GTCO last week held an earnings call following the release of its audited FY 2024 results. Group CEO Segun Agbaje discussed a bunch of topics including the usual suspect. Why isnt the bank growing its loan book in line with peers. 

All quotes are from him 

On the quality of earnings of 2024 (Can we have an encore in 2025?)

Yes it was a high interest rate environment but I really dont think youd see anything significantly different in 2025. If you look at the total yield of assets (in 2024) it was 11.7%. I think we can do 11.7% again. Even though the interest rates might not be as high, i also don’t think they will drop to the point where the yield on assets of 11.7% will be difficult to do in 2025

Swaps are pretty much gone. Fair value gains will pretty much disappear in my opinion. I think we are ready for that. If you look at the fair value gains we made in 2024, we took provisions against them. Over a N100 and something billion. 

Most of the income that came in 2024 are from core earnings. If you look, you will see that interest income is up 144%. That is core.
Non funded income is up 27%. So when we look at that we believe the core business is strong  enough to deliver strong profitability, and we are not that worried about fair value gains

On the capital raise 

Objectives of the public offer were meet. So we wont say it wasn’t successful. We didn’t want chunky investments. We wanted it to be retail. That’s what we got. We got 200,000 investors. We knew we where going to do this in phases, We will do the next tranche of our transaction which will be more of institutional. 

On the POS space

The POS business we are going to go more aggressively into 2025. I think that the combination of the bank and Habari means that we have a good chance of dominating that. We really dont worry too much about someone that has a million POSs. If you have been following Nigeria, in terms of  POS charges GT is charging zero, because there are other lines of income

Between the bank and Habari, we are ready to take on the POS business. You will see that business become a lot more important to both entities in 2025. 

On loan growth

Everytime you look at the asset size, we also seem to concentrate on the loan book. When you look at the asset side, there are many levers we can play. When you look at investment securities, it grew 68%. If you take money market placements, it grew 108%. Which led to an interest income growth of 144%. 

We don’t fall in love with loans. We fall in love with earnings assets and play with that looking at the environment. We are very comfortable with what happened in 2024, If i were you, i’d rather focus on interest income growth which was 144%. 

In terms of asset growth and competition, we really are not worried at all. What we look at is scale. 

We will spend 2025 pushing more scale to the balance sheet. We will grow the balance sheet to meet the numbers we have set for ourselves

We are not into the game of one asset of the bank is bigger than other. As the results have shown, There is more than enough scale to bring profits from the balance sheet. 

On macros (interest rate and FX rate).

When i look at the macros in Nigeria, i think we are in a great place. If you are a corporate what you really care about is stability (of the exchange rate). There has been plenty of stability. You also care about liquidity (fx) and theres been liquidity.
Interest rates are not crazy. They are around 22, 24%. Thats good enough to business in a country like Nigeria when you look at the population and the ability to consume. 

So when you look at the macros in terms of interest rate and exchange rate, its very positive. 

Dividend payout ratio 

We paid out 61% of allowable profit after tax by the regulator. On that basis, you can continue to count on 60% of permissible PAT by the regulator. 

On East Africa

We are going to fix it. We are not going to fix it by taking all the 4 countries at the same time. We are going to focus on Kenya and Rwanda.

We are going to scale out. we re going to put better IT and better manpower. We are going to increase our branch network. It is impossible to scale up when you are working with 5,6 branches in big countries. We will try to get to the optimum number in  terms og branches and support it with tech. whereby we can start to unlock the value.

On lending to SMEs

As a person and as an organization, we are really big on SMEs. If you look at the asset side, it hasn’t grown but the deposit side is growing at about 12%. My belief is that to unlock that, you need to get to the point where if you lend to it, and there’s any diversion of funds to another bank or entity. You can pull the funds. Once you can do that you can reinvest the cash flows of SMEs and you don’t need physical assets. Watching that space very closely.