“AMCON levy to last ten years as NPL’s to drop 4.6%” GTBank MD explains

…as shareholders unhappy over rising levy, NPLs

Adesola Afolabi

The management of Guaranty Trust Bank Plc has shed light on the controversial AMCON contributions made by financial institutions and assuaged shareholders on its rising non-performing loans.

According to Segun Agbaje, the Managing Director of GTBank, the AMCON contributions are to run for ten years, and can only exceed the duration by an act of legislation.

The AMCON levy was imposed on institutions in the country via a bill signed into law in 2010 as a sinking fund which initially represents 0.03 percent of these institution’s total assets, but has now been increased to 0.05 percent.

Shareholders at the company’s 28th Annual General Meeting, who expressed satisfaction over the proposed N2.70 dividend for the year ended December 2017, frowned at the rising level of the AMCON levy, which hit N13 billion as at December 2017.

Sunny Nwosu, National Co-ordinator for Independent Shareholders Association, and Timothy Adesiyan echoed the displeasure of shareholders over the AMCON levies, which according to them, the levy increases the company’s expenses and erode the dividend to be accrued to shareholders in terms of dividend at the end of the year.

They also expressed worry over rising Non-performing loans ratio which increased to 7.7 per cent violating the regulatory threshold of 5 per cent.

On the NPLs, Agbaje explained that the non-performing loans would moderate to 4.6 per cent, which is below the regulatory threshold as soon as a provision is excluded.

He said, “In terms of asset quality, NPL ratio increased to 7.7 per cent in December 2017 from 3.7 per cent in December 2016 largely as a result of classification of a single exposure within the Nigerian Telecommunication industry.”

Appraising the bank’s financial performance for the year ended December 2017, Timothy Adesiyan noted that shareholders are pleased with the growth of Capital Adequacy of the bank from 16 per cent to 25 per cent.

The Central Bank of Nigeria places a capital adequacy ratio minimum requirement of 15 per cent for top-tier financial institutions in the country.

In her letter to shareholders, Osaretin Demuren, Chairman of GTBank expressed optimism on the outlook for the year.

In her words, “We will continue to position ourselves to take advantage of the immense opportunities in all the markets in which we operate in order to grow our earnings, improve profitability and deliver returns to our esteemed shareholders.”

The strategies adopted by the bank in a tough operating environment characterised by recovery from recession proved rewarding as the bank recorded positive performances across all financial indices.

Gross earnings for the year grew 1.1 per cent to N419.2 billion from N414.6 billion reported in December 2016. Profit before tax stood at N200.2 billion representing a growth of 21.3 per cent over N165.1 billion recorded in the corresponding year ended December 2016 while the bank’s loan book dipped by 8.9 per cent from N1.590 trillion recorded December 2016.

Customer deposits increased 3.8 per cent, balance sheet remained strong with a 3.9 per cent growth in Total Assets while Return on Equity and Return on Assets closed the year in review at 35.4 per cent and 6.2 per cent respectively.