Guaranty in Nigeria Gains Most in 5 Weeks on Expansion

Guaranty Trust Bank Plc (GUARANTY), Nigeria’s biggest lender by market value, gained the most in more than five weeks after announcing plans to expand operations in Africa to grow its loan book.

The stock climbed 2.6 percent, the most since Feb. 14, to 14.52 naira by the 2:30 p.m. close in Lagos.

Guaranty will start its operations in Ivory Coast, the world’s leading cocoa producer, in May, Chief Executive Officer Segun Agbaje said on a conference call yesterday from Lagos. The bank plans to expand into five to seven “high impact” African countries in five years, he said.

The bank plans to grow its loan book by 15 percent this year and achieve a return on equity of 25 percent, Agbaje said. Nigerian banks are starting to normalise lending following a contraction in credit after a crisis in 2008 and 2009 in which loans were advanced to speculate on the stock market. The central bank responded by firing the chief executives of eight banks, which did not include Guaranty, and took corrective action to bail out the industry.

Guaranty’s net income in 2011 surged to 52.65 billion naira ($334 million) from 38.35 billion naira a year earlier, the Lagos-based bank said in an e-mailed statement March 16.

The bank’s return on equity stood at 31.06 percent prior to the crisis in 2007, dropping to 13.64 percent in 2009 and recovering to 23.6 percent last year, according to data compiled by Bloomberg. This ratio measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested.

To contact the reporter on this story: Vincent Nwanma in Lagos at vnwanma@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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