Nigeria’s Biggest Bank Eyes Retail Clients Amid Forex CrunchBy
GTBank sees loan growth rising up to 10 percent this year
Looking to East African country for expansion in 2016
Guaranty Trust Bank Plc, Nigeria’s largest lender by market value, said it will target retail customers and small- to mid-sized companies for growth as a plunge in oil prices and foreign-exchange restrictions limit opportunities in the West African nation.
“I am big on growing retail right now,” Chief Executive Officer Segun Agbaje said in a Feb. 17 interview at the bank’s corporate headquarters in Lagos. “I love the fast moving consumer goods industry." Households go back to buying the basics, like food, during an economic downturn as they focus on “wasting less money,” he said.
Nigerian banks may limit their exposure to oil companies in the continent’s biggest producer and could also reduce loans to the government, according to Agbaje. As a scarcity of foreign-exchange limits the import of goods and services, there will probably be "some slow down in the corporate business,’’ he said.
The bank’s strategy, “is the way to go for any lender” to ensure it doesn’t wipe away capital and profit, Taiwo Yusuf, a Lagos-based analyst at Meristem Securities Ltd., said by phone. “It is okay to consider which companies have adequate import substitution or have their raw materials in the country” to limit risks, he said.
Africa’s biggest economy is reeling from a slump in oil prices, a source of about two-thirds of government revenue and 90 percent of foreign-currency earnings. The central bank’s efforts to all but fix the naira against the dollar for the past year by restricting foreign-currency trading by banks has caused a shortage of dollars, hampering companies from expanding or accessing imports. Growth is estimated to have slowed to 3 percent last year, the lowest since 1999, according to Nigeria’s statistics agency.
Guaranty Trust is predicting “a better 2016” as the company pushes to boost growth in its loan book to a rate of as much as 10 percent from 7 percent in 2015, while keeping non-performing loans at below 5 percent, Agbaje said. The lender plans to save about $10 million in interest costs after paying back a $500 million bond due May 19.
Net income expanded 13 percent to 75 billion naira ($378 million) in the nine months through September, while revenue rose 15 percent to 229 billion naira.
Guaranty Trust plans to expand to an additional East African country this year, Agbaje said, declining to be more specific. The bank is currently operating in Kenya, Rwanda and Uganda as well as in six other countries outside of Nigeria.
Guaranty Trust Bank shares rose 1 percent to 16.87 naira at the close of trading in Lagos, valuing the lender at 497 billion naira. The shares are down 7 percent this year compared with a 15 percent decline by the Nigeria Stock Exchange All Share Index.
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