GTBank in acquisition talks with Kenyan lender in continent-wide expansion drive

• Awaits regulatory approval to transition into financial HoldCo by H1 2021

Charles Abuede

Nigeria’s biggest lender, Guaranty Trust Bank, has entered into discussions to acquire a Kenyan lender as part of its expansion on the continent, according to Segun Agbaje, the bank managing director.

It can be recalled that in early November 2020, the bank disclosed that it had obtained the Central bank of Nigeria’s approval-in-principle and has also received the “No-objection” of the Securities and Exchange Commission (SEC) in connection with the proposed scheme to proceed with the formal process of the banks restructuring into a financial holding company (HoldCo).

Sources closed to the bank have revealed that the move will place the bank in a position for profit generation from several subsidiaries as core banking, asset management, among others with a view to further expand its footprint into becoming a large holding company after its restructuring plans gets underway.

According to the bank managing director and the chief executive officer who gave the hint on this week during the investor call on Tuesday in Lagos, said Kenya is a potential market to expand its base across the continent but didn’t give a time line for the acquisition.

“I think the place we will still like to do business or do an acquisition is Kenya.”

Similarly, as part of the banks; growth trajectory following its restructuring plans into a financial holding company this year, Segun Agbaje said during the investor call that: “It targets 10 per cent growth in the loan book this year and pre-tax profit of 243 billion naira from 238.1 billion naira.”

Furthermore, a recent look into the banks’ full year 2020 audited financial statement filed to the local bourse last week, East Africa was the best performing region with a 14.8 per cent year on year soar in revenues to N19.187 billion, supported by an 8.4 per cent year on year growth in the Rest of West Africa to N68.0 billion, offset by a 42 per cent decline in revenue to N4.8 billion from Europe region. Nigeria accounted for about 80 per cent of revenues and climbed 4.5 per cent to N363.2 billion in FY20.

Also, it reported a 4.6 per cent year on year robust growth in its gross earnings to N455.2 billion for the full-year 2020 in the face of the pandemic from N435.3 billion reported in full-year 2019 and was principally driven by a 37.7 per cent year on year squirt in other income offset by a decline in interest income on cash and cash equivalent and a 14.8 per cent drop in the bank’s fee and commission income.

Further afield, the Lagos-based tier-1 lender has also revealed that it wants to increase the contribution of African subsidiaries to the bank’s income to about 30 per cent of profit-before-tax in the next three years from 15.3 per cent in 2020. Meanwhile, the bank boasts of operating offices in 10 different countries outside Nigeria which is inclusive of Kenya.

However, Nigerian banks are expanding on the continent just as seen with the likes of United Bank for Africa (UBA), Access Bank which acquired one of the biggest lenders in Kenya last year and matching its footprints in the eastern African region, and diversifying outside their core operations as they seek to grow after the global health pandemic and two contractions in the nation’s output growth in four years shuttered businesses and limited lending opportunities at home.

Elsewhere, Guaranty Trust Bank is expecting approval by the Nigerian regulators for a move to transition into a financial holding company in the second half of the year 2021, which will enable it to start payments and asset management units.