GTCo advocates reduced CRR, challenges Fintechs on transparency

The Group Chief Executive Officer (GCEO) of the Guaranty Trust Holding Company Plc (GTCo), Segun Agbaje has decried the increase in Cash Reserve Ratio (CRR), which he said has further made things difficult for banks.

The implication of the high CRR for Nigerian banks, he said, is that money that would have generated more interest profits is being held with the Central Bank of Nigeria (CBN).

Agbaje also assured that the completion of its restructuring into a holding company structure, will take it beyond current valuation.

While he disclosed the plan of the company to update its banking software this year to a friendlier and more adaptable platform; he mentioned that it will also be publishing what its payment company does quarterly. “We are going to create transparency in the Financial Technology (FinTech) industry that doesn’t exist.”

The GCEO also during the session with journalists, decried the rising energy cost, particularly, diesel, saying, the bank has reduced its physical branch operations from about 6pm to 4pm daily in a bid to save cost.

Agbaje also decried the costs of data, advocating its reduction in order to encourage financial inclusion, adding that the costs of data is too punitive for penetration.

He said GTCos subsidiaries will come good sooner than expected insisting that there is no quick fix. He predicted that the group’s profit before tax will hit N243.5b at the end of 2022 from the 2021 figure of N221.5 b.

Speaking further on its holdco structure, he said the group will be very transparent in everything it does.

“I am going to promise you something today that doesn’t happen often in the industry. None of the Fintechs publish their financials, we are going to publish every quarter what our payment system does. We are going to create transparency in the Fintech industry that doesn’t exist. Today, we don’t know what their valuation is based upon, we don’t have their numbers. We will show our financials every quarter going forward, “he said.

On its loan book growth, he said the bank decided to take a slow approach because of the macro economic conditions in the country.

“We can grow the loan book more but like I said, if you grow the loan book, we all live in this country, the macros are not very strong and businesses are going through tough times. If you grow your loan book too aggressively, you are going to pick up Non-Performing Loans (NPL) in the future. It is a time to be careful about loan growth, otherwise you will cough up the money in the future. We know we can make more interest income, just book the loans, make the interest income this year and then cough it up the next year, “he said.

Also, he assured that the bank will bring down its non-performing loans to below six per cent,

“But there is no point deceiving ourselves, there are some loans banks call a watch list, for us, if we know that the watch list might crystalise we take the provision and then if we are able to recover it, we reverse the NPL. So, what you see is a very aggressive stance, the other bank that does that in this industry is Stanbic. Rather than be obsessed with 5 percent NPLs, we will rather deal with the issues we have and then reverse them subsequently.

“Yes, we can grow the interest income but we need to be careful. As the macro economic environment improves, we will ramp up the loan books because every probability of NPLs would have gone down.”

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