Tuesday, 9 May 2017

No Economy Grows Without SMEs – Gtbank GMD

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.