1. Guaranty Trust Bank Plc.
GTBank has always been a favourite for investors right from their first IPO in 2004, at
an initial share price of N10.00. Since then, the banking stock has consistently given
back to shareholders twice every financial year. Before the financial crisis in 2008,
GTBank could boast of giving out share bonuses at least every two years.
So what makes GTBank tick and what winning strategy has the firm put in place to
emerge as Nigeria’s largest lender by market value? I will attempt to answer these
questions in this article. GTBank provides commercial banking services which include
retail banking, granting of loans and advances, equipment leasing, corporate finance,
money market activities and allied services as well as foreign exchange operations.
The bank’s only subsidiary is involved in funds and portfolio management services.
The banking stocks are the most liquid on the Nigerian Stock Exchange and yet
remains the most volatile. I have picked this stock as a darling for this period and in
this article, I would throw more light on the facts behind the figures and the reason(s)
backing an investment decision regarding this stock. One should not just purchase a
stock without concrete fundamentals backing investment decisions.
The following are some fundamentals one may consider:
• Brand
• Experienced Management Team
• Profit
• Core business sustainability
• Ethics
• Corporate social responsibility (CSR)
• Capital / Cash

2. 2
The latest financial report (Q3) from the bank, though unaudited, may give some
insight into what to expect at the fiscal year end. From this report, we will look at
specific accounts and compare with the previous fiscal year.
NET INTEREST INCOME (Core business)
NIM grew by 11% from N120.1billion in September 2015 to N132.7billion in
September 2016. Total performing loans stood at N1.64trillion for the period Q3 2016
as against only N70.8billion, which were non-performing.
NON-INTEREST INCOME
Rising from N54.6billion in September 2015 to N147.4billion in September 2016, NII
grew by 161%. The growth was due largely to the foreign exchange revaluation gain,
which grew from N6.7billion in September 2015 to N93.6billion in same period in
2016. I believe NII will have a moderate growth in Q4 2016 as FX rates tend to
stabilize.
FEE AND COMMISSION INCOME
E-banking income accounted for 45.8% of total fees and commission in Q3 2016. With
the CBN ban on use of Naira debit cards abroad, the bank still has other e-banking
services such as the innovative *737# short code service for which the bank was
recognized as ‘Best Digital Bank in Africa’ at the 2016 Euromoney Awards in London
recently. This has prompted customers to open new domiciliary accounts to be able to
use the currency denominated debit cards.
DEPOSITS FROM CUSTOMERS
Deposits grew by from N1.61trillion in September 2015 to N2.04trillion in September
2016. Current deposits accounted for 54.3% of deposits at N1.11trillion as compared
to 24.5% and 21.2% for term deposits and savings respectively. As stated above,
though a moderate growth is expected in NII, the bank will continue to enjoy streams
of income from fees and charges.
INTEREST EXPENSE
Total interest expense reduced by 7% from N52.8billion in September 2015 to
N49.1billion in September 2016

3. 3
OPERATING EXPENSE
A moderate growth was seen at 8% from N73.8billion in September 2015 to
N79.9billion in September 2016
PROFIT AFTER TAX
PAT grew by 60% y/y to N119.9billion in September 2016 and grew by 54.7% m/m
from Q2 2016. GTBank’s PAT of N119.9billion is the highest so far, in the banking
industry with N100billion, N57.1billion and N52.3billion from Zenith Bank, Access
Bank and UBA respectively recorded in the same period.
EARNINGS PER SHARE
Weighted average number of ordinary shares in issue stands at 28.1billion, therefore,
basic EPS stands at N4.24 for Q3 2016. The Group does not have any dilutive
potential ordinary shares; hence, basic EPS and diluted EPS for continuing operations
are the same for the Bank. This EPS grew by 60% y/y. An annualized EPS of N4.00+
seems feasible for year-end barring unforeseen circumstances.

4. 4
SHAREHOLDER’S RETURN (Dividend)
The bank has already paid an interim dividend of N0.25kobo in Q2 2016. Current
reports suggest the bank may likely pay better than a final dividend of N1.50 at the
last fiscal year.
KEY RATIOS Sep-16 Sep-15
Net Interest margin 8.79% 8.22%
Cost-to-income ratio 36.20% 44.51%
Loans-to-Deposits 80.27% 80.07%
Liquidity ratio 37.62% 43.95%
Capital adequacy ratio 18.10%* 20.76%*
NPL/Total Loans 4.13% 3.16%
* Regulatory benchmark is 15%
So looking at the analysis above, the bank got it right from the start. So you can
confidently answer this question: is GTBank a good buy?
Written by Jonathan Ojesebholo B.Sc., MBA

5. 5
PROFILE OF THE WRITER
Jonathan is a financial analyst, a young cheerful professional with a first degree in
Biochemistry and an MBA from the prestigious Lagos Business School. He likes to read
extensively and is currently learning a foreign language. When he is not poring over
reports, he plays basketball and enjoys listening to favourite genre of songs. He hails
from Edo state and is the last born in the family.