Group Managing Director of GTBank Plc, Mr. Segun Agbaje, in this interview with ABIOLA ODUTOLA, explains the importance of having easy access to loans by operators in the Small and Medium Enterprise. He also talks about the real sector, its benefits to the economy, as well as concerted efforts with Etisalat, towards rescheduling the telecoms company’s indebtedness to GTB. Excerpts:
Last year, you promised that your bank would grow its retail and Small and Medium Enterprise businesses for that year. But at the end of 2016, your SME deposit was only about 10.6 per cent and your risk assets in the sector were below two per cent. What is responsible?
SME is a sector we believe strongly in because we understand that any economy cannot grow without supporting SMEs; but it is also an area you don’t just jump into without understanding the parameters.
We are driving our participation in the sector because last year, we recorded about 1.5 per cent in terms of loan. Our participation will continue to grow but it will never become a large percentage because of the way our loan book is.
How is your loan book designed?
It is 72 per cent corporate. Our strategy is to ensure we give 10 per cent of our loan book to SMEs. It is gradual but we are optimistic we will meet our target in the next five years.
It appears that it is the banking sector alone that is making profit across other sectors of the economy. Critics argue that banks are not responsive to other sectors. The banks, they say, are not lending, especially to the real sector. What is your take on this?
I am not sure it is true that it is only the banks that are making profits in the economy. The reason it appears that way is that the banks are quoted companies and they have to publish their results. Operators in the fast-moving consumer goods, telecoms, oil and gas are also making profits because they feed on a population that is large and consuming.
Do you believe banks give adequate loans to the real sector?
Real sector differs from country to country. The real sector is where you have a competitive advantage as a country. In some parts of the world, you might classify building airplanes and ships as the real sector. So it depends on the comparative advantage a country has over others that determines what its real sector is and we believe we are lending to the real sector. About 72 per cent of loan are given to the real sector, while 10 per cent goes to the retail.
What is the update on the Etisalat loan; have you restructured it. If not, why?
Both regulators, Nigeria Communication Commission and the Central Bank of Nigeria are involved in the case. So as a bank, we are not saying too much about it. What I can say is that as at February 2017, Etisalat had met all its loan repayment requirements. Hopefully, with the guidance of the regulators, the bank and Etisalat will be able to conclude the restructure terms before the next loan repayment.
Your bank was strongly corporate oriented but now it’s tilting towards retail. What are the challenges of the new era?
For me, retail has been a blessing to GTBank. Five years ago when we started the retail campaign, we had only two million retail customers and today, we have over 10 million retail customers. It has kept us alive a n d strong. One of the challenges in the retail arm is the overcrowding of our banking halls. We hope more of our retail customers will avoid using the hall and rather, use other services like Automated Teller Machines, Internet Banking and Unstructured Supplementary Service Data banking, among others. We have been encouraging our retail customers that they should be part of the digital world and we believe that will be achieved in the next two to five years. Also, our 737 innovation, which is an account mobile application, has been working perfectly well.
A lot of bank customers are concerned about cybercrimes, as they see it as a threat to digital banking. What structures does your bank has in place to tackle the menace?
That should not be a worry to our customers because we are investing lots of money to address this challenge. We understand it is a grey area but the bank is doing all it can to guaranty security around its digital platforms.
Have you witnessed any breach of security?
The breach we have seen so far is about customers giving out their personal information details to third parties, which allows people to access their accounts.
GTBank is one of the few banks that reward shareholders twice every year. Is there any plan to change your payout ratio considering unforeseen circumstances?
I don’t see any reason in changing our dividend payout ratio for as long as you have enough capital and (our) capital adequacy today is over 18 per cent. So, for as long as capital adequacy remains that high, we are going to keep at that dividend payout ratio. We pay about 50 per cent of our profit to shareholders as dividend.
The dispute between the National Inland Waterways Authority and the Lagos State Waterways Authority must be resolved for things to further improve. They are both at each other’s throat over dues and levies and it is really affecting our business
What are your expectations in 2017, in terms of performance of the bank and reward of investors?
Given the significant progress we made in 2016, we came into the year better equipped to navigate any further economic headwinds, and our performance in the first quarter demonstrates our ability to deliver sustainable long-term growth. We remain committed to maximizing shareholders’ value and delivering superior and sustainable return, guided by our founding values of hard work, discipline and integrity.
What about your customers?
As we transform our organisation into a platform for enriching lives, we are providing our customers with information and access they need to thrive. We are also leveraging our brand and networks to support small businesses through free business platforms and capacity building initiatives.
