By Milcah Tanimu
Guaranty Trust Holding Plc (GTCO) is gearing up to seek shareholder approval in the upcoming month to raise a substantial sum of up to $750 million in capital. This strategic move mirrors similar endeavors by other banks aimed at fortifying capital reserves to meet newly set regulatory benchmarks.
The Central Bank of Nigeria recently introduced minimum capital requirements for banks, underscoring the importance of reinforcing the country’s financial stability and empowering lenders to play a more significant role in fostering economic expansion.
In line with this directive, Guaranty Trust Holding Plc, the parent company of Guaranty Trust Bank, one of Nigeria’s premier financial institutions, announced its intention on Friday to seek shareholders’ consent for the capital raise at a meeting scheduled for May 9.
Other major players in the Nigerian banking sector, such as Access Holding and FBN Holdings, have also disclosed their plans for capital augmentation in recent weeks.
With over 20 banks in Nigeria expected to shore up their capital reserves within the next two years to meet the central bank’s revised standards, this initiative underscores the nation’s ambitions for economic growth.
In response to the evolving economic landscape, Guaranty Trust Holding expressed readiness to explore various avenues, including issuing shares or bonds domestically or internationally, to secure the necessary funds.
Despite this proactive stance, shares of Guaranty Trust Holding experienced a decline of 8.70%, closing at N42, underperforming the broader banking sector, which traded flat on Friday.
Financial Performance Highlights
Nairametrics reported robust financial performance for the Group, with a significant increase in profit before tax, reaching N609.3 billion for the full year 2023, marking a remarkable surge of 184.5% compared to the previous year.
Key metrics such as the Group’s loan book and deposit liabilities witnessed substantial growth, reflecting a resilient balance sheet and strategic diversification. Total assets and shareholders’ funds closed at N9.7 trillion and N1.5 trillion, respectively, highlighting the Group’s strong financial position.
Although the Full Impact Capital Adequacy Ratio (CAR) remained robust at 21.9%, challenges persisted in certain areas, with the Cost of Risk (COR) rising to 4.5% due to adverse macroeconomic conditions.
Commenting on the results, Mr. Segun Agbaje, the Group Chief Executive Officer of Guaranty Trust Holding Company Plc, emphasized the resilience of the Group’s business model amidst the challenging operating environment of 2023. He underscored the significance of leveraging synergies across banking and non-banking verticals, alongside a commitment to innovation and customer-centricity, as key drivers of the Group’s success.