Guaranty Trust Bank (GTBank), Nigeria’s biggest bank by market capitalisation, has posted a record N84 billion profit for the first six months and has attributed its improved performance to increased government lending.
Segun Agbaje, the Bank’s MD/CEO, had informed investors on the back of a positive 2016 result that the Bank would prioritize lending to the government in 2017 while scaling down lending to the private sector, which had become risky in past few years given the poor growth rates in many the economic sectors across the country. It was considered the Bank’s single strategy for the current year.
GTBank seems to have pursued this strategy with some vigour. An analysis from Nairametrics showed that interest income from mostly government securities more than doubled to N37 billion from N14 billion the year before. Non-loan (private lending) related interest income rose from about N20 billion to N53 billion and these were mostly related to government securities.
The Nigerian government has sold securities at rates as high as 19 percent since the turn of 2017.
Loans to private sector customers dropped from N1.5 trillion in December 2016 to N1.4 trillion in June 2017 while it increased investments in government securities to N515 billion, from N434 billion during the same period.
This strategy ensured the Bank reported a profit after tax of N84 billion for the first half of 2017, 17 percent more than what was reported the same period last year.