In apparent cautious move, Guaranty Trust Bank intends to return on loans growth path in 2022 financial year after a significant slowdown it registered in 2021. The bank intends to expand its loan books by about N180 billion or 10 percent growth rate in the current financial year.
The bank’s loans and advances to customers closed at N1.8 trillion last year, compared to the N1.66 trillion in 2020, about 8.0 percent growth which was slower than the 10.7 percent growth it recorded in the COVID-19 dominated period of 2020.
The Managing Director of the Guaranty Trust Holding Company Plc, GTCO, Mr Segun Agbaje, told a section of the financial media last week that the bank was constrained from giving more loans last year by two main reasons, macro-economic headwinds and regulatory restrictions.
But he admitted that the bank could have increased its income from more loans to compensate for the general decline in interest margins in the industry during the period if not for these challenges.
He expects that the environment would improve in the current year while also informing that the re-organisations in the bank would enable it turnout response strategies against whatever headwinds may bring against the industry during the year.
He stated: ‘‘We couldn’t grow the loan book more. If you grow the loan book, gentlemen we all live in this country and things are though. Businesses are going through though times.
“Individuals are going through though times. If you grow your loan book aggressively, you are going to pick up non performing loans in the future. It is a time to be careful about loan growth.
“If not you will cough up the money into the future. Therefore, we maintained our conservative stands. ‘‘Of course we know we can make more interest income.
“We just book the loans, make interest income, but we may have to cough it up next year.
‘‘So, yes we can grow the interest income, but we need to be careful as the macro environment is improving we will ramp up the loan book.’’
The bank’s loans impairment charges literarily crashed in the 2021 financial year by 56 percent to N8.5 billion from N19.6 billion in 2020.
On the regulatory restrictions, Agbeje mentioned that over 60 percent of the bank’s cash were tied down in Cash Reserve Requirement, CRR, during the 2021 financial year, a situation which denied it the huge resources for trading and further income.
He stated: “CRR is not unusual. Right now, Ghana just went to 12 per cent. It is the quantum limit. I think our quantum is too high and we should bring it down.
“The thing about CRR, if you release it to us we don’t even have to put it in Treasury Bills. We can actually put in loans to customers, to grow the economy. We also earn income rather than the zero earnings in CRR; We can put it in retail loans even if we lend at 10 per cent, which means our profitability will go up.
‘‘My believe is that ultimately in at some point we are going to have to reduce the level of CRR. CRR is a monetary policy tool that is available to Central Bank and you are allowed to use it to control the liquidity in the system.
“The only thing you will find that the banks might complain about or reason about is the level of the CRR.”
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