•Track records, higher dividends to support recapitalisation
Shareholders of Guaranty Trust Holding Company (GTCO) Plc, the holding company for Guaranty Trust Bank (GTBank), have expressed their readiness to support the company in realising its ambitious bid to raise some N1 trillion in new capital.
GTBank, which holds commercial banking licence with international authorisation, needs about N362 billion in new equity funds to meet Central Bank of Nigeria (CBN)’s new minimum capital requirement of N500 billion for its category of operations. GTBank has a share capital and share premium of N138.2 billion.
The CBN, in its circular on review of minimum capital requirement for commercial, merchant and non-interest banks, had increased the new minimum capital for commercial banks with international affiliations, otherwise known as mega banks, to N500 billion; commercial banks with national authorisation, N200 billion and commercial banks with regional license, N50 billion.
Others included merchant banks, N50 billion; non-interest banks with national licence, N20 billion and non-interest banks with regional licence will now have N10 billion minimum capital. The 24-month timeline for compliance started on April 1, 2024 and would end on March 31, 2026.
In the ongoing recapitalisation, CBN uses a distinctive definition of the new minimum capital base for each category of banks as the addition of share capital and share premium, as against the previous use of shareholders’ funds. While several banks have shareholders’ funds in excess of the new minimum capital base, their share premium and share capital significantly fall short of the new minimum definition. GTCO has shareholders’ funds of N2 trillion by the end of first quarter ended March 31, 2024.
Shareholders of GTCO said they would actively mobilise for the success of the group’s recapitalisation plan citing the group’s track records of growths over the years, reputation on corporate governance and dividends and other returns over the years.
National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Mr. Moses Igbrude, said the retail minority shareholders would support GTCO because of its records with the shareholders.
He urged shareholders to pick up their rights in the case of rights issue, while mobilising supports for new capital issuances by the group.
Igbrude, who leads one of Nigeria’s largest shareholders’ groups, noted that the company’s performance in 2023 was impressive, considering the situation of the country.
He pointed out that GTCO has been at the forefront of good corporate governance, urging the boardand management of the company to continue to run the business well in order to deliver good returns to the shareholders.
National Coordinator, Progressive Shareholders Association, Mr. Okezie Boniface, said GTCO would achieve successful recapitalisation due to its good track record of paying dividends.
He pointed out that the company’s performance in 2023 was excellent, with growth in its earnings per share of N19.70 and the company paying N3.20 per share dividend.
Shareholders of GTCO had last week at their Annual General Meeting in Lagos approved the company’s plan to raise $750 million.
The shareholders mandated the board to undertake any or a combination of public offerings, private placements, rights issues and other transaction modes.
Also, shareholders approved the payment of N94.179 billion as dividends for the year ended December 31, 2023, comprising of N2.70 per share final dividend and 50 kobo interim dividend paid last year, making a total dividend paid for the 2023 financial year to N3.20 per share.
Chairman, GTCO, Mr. Hezekiah Oyinlola, said after three years of reorganising and fitting the business verticals into a holding company structure, the group made the first wave of progress in its drive to broaden and diversify revenue streams and solidify standing as a leading financial services provider in Africa.
Oyinlola noted that “in 2023 the Group’s Balance sheet remained well structured and distributed with loans and advances accounting for 25.4 per cent in full year 2023, investment securities at 25.3 per cent in 2023 and placement 16.1 per cent in 2023. The Group grew its total Assets by 51.3 per cent to N9.8 trillion in 2023 due to increases posted on key asset lines including investment securities, cash & bank balances, loans and advances, and restricted deposits.”
He added that “beyond the bottom-line, we understand that building an enduring institution is also about the underlying drive to make a sustainable impact in the communities we serve and operate in.
“Through strategic initiatives and partnerships, we strive to address pressing social and economic challenges, enriching lives and fostering better outcomes for people and businesses across Africa.”
Group Chief Executive Officer, Guaranty Trust Holding Company (GTCO), Segun Agbaje stated that in spite of the varying challenges in the operating environment and headwinds that weighed on growth in 2023, the group delivered a strong performance posting a profit before tax of N609.3 billion representing a growth of 184.5 per cent from N214.2 billion achieved in full year 2022.
According to him, this result was on the back of impressive growth in gross earnings, increasing by 120 per cent to N1.186 trillion in the year under review, underpinned by the growth on funded and non-funded income lines.
He added that “our Nigerian banking operation accounts for 77.5 per cent of the Group’s profitability, West Africa constitutes 17.5 per cent, East Africa contributes 2.2 per cent, UK 1.9 per cent, and Non-Banking Entities make up 0.9 per cent.”
Responding to questions at the end of the meeting, Agbaje said the board and management of the company is happy at the performance of the company in 2023 financial year and promised that the company will do better in 2024 to continue with the tradition of upward trajectory already in place in the company over the years.
His words, “I think for us, it is a good result. We looked at the volatility in the environment and we balanced profitability with some conservatism. We are happy at how we ended 2023. For us, we have a tradition of increasing dividend, every year, so I can say categorically that in 2024, dividends will be up .Already, profit is up in the First Quarter of 2024, we have posted N509.3 billion, I think this is an indication that we will have bigger dividend in 2024.
“If look now, from outside Nigeria, we recorded 25 per cent to 30 per cent of the profit. We have also diversified geographically. We also have three new businesses which we started which are our PFA, HabariPay and our asset management company. They are already at one per cent of Group profit in one and a half years. I think our diversification away, both banking and geographically, is going on well.
“The next thing is to work hard and hopefully with the support of Nigerians we will raise the money”.
