The Guaranty Trust Bank has embarked on initiatives meant to bolster its deposit base and gross earnings, two areas where it currently lags behind its key competitors.
First, it has doubled up on branch establishment as way of widening its dragnet for cheap funds, especially in major commercial areas of Lagos and other states.
Two, it has just extended its banking hours to 5pm, from the 4pm closing hour for virtually all other banks. This is seen by banking observers as a direct response to the banking needs of merchants which businesses c lose between 6pm and 7pm.
Sources are well-informed about the inside happenings in the bank said that the bank was not mindful of the fact that it cannot maintain its top tier performance over time without expanding its deposit holdings to within the precincts of what both Zenith Bank of Nigeria Plc and First bank of Nigeria Plc is holding.
In 2012 operation, GTB lagged far behind its peers in deposit mobilization or accretion.
First Bank was top on this criterion with a deposit base that is more than twice that of GTB Bank. First Bank’s deposits ended the year at N2.4 trillion as against N1.16 trillion by GTB. Zenith Bank’s deposits at N1.93 trillion also came close to doubling that of the bank.
This reflected in gross earnings as both First Bank and Zenith returned stronger gross earnings at N360 billion and N307 billion respectively as against GTB’s N170.3 billion. This means that again First Bank’s gross earnings, just like deposits, more than doubled GTB’s, while in the same vein Zenith Bank came barely short of doubling it.
That means that GTB bank literarily clambered the steep incline of top three ranking in profitability basis by sheer stringent cost-containment and windfall earnings. The bank’s profitability in the year was helped by a huge drop in provisions for credit losses, which fell by 96% from N20.68 billion in the preceding year to just N836 million in 2012. Specifically, it enabled the bank transfer such cost-savings windfall directly into profit.
Another factor which helped the bank achieve strong value delivery in the year under review is its shrewd cost management. Operating costs came in at 10 per cent growth as against 22 per cent by gross earnings.
‘We all know that GTB is a very good in cost efficiency and value creation. They just good at that. But there is limit to where that can take them if it does not expand its deposit base. I believe that the management is already taking steps to address the issue,’ one of the sources said.
The source said that the bank has in addition to establishing branches strengthened its marketing department to reach out more aggressively to customers and potential customers.
‘They know that the middle market is one fertile ground for cheap and quantum deposits. With the goodwill they enjoy, especially in the Lagos market, the management of the bank believes it can effectively bridge the gap. It has been a question of striking a strategic balance between costs and the generating more deposits and in concomitance earnings too,’ one of the sources told our correspondent.
GTB has just opened branches at Coker to cater for the Oduade Market, another at Odolowu in Ijesha, along Apapa-Oshodi Expressway to cater for the high volume transactions from the many commercial warehouses in that area. It was learnt that it is also planning another branch at Aguda, which has become a very successful banking zone.
Both Zenith and First Bank have enjoyed tremendous patronage in their Aguda branches, where about nine leading banks, including Fidelity, Keystone, Ecobank, Stanbic IBTC, Access Bank and Union Bank have already opened shop.