Loosing massive market values
At its peak on January 19, 2018, GTB traded at N54 per share or a market capitalization of N1.5 trillion. Since then ,things are longer at ease with this one time most valuable bank ..Guaranty Trust Holding began the year 2021 with a share price of 32.35 NGN but as at December,24, it had lost 20.4% off that price valuation, ranking it 141st on the NGX in terms of year-to-date performance .Currently , it is trading N25.20 per share and its current market capitalization is N551.72b .This is ,indeed, a serious down turn in terms of market value ,
And this is against the promise from the management . A look into the effusive laden so called promise, raises questions against its leadership . At the media briefing in 2020 when the then GT Bank MD/CEO Segun Agbaje was discussing the benefits of transiting to a Holdco, he was full of spirit and vitality, radiating energy and positivity ; he assured investors of a rewarding future. “I am delighted over the approval by shareholders for the holding company and I assure the investors of a more rewarding future. The bank will not embark on any share reconstruction, as the same number of shares they have with the bank will be maintained. Under the new structure, existing shareholders of GTBank would be migrated to Guaranty Trust Holdings via a share-for-share exchange between the shareholders of GTBank and GTHoldings.”
Agbaje explained that the overall strategy was to create an operating model that would profitably grow the bank’s presence in the market for commercial banking and non-banking financial services, in order to achieve the aspiration to be the dominant financial services group.
But none of these promises is yet to materialize as the bank navigates through the difficult waters of operating a holding company. During its 9 months interim results, the bank reported a 9% dip in pre-tax profits going from N167.3 billion to N151.9 billion. The major reason for this is a decline in its net interest income and a rise in operating expenses.
Nigeria’s most efficient bank, Guaranty Trust Holding Company, the owners of GT Bank has suffered an N80 billion loss in market valuation since it transformed into a bank holding company. GT Bank’s shares price was trading at N28 per share in the weeks leading to finally transforming to a holding company.
Since then, its share price has taken a nosedive ending the year with a 20% drop compared to the banking sector all share index which gained 10% during the year. The slide appears to have continued this year with the share price falling to N25.45 at a point towards the end of the year 2021 . In fact, the bank shares fell to a year low of N23.9 in December before rallying to N26 in December. Return vs Industry: At -23 % GTCO underperformed the Nigerian banking industry which returned -1.5% over the past year; it also underperformed the Nigerian Market which returned 2.8% over the past year.
Guaranty Trust Holding’s ,GTHO , stock lost 20.4% YTD as at December 2021 .Guaranty Trust Holding began the year 2021 with a share price of 32.35 NGN but has since lost 20.4% off that price valuation, ranking it 141st on the NGX in terms of year-to-date performance
At its peak on January 19, 2018, GTB was trading at N54 per share or a market capitalization of N1.5 trillion. In the same period, Zenith Bank was trading at N33 per share valued at just over N1 trillion. During the Covid-19 bull ride of late 2020, GT Co shares recorded a resurgence after its share price rose to as high as N36 taking it to over N1 trillion.
The bank has now lost over N250 billion in market value since November 2020. Data also reveal its price to book ratio is now firmly below 1 for the first time in years
Now ,GTB current market capitalization is N551.72b ,indicating the bank has suffered a colossal loss in value in the last three years . At the current price per share of N25.2 some analysts noted that the share is trading below their estimate of fair value of NGN48.92 saying it is trading below fair value by more than 20%. At its last price of N25.50 which translates to a market capitalization of N800.6b ,Zenith Bank has overtaken GTB going by its current market capitalization
Late last year , GTB still traded at a slightly higher price-earnings ratio than Zenith Bank at 3.85x compared to 3.46x respectively. But it is currently loosing some strength in this area too . ;its PE Ratio has dropped currently to 3x currently compared to the industry average of 3.4x and the market index of 7.6x . The stock is relatively cheap in terms of its valuation.; its PB Ratio currently is 0.7x compared to the industry average of 0.5x while its PEG Ratio is 0.2x confirming the share price is at discount to its assets . Late last year its PB ratio was 0.9x. indicating a downward movement in its stock value relative to its asset value between last year and presently
Die-hard shareholders of the bank worried about the slide in its market valuation will hope that this is a temporary blip as the bank has always bounced back from such situations. GT Co is still a solidly run bank with profits only surpassed by the likes of Zenith Bank its main rival.It might be struggling at the moment with its HoldCo structure but we can not rule them out from seizing bank its position as the most valuable bank in Nigeria.
Nigeria’s largest bank by profits and net assets Zenith Bank has now outpaced GT Co as the most valuable bank in the country. Zenith Bank’s market capitalization rose past N800 billion on Thursday while GT Co slipped to N551.72b
The drop in GT Co’s valuation means it has now been overtaken by Zenith Bank in terms of the market valuation after GTB’s share price fell to N25.45 and Zenith rose to N25.5. Zenith Bank has more shares on issue making it more valuable than GT at a similar price.
Zenith Bank first overtook GT Bank in terms of market valuation on November 19, 2021, when GTCo’s market cap fell to N747.5 billion compared to Zenith’s N753.5 billion. Since then, Zenith has risen past N800 billion while GT CO’s slide continues.