Segun Agbaje, Managing Director, Guaranty Trust Bank Plc., at a recent media forum in Lagos, spoke about the Nigerian banking sector, his bank’s biggest achievements in the past years, and their plans going forward, among other issues.
Can you tell us how your bank has been surviving despite the recessionary atmosphere that prevailed in the past few years?
Well, we are barely out of recession, and despite the tough market conditions that characterised significant parts of the year, the underlying business fundamentals of the bank remained strong as reflected in the bank’s released audited financial results for the year ended December 31, 2017 to the Nigerian and London Stock Exchanges.
A review of the results shows positive performance across all financial indices, reaffirming the Bank’s position as one of the most profitable and well-managed financial institutions in Nigeria.
Gross earnings for the year grew by 1.1% to ₦419.2 billion from ₦414.6 billion reported in the December 2016; driven primarily by growth in interest income as well as e-payment revenues. Profit before tax stood at ₦200.2 billion, representing a growth of 21.3% over ₦165.1 billion recorded in the corresponding year ended December 2016. The Bank’s loan book dipped by 8.9%- from ₦1.590 trillion recorded as at December 2016 to ₦1.449 trillion in December 2017, while customer deposits increased by 3.8% to ₦2.062 trillion from ₦1.986 trillion in December 2016.
Sir, the financial result is unarguably impressive, what is your view on it?
I will agree with you that the financial result is impressive. Last year, 2017, was a pivotal year for the bank. Our team, no doubt, delivered a strong result in a challenging environment as you are not unaware that that the recessionary business atmosphere is gradually exiting.
Despite the unprecedented business atmosphere, we achieved record growth in earnings, carefully managed cost margins and leveraged our digital-first customer-centric strategy to deliver excellent services that are simple, cheap and easily accessible.
Not only that, the result demonstrates the fundamental strength of our franchise as well as the progress we are making in transforming our organisation into a platform on which our customers could build their businesses, connect with their consumers and access all the resources that they need to make their lives better.
GTBank has continued to report the best financial ratios for a Financial Institution in the industry as revealed by its Return on Equity (RoE) of 35.4% and cost to income ratio of 38.1% evidencing the efficient management of assets and operational efficiency.
Overall, the Bank has enshrined its position as a clear leader in the industry. In recognition of its innovation and hard work, the Bank received over 20 international awards in 2017.
You did mentioned that your organisation, GTB, is being transformed into a platform on which customers could build their businesses, connect with their consumers and access all the resources that they need to make their lives better. Does this imply that the adoption of digital platform is one of the reasons why the bank has been recording successes by each passing financial year?
Yes, it is. Digital technology has been helping us to remain a forward-thinking institution. The world is changing around us and the future of banking is digital. To protect our traditional business and maintain our social relevance, we are easily accessible on mobile phones with the use of data. In fact, we have created a platform to support our traditional business model by leveraging digital solutions.
As you are aware, GTBank’s Bank 737 provides banking services to millions of Nigerians who use mobile phones. They do not require internet access to perform basic banking services anyone. With a phone registered in Nigeria, anyone can open an account, transfer money, buy airtime or check their balance by dialling *737#. The convenience of Bank 737 lies in the fact that all of its services can be accessed through a customer’s mobile phone, at the dial of *737#. The ease which digital platform provides contributed to our sustained success over the years.
Some shareholders of your bank commended the management and board of directors of the bank for its teamwork and successes recorded in the 2017 financial year. As gathered by Daily Independent, the shareholders who spoke at the 28th Annual General Meeting (AGM) of your bank in Lagos also expressed joy for the declaration of N2.70 dividend per ordinary share of 50 kobo. Against the backdrop of their excitement, how do you intend sustaining the success record?
We are definitely poised to sustain our investment and stepping up our building of digital capabilities, and actively strengthening our collaboration with FinTech companies.
As you are aware, we have already gone beyond being a bank to becoming a platform that enriches the lives of all the customers that it serves. What we intend doing is to step up from where we are to another digital level.
As a platform for enriching lives, we will continue to transform our organisation into a business enterprise that is all about creating value for its customers. We will continue to provide our retail customers with the information and access that they need to make decisions. Not only that, we will continue to offer our financial capabilities to high end corporate institutions and in the same vein continue to leverage our brand and networks to support small businesses, and we will ensure that we continue to add value to our customers and develop meaningful relationships and partnerships. What all these strategies that I am revealing now translate to is that we will continue to put our customers first in everything that we do by offering a differentiated and personalised user experience.
As we continue to grow our digital services and take everyday banking services outside of the banking halls, we will continue to ensure that we create digital touch points to stay in touch with our customers.
We will constantly continue to engage with our customers across all digital and social touch points, as reflected in our dominance of the social media space. With over millions of followers on Facebook and more than a million followers on Twitter, we have the highest social media presence among African financial institutions. We are also available on Google+, Instagram, LinkedIn and Blackberry Messenger.
We will continue to build on the success of the Small and Medium Enterprises, (SME) MarketHub, which now has hundreds of storefronts run by small businesses. We will further strengthen our commitment to the SME sector by creating consumer-focused initiatives that will serve to boost their expertise, exposure and business growth.
It is. The Fair is our annual food exhibition and sales event that aims to project the diverse angles of the food industry by connecting various businesses involved in the production and sale of food related items to a cosmopolitan audience of food enthusiasts. It would be recalled that we held our first edition of the GTBank Food and Drink Fair in May 2016. It is a completely free business platform, with the aim of enhancing the exposure and sales of small businesses in the Nigerian food industry.
Similar project, GTBank Fashion Weekend, aimed at promoting small and medium businesses has been organised by the bank. It was targeted at unlocking growth opportunities for small businesses in the fashion industry. Both events have been unique as they were successful, with more than 200 small business retailers participating and over 50,000 guests in attendance. Through these events, we have been able to intervene in key economic sectors to strengthen small businesses whilst presiding over the unveiling of new ideas and the creation of business relationships.
Beyond our core business of supporting individuals and businesses directly, we continue to give back to the communities in which we operate through sustainable Corporate Social Responsibility (CSR) initiatives, which are motivated by our belief that creating a strong business and building a better world are both essential ingredients for long-term success.
In the area of Corporate Social Responsibility (CSR), your bank has remained on the forefront; what is your approach to this service to the people?.
Sustainability of CSR is firmly embedded in the formation of the bank. As a first-class financial services provider with an internal obligation to comply with international best practices, GTB has always ensured that its lending activities comply with international performance standards as well as applicable national economic, environmental and social regulations. This has helped us attract on-lending facilities from international finance institutions very early in our business.
Guaranty Trust Bank continues to build internal capacity in managing the economical, social and environmental aspects of its operations, guided by a comprehensive Project Sustainability Policy. We conduct environmental and social due diligence on major Credit requests, bench-marking against the performance standards of reputable international finance institutions. This process provides a firm foundation upon which we identify new opportunities to grow our businesses, and gain competitive advantage in the marketplace. These performance standards also ensure our conduct influences our customers and other stakeholders positively.
As our corporate strategic aspirations grow, we remain proudly African with an international outlook. We are committed to the creation of long term value for all our stakeholders by measuring not only the impact of our activities on the economies and communities where we operate but also the external environmental outcomes of transactions funded by our Bank. We will partner with our clients, customers, regulators and communities in analyzing our individual and collective economic, environmental and social risks with a view to avoiding or reducing adverse impacts.
Guaranty Trust Bank will continue to be transparent in its conduct and operations; learning and improving on our Sustainability journey. As we set stretch goals for our Bank over the coming years, we pledge to measure our successes through the prism of Sustainability.
Our Sustainability priorities are borne of various expectations arising from our stakeholders and ourselves.
Can you shed light on the projects you have executed under your CSR policy?
In 2016, we invested N450 million in our CSR intervention projects across the four major pillars of Education, Community Development, Arts, and the Environment, which, we believe, are essential building blocks for the society and prerequisites for economic growth.
We believe that quality education is an important pre-requisite for nation building and a fundamental right of every child irrespective of background, race or economic status. We continued to invest in our Adopt-a-School Programme to ensure that young people in our communities do not stop learning and developing capacity to make meaningful contributions to the society.
In 2016, we reconstructed 25 classroom blocks in Kano State, provided scholarships to 98 students across primary, secondary and tertiary levels. We also trained more than 870 students across the six geopolitical zones on financial literacy and provided sports education through football tournaments, for 763 secondary schools in Lagos and Ogun States.
Recently we embarked on a CSR project, which we simply named “The Dusty Manuscript”. With the project, we are looking for novels in the genre of fiction category, including but not limited to crime, romance, fantasy, sci-fi, mystery/thriller, etc that stretch boundaries creatively, culturally and socially.
We are committed to creating enduring partnerships for sustainable development whilst adding immense value to the diverse communities in which we operate. Corporate Social Responsibility is a key component of our business activities and to ensure optimum impact and sustainability, our CSR strategy focuses.
Sir, tell us the secret of your commitment to delivering exceptional financial services to your customers in the last one year, in the face of the rapidly changing market variables in the nation’s recessed economy?
One of the secret of our commitment to delivering exceptional financial is that at the beginning of 2016, we set out with two major objectives; to stay nimble in the face of rapidly changing market variables and to enrich the lives of our customers, communities and stakeholders.
We knew that the business environment in 2016 would be particularly challenging given the weakness of the naira, depressed oil earnings and inadequate supply of foreign exchange, all of which culminated in the eventual slide of the Nigerian economy into recession.
However, we played to our strength by leveraging technology, just as I said earlier, to deliver superior payment solutions, grow our customer base and enhance our service delivery channels to make banking with us simpler, faster and better.
Also, in the first quarter of 2017, knowing that challenges in our macroeconomic environment are likely to persist, we resolved to stay committed and positive, and with that delivered exceptional financial services to our customers, and adding value to all stakeholders.
With the repositioning of our business structures and significant investment in our digital abilities, we have remained confident in our capability to deliver differentiated products and services to our customers whilst enhancing cost-efficiency and reducing risk.
Ultimately, we understand that becoming a platform for enriching lives means building strong, value adding relationships with our customers, stakeholders and the communities in which we operate. We will continue to focus on strengthening these relationships in order to ensure long-term franchise value and deliver sustainable returns to our shareholders. This strategy, which has served us well in the past, and is serving us well in the present, we believe, will continue to serve us well into the future.