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Published On: Sat, Jun 3rd, 2017

GTBank: Improved Stock Returns On Back Of Good Run

(Independent Newspaper) GT Bank stock has been on the upswing in the last six months, defying the recession and portfolio investors’ apathy to the Nigerian economy. First quarter financial results released April provides insight to the growing share price even as it fuelled a further rise.
The stock holders have had capital appreciation of 9 percent in the last six months beginning November 1, when it sold for N23.68. Friday’s price of N35.28 represents a 71.18 percent change in the last 12 months. But relative to the market, the bank has outperformed in the last six months by returning 60 percent to investors compared to 15 percent return by the All Share Index (ASI). It also outperformed peers, Zenith Bank and Access Bank, in the period with returns of 40 percent each in the period.
Trading at 6.84x multiple, analysts believe the stock is overvalued and forecast a median price of N30.01 although they maintain that the stock will outperform the market. Analysts polled by the Financial Times say “as of May 26, 2017, the consensus forecast amongst 15 polled investment analysts covering Guaranty Trust Bank Plc advises that the company will outperform the market. This has been the consensus forecast since the sentiment of investment analysts improved on Jul 07, 2015. The previous consensus forecast advised investors to hold their position in Guaranty Trust Bank Plc.
“The 14 analysts offering 12 month price targets for Guaranty Trust Bank Plc have a median target of 30.01, with a high estimate of N35.00 and a low estimate of N21.52. The median estimate represents a -14.95% decrease from the last price of N35.28.”
First quarter results validates the sprint of the share price with interest income jumping 50.6 percent to N80.11 billion from N55.8 billion in the period. This jump, along with sundry factors pushed the bank’s bottom line 62 percent better than the equivalent period in 2016.
Relative to interest income, Interest expense rose at a weaker rate of 19.6 percent to N17.98 billion from N15.04 billion to propel net interest income to a much more comfortable position at N66.13 billion from N40.8 billion. The rise helped improve net interest margin to 2.56 percent from the previous position of 1.53 percent. It means the ability of the bank to wring out profits from interest bearing assets is better relative to the previous quarter.
After providing for impairments and operating costs, the bank improved pre-tax profit even if fee and commission income dropped a few notches in the period. Pre-tax profit grew 64.3 percent to N50.4 billion from N30.68 billion. Despite paying N8.9 billion in tax compared to N5 billion paid earlier, net profit shut up to N41.48 billion from N25.61 billion, a 62 percent rise.
Rising profit ensured improved return on assets to 1.31 percent compared to 0.82 percent of the equivalent quarter. The rise was despite a lower loans deposit position of 77.7 percent compared to 80 percent made earlier. This was largely fuelled by rising deposits and dwindling loans position. Loans were down 1.7 percent to N1.56 trillion from N1.59 trillion while deposits inched up 1.28 percent to 2.01 trillion from N1.9 trillion.
The bank’s loans to assets ratio also dropped in the period to 49.4 percent compared to 51 percent to indicate a lower credit risk in the period under review.

Year on year Guaranty Trust Bank PLC grew revenues 37.36% from N301.85bn to N414.62bn while net income improved 33.10% from N98.68bn to N131.34bn. Based on the performance, the bank was named the African Bank of the Year at this year’s African Banker Awards.
Commenting on the awards ceremony, Publisher of African Banker Magazine; Mr Omar Ben Yedder said “In the year under review, GTBank demonstrated positive results across numerous indices, including a strong balance sheet, growing customer base and a continuous regional expansion.

According to him, “the bank is at the forefront of innovation through simple and accessible digital banking platforms, which allowed it to gain 10 million customers who have long been excluded from banking.

Receiving the award on behalf of the Bank, Segun Agbaje, Managing Director/CEO of GTBank said: “We are honoured to be recognized as the best bank in Africa by a globally renowned and well respected magazine. This award is an affirmation of our commitment to creating sustainable value for our customers, shareholders and the communities in which we operate.

Culled From Independent Newspaper

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