Time there was when banks flaunted their numerous branches as a measure of their size or bigness. Not so, anymore, at least for Guaranty Trust Bank (GTBank) Plc. The Managing Director and Chief Executive Officer of GTBank, Segun Agbaje, believes that expanding the branch network should not be done in isolation, but as is necessary to drive banks service delivery to customers.
Agbaje, who spoke over the weekend in Lagos at a forum with Business Editors, said the branch network is the most expensive platform for servicing customers, adding that in growing your branches, you should be careful not to put more branches that will increase cost and reduce profitability.
He said: “I do not believe that the solution to serving your customers better lies alone in increasing your number of branches. I believe that the solution lies in finding an optimum amount of branches that are supportive of your alternative channels, and that neither one by itself works, they need to mix together.”
Nevertheless, he said GTBank has lined up plans to add 45 branches this year to its existing 207 branch network.
While speaking on the direction the bank is heading in the 2013 financial year, Mr. Agbaje said GTBank is eyeing the East African axis. In his words: “The bank will continue its expansion in Africa. We would like to go to East Africa,” arguing that East Africa is more of an Economic Zone than most other parts of Africa. “Its always been there. There has always been a close economic relationship between Tanzania, Kenya and Uganda. They also have a sizable population, they are about 20 million. The GDP growth is very good and you also have good infrastructure. So I believe in my perspective, East Africa is a nice economic zone,” he added.
The GTBank helmsman, said the bank’s desire to explore the East African market does not mean that the indigenous market is being relegated to the background. He said Nigeria is where the bank makes most of its profit. “Nigeria is where I make most of my money. I don’t think the opportunities in Nigeria and East Africa are mutually exclusive. I think we will continue to pursue both,” Agbaje stated.
On mobile banking, Agbaje spared some kind words for the telecom operators who are clamouring to be co-players with the banks in the delivery of the service, He said as a money instrument, a banking licence would be required.
His argument: The mobile money banking network is a banking instrument. So if the telcos want to do mobile money, they have to go get a banking licence because you have to regulate the deposits and protect the depositors and the public. So its really not about the banks or the telcos. It’s about the process. If you want to run a banking product which has KYC (Know Your Customer) and has inherent risks, then to do that, you have to get a banking licence,” the GTBank boss, stressed.
He denied claims that the bank has restricted its partnership with the telcos to about one, or two operators. “We are partnering with all the telcos in our mobile money banking business,” he said, adding that “the platform we have built today is the one that allows us to partner with everybody, so we’re not restricting ourselves.”
He said in the few months that GTBank started the service, it has registered thousands of subscribers. He said: “We are already approaching about 100,000 active users, and we’ve only been at it for two months, and we are not despondent,” he said.
Agbaje painted a glowing picture of mobile money banking in the near future. His words: “But one thing I can assure you is that mobile phone is going to become a great focal point of banking, no matter how slow it starts. I see a situation that by 2015, there will be more mobile devices than we envisage, and the cheaper these handsets become, the more the penetration. That is where most of the banking is going to be done.”
He, however, acknowledged the associated challenges bedevilling mobile banking, saying: “We all know the telephone challenge, we have infrastructure challenge, I think we will get better, just as we have the ATM challenge. It will get better.”
On the power sector reform, Mr. Agbaje said banks have expressed sufficient interest in the sector. He said every bank has a power sector desk, adding that what is at stake, is whether the banks have the expertise to really understand the power sector. “We all need to move cautiously, it’s a good thing with strong initiative, and we will see how the first round of the privatisation goes, and we will see whether the money to back it is available. We are all moving with cautious optimism in that regard,” he stated.
Agbaje staved off suggestions that the bank might opt to buy, or acquire any bank, including any of the bridged banks. He said there was no remote possibility of such a union. As put it: “Our DNA is not best suited for acquisition. We’ve never married any other bank in our 22 years of existence, We’ve always been by ourselves, we’ll probably remain so.”
He underlined the relevance of the Credit Bureaux, saying any insinuation that their relevance has waned, is imaginary. “We are not allowed to give a loan without a credit reference from a Credit Bureau,” he said, adding however that there are challenges of identification. “One of the challenges that Credit Bureaux are having, is the fact that there are no credible means of identification. So even when credit reports come, they are not full proof because people change names. But the truth is, CBs are still very relevant, and you are not allowed, even by CBN regulation to avail a credit without having done a check on the company,” he explained, adding that adopting the bio-metric method will help advance the credibility of the process and make it a lot more robust.
Agbaje said GTBank’s doors are open to all without any ceiling whatsoever as to minimum balance. His words: “We don’t have a minimum balance. My take on that is, if people want to bunk, we should encourage them.”
He explained that the reality of where banking is going is that we are going to have frictionless internet banking which is a more robust social banking, and that coupled with strong ATM network, the need for such requirement is no more paramount.
He said GTBank will continue to leverage on its chosen sectors, which he listed as oil and gas, maritime, construction, the retail segment and telecoms to drive its business.
On the economy, Agbaje said Nigeria’s economy continues to enjoy a steady smooth, with the real Gross Domestic Product (GDP) averaging 7.1 per cent, adding that the growth in Foreign Exchange reserves which grew by 33 per cent in the review period, is expected to continue with the trend this year. He said the single digit inflation rate would prevail in 2013.
Agbaje said with a profit of N103 billion in 2012, GTBank is the first Deposit Money Bank in Nigeria to post over N100 billion in profits.
He listed Profit After Tax of N87.30 billion, representing an increase of 68.72 per cent; Return On Equity (ROE) of 33.98 per cent; Francophone expansion with GTBank Cote D’Ivoire and complete divestment from all Non-Bank subsidiaries as some of the major achievements of the bank in the review period.
Specifically, the bank came tops on Return On Equiity (ROE), posting 23.60 per cent in Nigeria and Africa, while it occupied the second position in BRIC (Brazil, Russia, India and China) and other peer countries.
Among its achievements are: Best Bank in Nigeria-Euromoney; Best Bank in Nigeria-World Finance, UK; Best Commercial Bank in Nigeria- World Finance, UK and Best Financial Institution Brand Award-EMEA Finance, UK, while Agbaje, the CEO, was voted the African Banker of the Year by African Banker.
