Guaranty Trust Holding Plc (GTCO) is intending to seek shareholder approval next month to raise up to $750 million in capital.
This initiative aligns with the efforts of other banks to bolster capital reserves in order to meet new regulatory targets.
The Central Bank of Nigeria last month announced minimum capital requirements for banks to strengthen the country’s financial system and enable lenders to play a bigger role in boosting economic growth.
According to Reuters News, Guaranty Trust Holding Plc, which owns Guaranty Trust Bank, one of Nigeria’s top tier lenders, said on Friday it would ask shareholders for permission to raise the funds at a meeting set for May 9.
Access Holding (ACCESSCORP.LG), opens new tab and FBN Holdings (FBNH.LG), opens new tab have announced capital raising plans in the past few weeks.
More than 20 banks in Nigeria will need to raise extra capital within two years to meet the central bank’s new threshold.
Recommended reading: GTCO Plc releases 2023 full year audited result
Nigeria’s economic growth ambitions
The regulator has said lenders require extra buffers to support Nigeria’s economic growth ambitions, especially after two large devaluations in the local naira currency since June last year.
Credit ratings agency Fitch said on Wednesday that it expected a marked increase in equity issuance by Nigerian banks over the next two years and also mergers as some mid-sized or small lenders could struggle to raise capital.
Guaranty Trust Holding said it could issue shares or bonds in Nigeria or internationally to raise the funds.
Shares of Guaranty Trust Holding fell 8.70% to N42, underperforming the banking sector (NGSEBNK10), opens new tab which traded flat early on Friday.
Financial performance
Nairametrics reported that the Group reported profit before tax of N609.3billion for the full year 2023, representing an increase of 184.5% over N214.2billion recorded in the corresponding year ended December 2023.
The Group’s loan book (net) Increased by 31.5% from N1.89trillion recorded as of December 2022 to N2.48 trillion in December 2023, while deposit liabilities grew by 63.7% from N4.61 trillion in December 2022 to N7.55 trillion in December 2023.
The Group’s balance sheet remained well structured, diversified, and resilient with total assets and shareholders’ funds closing at N9.7trillion and N1.5 trillion, respectively.
Full Impact Capital Adequacy Ratio (CAR) remained very strong, closing at 21.9%, while asset quality was sustained as IFRS 9 Stage 3 Loans improved to 4.2% in December 2023 from 5.2% December 2022. However, Cost of Risk (COR) closed at 4.5% from 0.6% in December 2022 owing to worsening macros which caused significant increase in ECL variables.
- Commenting on the results, the Group Chief Executive Officer of Guaranty Trust Holding Company Plc, Mr. Segun Agbaje, said: “The challenging operating environment of 2023 truly tested the business model we put in place for the Holding Company, for both our banking and non-banking business verticals. Harnessing the Group’s synergies yielded a strong performance, allowing us to strengthen our foothold in banking whilst also building viable and resilient businesses of HabariPay, Guaranty Trust Fund Managers, and Guaranty Trust Pension Managers. Also important to our success is our relentless obsession with innovation and offering great customer experiences as demonstrated by the successful redesign and upgrade of our mobile banking application, GTWorld.”
Recommended reading: GTCO reports record N539.6 billion profit in 2023
