit declined in the first half.

The bank also expects its subsidaries outside of Nigeria to account for about 20 percent of the business.
“We will put more effort on the East africa subsidaries becuase we would like for them to do better than they are doing and once we get the East Africa on the block then we will begin to look foward to the subsidary growth of about 20 percent,” Agbaje told BusinessDay.

Although he said at 12 percent profit, 15 percent loan and 18 percent of deposit, the subsidaries outside of Nigeria are perfroming as expected but they would still like for the East Africa to make more improvement.

The way the bank intends to achieve the growth of the East Africa subsidaries is by ensuring Kenya subsidary makes more profit while Uganda and Tanzania subsidaries’ losses will be tackled.

“Last year’s operation ouside Nigeria were 9 percent of profit and in the first half of 2018 are up 12 percent and our target is 20 percent,” Agbaje cited