GTCO Is Taking A Careful Approach To Its Loan Growth.

According to Segun Agbaje, the CEO of GTCO Plc, the company has decided to be careful about its loan growth in 2022 due to macroeconomic challenges that have led to increased credit risk in all jurisdictions of operation, particularly in Nigeria.

Agbaje, who disclosed this recently at GTCO’s investor and analyst conference, was commenting on the group’s audited financial results for the year ending December 31.

The results showed that the Group’s total loans grew to N1.886 trillion in 2022, representing about 5 per cent YoY growth, which is below its 2022 guidance.

He stated that Nigeria is still the primary source of loan growth, but the Group is cautious about loan growth in Nigeria due to the challenges in the environment.

Agbaje said, “In terms of loan growth, Nigeria is still where the loan growth is still going to come from. We are always very careful even about loan growth in Nigeria because we still believe there are challenges in the environment.

“The loan growth is what we do in terms of deposits and one pulls the other. There is no point in us going with 25 per cent deposit growth if all we are going to do is packaged it into CRR or special bills. So we grew the deposit by 12 per cent and grew the loan book by 5 per cent in Nigeria because that is what we saw in Nigeria. In terms of Ghana, we are not going to change… We are not going to be long.”

In addition to the loan growth strategy, GTCO also faced margin compression due to the low yield environment seen in 2022, which could not outpace the cost of funds.

“The Group grew its Investment Securities Portfolio by 9.5 per cent (N124.2 billion) to N1.435 trillion from N1.311 trillion during the same period but this did not translate to the desired revenue, owing to the sub-optimal yield environment that pervaded Nigeria, Gambia, Kenya and Cote D’Ivoire.

The Group is optimistic that 2023 will present a better net interest margin than 2022, especially in Nigeria due to the expected higher fixed-income yield environment and the Cash Reserve Requirement (CRR).

While shareholder return, quality service delivery to customers, and the firm’s value are essential, the Group posted a Pre-tax Return on Average Assets of 3.6 per cent and a Pre-tax Return on Average Equity of 23.6 per cent despite the muted net interest margin/loan growth and challenges in the operating environment, which had negative implications for individuals, households, and businesses.

The Group’s share price has gained 8.70 per cent this year YtD as of the last trading day in April 2023, in contrast to last year, which saw the share price lose 11.54 per cent of its value as of the close of trading on December 31, 2022.

Previous post From May 1, MultiChoice Nigeria Plans To raise The Prices Of DStv Subscriptions.
Next post Aviation: Sirika Insists On Demolition Of Structures Aviation Agencies Building, Dares Unions

Leave a Reply

Your email address will not be published. Required fields are marked *