Hyundai brings together 20-plus years of hydrogen technology to usher the new energy age
December 10, 2020 – Hyundai Motor Group today introduced ‘HTWO’, a new brand to represent the group’s world-leading hydrogen fuel cell system. Building upon Hyundai’s 20-plus years of experience in hydrogen fuel cell technology, the brand will present hydrogen as positive energy for humanity.
HTWO stands for ‘H2’, the hydrogen molecule, whilst also representing ‘Hydrogen’ and ‘Humanity’, the two main pillars of Hyundai’s fuel cell business. The launch of the new fuel cell system brand will help facilitate Hyundai’s global fuel cell business and grow the hydrogen ecosystem.
With HTWO, Hyundai Motor Group is stepping up efforts for the development of a next-generation hydrogen fuel cell system that can be applied to various forms of mobility such as UAM, automobiles, vessels and trains.
Not only will the next-generation fuel cell system be available for many different mobility products and services, but it will also deliver enhanced performance and durability at an affordable price in a lighter architecture with enhanced energy density. With its next-generation fuel cell system, the group aims to offer a highly efficient and diversified lineup of hydrogen-powered vehicles.
Through strategic partnerships with hydrogen, energy and logistics companies around the world, Hyundai Motor Group has expanded its fuel cell system business, accelerating the development of a hydrogen society and laying the foundation for the company’s HTWO brand, with an initial focus on major hub regions – Korea, the United States, Europe and China.
Since marketing the world’s first mass-produced fuel cell electric vehicle ix35 in 2013, the group has been expanding its vehicle offerings powered by its fuel cell system such as Hyundai NEXO SUV, XCIENT Fuel Cell heavy-duty truck and a fuel cell electric bus, as zero-emission mobility solutions.
As a steering member of the Hydrogen Council, a global coalition of leading energy, transportation and industry companies with a shared vision and long-term ambition for hydrogen, Hyundai is committed to fostering a clean energy transition.
Hyundai Motor Group is a global corporation that has created a value chain based on automobiles, steel, and construction and includes logistics, finance, IT and service. With about 250,000 employees worldwide, the Group’s automobile brands include Hyundai Motor Co. and Kia Motors Corp and Genesis.
Armed with creative thinking, cooperative communication and the will to take on all challenges, we are working to create a better future for all.
Newest prototype showcases Toyota’s commitment to heavy-duty fuel cell electric vehicles
Next-generation fuel cell electric system delivers increased efficiency and performance
PLANO, Texas (December 10, 2020) – Toyota’s next-generation fuel cell electric technology is now powering a new set of Class 8 heavy-duty trucks.
Using the same fuel cell system as the all-new 2021 Mirai sedan that goes on sale this month, the engineers at Toyota Motor North America Research and Development have developed a set of production-intent prototype trucks that are being prepared to run drayage routes at the ports of L.A. and Long Beach to validate their performance, efficiency and drivability.
Designed to be flexible enough to meet the needs of a wide variety of OEM truck makers, the new fuel cell electric system in the latest prototypes has been adapted to a Kenworth T680 chassis. A more compact hydrogen storage cabinet behind the cab houses six hydrogen tanks with the same capacity as previous prototypes while a new, more powerful lithium-ion battery helps smooth out the power flow to the electric motors.
In this configuration, the second-generation fuel cell system delivers over 300 miles of range at a full load weight of 80,000 lbs., all while demonstrating exceptional drivability, quiet operation, and zero harmful emissions.
“This is an important step in the transition to emissions-free heavy-duty trucks,” said Andrew Lund, chief engineer, Toyota Motor North America Research and Development. “Our first prototype trucks proved that a fuel cell electric powertrain was capable of hauling heavy cargo on a daily basis. These new prototypes not only use production-intent hardware, they will also allow us to start looking beyond drayage into broader applications of this proven technology.”
Reducing airborne pollution at the Ports of L.A. and Long Beach is an important driver of this program. Toyota’s Environmental Challenge 2050 aims to almost completely eliminate CO2 emissions from our vehicles, operations and supply chain by 2050. Converting the drayage trucks that currently serve these ports to electric drivetrains would move us closer to that goal while improving the quality of life of operators, workers, and communities in and around the ports.
Toyota Motor North America Research & Development (TMNA R&D) aims to redefine next-generation vehicles to more than simply a form of transportation. Since 2003, Toyota has been awarded more patents than any other automaker, including autonomous vehicle patents (more than 1,400).
At the start of the year, sentiments in the Sub Saharan African (SSA) Eurobond Market were broadly positive as countries in the region reaffirmed their sustained appetite for foreign-denominated debt with the latest issuer in 2020 being Gabon and Ghana.
However, the outbreak of the Covid-19 pandemic raised the macroeconomic risk of SSA countries and consequently led to widening in SSA Eurobond spreads prompting many countries to delay their planned return to the market, on the back of a higher risk premium.
EURO banknote bank bill | www.brandspurng.com
Notably, the adverse effects of the pandemic have seen countries like Zambia face an unprecedented liquidity crunch that resulted in default, making the country the first African coronavirus-era defaulter.
Nigeria, which had planned to issue a new Eurobond worth $3.3bn for budgetary purposes and to refinance existing loans have had to postpone their issue due to the high yields in the market which would increase borrowing costs especially given that the country is highly
reliant on oil exports.
Looking ahead, we expect a combination of fiscal imbalance caused by Covid-19 especially for oil-exporting countries and the penalty for the Zambian default to keep the risk premium for the region high. As such, the international debt market will price any issue coming from the region in light of these realities.
That said, we think most SSA issuers particularly Nigeria will remain reluctant to raise USD-denominated debt in light of the prevalent fiscal pressures, exchange rate concerns and widening risk premium.
The implication for Nigeria largely revolves around sustained local debt capital raising to finance long term and short term obligations. Nevertheless, we expect the impact on local yields to be muted given CBN’s staunch stance on maintaining a low-interest-rate environment.
The local bourse today (Thursday) closed for the fourth straight session on a negative note, as more investors took profit worth N232.07 billion from the equity market capitalization. Consequently, market breadth closed negatively, recording 40 losers as against 6 gainers.
In summary, the All-Share Index (ASI) shed 440 absolute points, representing a decline of 1.27% to close at 35,557.26 points. Similarly, the overall Market Capitalization value also declined by N232.07 billion, representing a contraction of 1.27% to close at N18.072 trillion.
OKOMUOIL emerged top of the gainers’ chart for today, with a maximum price appreciation of +10.00%, while UPL, WAPCO, and FBNH emerged joint top-losers with maximum price depreciation of -10.00%.
Today’s downtrend was also driven by price depreciation in medium and large capitalized stocks amongst which are; GUINNESS (-9.83%), FIDELITYBK(-9.80%), VITAFOAM (-9.29%), DANGSUGAR (-6.88%), ACCESS (-6.63%), OANDO(-6.44%) and ZENITHBANK (-6.18%).
Trading activities on the NASD-OTC counter today (Thursday) closed on a positive note, as the Unlisted Securities Index (USI) and the Market Capitalization Value both rose by 0.41% from yesterday’s position to settle at 724.35 absolute points and N538.41 billion respectively.
However, the Volume and Value of total transactions for today fell by 79.02% and 80.55% compared to yesterday’s position to print at 598,264 points and N10.698 million respectively.
Fig 1. Top 5 Car Sharing Operators, # of Vehicles (Graphic: Business Wire)
At the outset of the COVID-19 pandemic the outlook for peer-to-peer car sharing operators was bleak. Users and members vanished along with revenue and investment. Nearly a year later, a very different picture is emerging as operators have found renewed interest and enhanced prospects from an increased interest in personal transportation and the cost savings offered by the sharing economy.
What has emerged from this pandemic-fueled recovery is a global phenomenon with more than 50 P2P operators, 1.3 million vehicles, and 42 million users; reflecting low barriers to entry and a compelling low-cost, low-investment business model. In fact, more than half of the P2P operators tracked in Strategy Analytics’ database were founded within the last three years, suggesting the global P2P car sharing competition is just starting to heat up.
In the “Global Peer-to-Peer (P2P) Car Sharing Database 2020 Topline Report”, Strategy Analytics details the top 5 P2P car sharing operators in terms of number of vehicles, number of users, geographic reach, and total funding.
“Car sharing continues to boom amid the ongoing pandemic,” said Roger C. Lanctot, director of automotive connected mobility for Strategy Analytics.
“For many, P2P car sharing flourishes due to accessibility, convenience, and relative cleanliness compared to public transportation. This business model is here to stay,” added Ben Lundin, industry analyst for automotive connected mobility.
Sentiment surrounding current conditions drop as the impact of the recession is felt by consumers
While currently glum, Nigerians expect future conditions to improve as the holidays approach and restrictions ease
Despite the recession and the pandemic, there is hope for brands ahead of the holiday season
After a drop in CCI in the month of September, in October, Nigeria’s CCI got back on its trend for recovery increasing 7 points to an index value of 22. This was primarily led by a 12-point increase in the index of consumer expectations which increased to 43 from 31.
Nigerians are becoming more optimistic about the future; this index value is comparable to that of pre-pandemic levels. However, current conditions scored lower in October, dropping to a value of -30.
Sentiment surrounding current conditions drop as the impact of the recession is felt by consumers
The drop in consumer sentiment surrounding current conditions was mainly driven by the decrease in sentiment regarding job prospects. KASI’s job prospect sub-index dropped further to -71 in October, the lowest the index reading has been since April 2020 when the pandemic caused a halt of the global economy.
Nigeria is heavily dependent on oil production with an average daily output of 2 million barrels of oil. While the number has gone up since the peak months of the pandemic, output now is at 1.2 million barrels of oil a day – causing a 13.89% contraction in the sector. As a result, Nigeria’s real GDP has contracted by 3.62%, a second consecutive contraction in GDP, triggering a recession in the economy.
As per our COVID-19 Pulse tracker, 77% of respondents indicated that job search has become more difficult in the last few months, up 11% from the number of people who responded the same way in September.
Furthermore, inflation currently up to 14.2% from the 13.7% recorded in September and it is expected to continue on this upward trend. Overall, the IMF forecasts a 5.4% drop in Nigeria’s GDP.
These uncertainties have dampened current consumer sentiment and hence, aside from keeping themselves and their family healthy, Nigerians are worried the most about struggling financially and making enough money for the household.
While currently glum, Nigerians expect future conditions to improve as the holidays approach and restrictions ease
Despite the current bleak economic conditions, Nigerians remain positive about the future as shown by the index of consumer expectations improving to a record high of +43. This was led by the expectation that general economic conditions will improve both in the country and the respective cities, these indexes rising 10 and 15 points respectively in October.
This expectation of future improvement was reflected in other sub-indexes as well. Not only are Nigerians optimistic about meeting regular expenses, as seen in the 18-point increase in the index to a value of 32, they are also optimistic about making and increasing purchases of discretionary items.
The index went up a significant value of 10 points to 49, comparable to pre-pandemic index values. This goes to show that firms in the retail industry may be expecting some increase in sales over the holidays.
In addition to optimism surrounding household income and expenditure, the improving pandemic conditions have also impacted sentiment. October survey shows an increase in 6% of people who think the worst of the crisis is now over.
Nigeria’s daily case count has significantly decreased with under 200 new cases being recorded daily (sometimes under 100) in comparison to the over 300 cases recorded daily on average in August. The easing of restrictions and the allowance of operation for free travel and work between 08:00 to 18:00 has brought about some positivity in the country.
While the majority of Nigerians surveyed feel that it will be anywhere between 6 months or more before “normal” comes back, easing restrictions have allowed some sense of normalcy to come back. As of September 19th, cinemas, gyms and spas, and other recreational centres have reopened. Albeit, cinemas will only be allowed to operate at 33% capacity.
Despite the recession and the pandemic, there is hope for brands ahead of the holiday season
As a result of optimism surrounding the pandemic situation, Nigerians have eased up on restrictions they’ve placed on their lifestyles as well. There was a 21% drop in the number of people who responded that they are keeping their children home from school and also a 6% decrease in individuals feeling the need to self-isolate/quarantine.
Furthermore, there has been a fall in the percentage of people avoiding restaurants, public transport, cinemas, public halls, and public gatherings which reflects the ease in restrictions on the public.
While this reflects well for firms in the entertainment and retail industries, travelling doesn’t seem to be on the agenda for Nigerians this coming holiday. 42% of our respondents indicated that they have cancelled travel plans in October, up by 11% from the value recorded in September.
Dec. 10, 2020 – The Board of Directors of Philip Morris International Inc. today declared a regular quarterly dividend of $1.20 per common share, payable on January 11, 2021, to shareholders of record as of December 23, 2020. The ex-dividend date is December 22, 2020.
Philip Morris International: Delivering a Smoke-Free Future
Philip Morris International (PMI) is leading a transformation in the tobacco industry to create a smoke-free future and ultimately replace cigarettes with smoke-free products to the benefit of adults who would otherwise continue to smoke, society, the company and its shareholders.
PMI is a leading international tobacco company engaged in the manufacture and sale of cigarettes, as well as smoke-free products and associated electronic devices and accessories, and other nicotine-containing products in markets outside the U.S.
One of 10 Organizations Acknowledged by CDP for Environmental Leadership and Demonstrable Progress on Climate, Forests, and Water in 2020
Dec. 10, 2020 – Philip Morris International Inc. today announced its sustainability efforts have been recognized by two leading environmental organizations: CDP, the international nonprofit whose global disclosure system is used by investors, companies, and municipalities to measure and manage their environmental impacts, and the Science Based Targets initiative (SBTi), which drives ambitious climate action in the private sector by enabling companies to set meaningful emissions reduction targets.
André Calantzopoulos, PMI’s CEO, said,
“Strong action must be taken to reduce the risks of climate change impacts and stop the destruction of nature. At PMI, we are investing in innovative programs and taking a multidisciplinary approach to reduce the environmental impact of our products, operations, and value chain.”
He continued,
“We firmly believe that by integrating sustainability into every aspect of our company, we will have a positive impact on both the long-term resilience of our business and the well-being of society. The validation of our efforts by CDP and SBTi reinforces that we’re on the right path and demonstrates the commitment of our teams and suppliers, who play an essential role in making our sustainability ambitions a reality.”
CDP has recognized PMI as a global environmental leader. Of the more than 5,800 organizations scored, PMI is one of only 10 companies worldwide to receive the “Triple A” score, which acknowledges the company’s best-in-class efforts in tackling climate change, as well as acting to protect forests and water security.
This marks the seventh year that PMI has ranked on CDP’s A List for Climate Change. For the previous year, PMI also earned a position on the Water Security A List, and an A- for its forest disclosure. Combined, CDP’s most recent rankings place PMI among the select few to achieve a Triple A score and among the world’s most pioneering companies leading on environmental transparency and performance.
Further, SBTi verified PMI’s emissions reduction targets, confirming that PMI’s environmental efforts are grounded in science and consistent with the reductions required to meet the goals of the Paris Climate Agreement and limit global warming to 1.5 °C. SBTi’s validation emphasizes that PMI’s carbon reduction strategy is aligned with climate science to prevent the most damaging effects of climate change.
Jennifer Motles, Chief Sustainability Officer at PMI, said:
“Despite the unprecedented challenges brought on by the global pandemic, we have not deviated from our efforts to be a more sustainable company. I am incredibly proud of our teams and suppliers around the world, whose dedication to combating the risks of climate change has made us one of a handful of companies recognized as a leader on corporate environmental transparency by both CDP and SBTi.
These monumental achievements demonstrate not only the seriousness we attribute to ESG-related matters but also the level of expertise, talent, and passion our company is putting toward achieving our long-term targets and ultimately making impactful change happen.”
Earlier this year, PMI released its first-ever Integrated Report highlighting the progress made in 2019 toward a smoke-free future and the company’s performance in environmental, social, and governance (ESG) related areas.
The report discloses the broad range of activities PMI is undertaking to achieve carbon neutrality in its direct operations (scopes 1 + 2) by 2030 and across its entire value chain (scopes 1 + 2 + 3) by 2050. In November, the company integrated its sustainability function under the leadership of PMI’s Chief Financial Officer, further reinforcing that PMI’s sustainability strategy is embedded in every aspect of its business.
Water stewardship and sustainable forest management are also a significant part of PMI’s efforts to reduce its environmental footprint. As the company increases its production capacity for smoke-free products, it is evolving its water strategy, with clean technology investments delivering water recycling.
These efforts are guided by the Alliance for Water Stewardship standard, through which the company has had six factories certified. To combat deforestation and protect biodiversity, PMI has developed a zero deforestation manifesto and has set a goal to have a net positive impact on forests associated with its tobacco supply chain by 2025.
Additionally, as part of PMI’s Good Agricultural Practices program, all tobacco suppliers and contracted farmers are expected to use and manage natural resources sustainably and minimize negative impacts on the environment.
Paul Simpson, CEO of CDP, said:
“We extend our congratulations to all the companies on this year’s A List. Taking the lead on environmental transparency and action is one of the most important steps businesses can make and is even more impressive in this challenging year marked by COVID-19. The scale of the risk to businesses from climate change, deforestation, and water insecurity is enormous, and we know the opportunities of action far outweigh the risks of inaction.
Leadership from the private sector will create an ‘ambition loop’ for greater government action and ensure that global ambitions for a net-zero sustainable economy become a reality. Our A-List celebrates those companies that are preparing themselves to excel in the economy of the future by taking action today.”
Since announcing its commitment to a smoke-free future in 2016, PMI has actively focused its resources on developing, scientifically substantiating, and responsibly commercializing smoke-free products that are less harmful than smoking, with the aim of replacing cigarettes with smoke-free alternatives as soon as possible for those adults who would otherwise continue to smoke.
The biggest positive impact PMI can have on society is to transform its business, and thus the company places this atop its sustainability priorities. As PMI rapidly progresses toward achieving its vision of a smoke-free future, it continues to enhance its sustainability efforts and embed sustainability into every aspect of its business.
The full list of companies on this year’s CDP A-List is available here, along with other publicly available company scores: www.cdp.net/en/companies/companies-scores.
Rolls-Royce is launching a new MTU Series 500 for power generation. With a power range of 250 to 550 kilowatts and peak efficiencies of up to 42.6 percent, the gas gensets offer a climate-friendly and economical solution for the industrial and utility sector in addition to other applications.
Gas gensets and cogeneration plants can be ordered on the basis of 6-cylinder in-line engines as well as 8 and 12-cylinder V-engines for the 50 Hz market. In cogeneration, when electricity and heat are generated, efficiencies of around 90 percent can be achieved. In the 60 Hz market, the units will be introduced from mid-2021.
“With the 500 series, we are offering our customers state-of-the-art products with which they are equipped for the future in terms of efficiency and environmental friendliness,” explains Andreas Görtz, Vice President Power Generation at Rolls-Royce Power Systems.
“With efficiencies of up to 42.6 percent, low life-cycle costs and high availability, plant operators benefit from low fuel consumption and thus high yields”, says Görtz. The products will initially be offered for operation with natural gas, and from end 2021 also for biogas. In addition, the 500 series is H2-ready, which means that the engines can be converted to hydrogen operation at a later date.
Optimally controlled by MTU Module Control System
All gensets are equipped as standard with the flexible MTU Module Control System (MMC), a control system that can be customized to perform all important functions required for continuous monitoring and control of a complete customer solution. The MMC is located in a separate panel next to the genset. This allows the gensets to be integrated into complex systems such as microgrids and provides access to the global MTU service network.
Ideal component for microgrids
With their MMC control system, the 500 series gensets are ideally suited for use in a wide range of applications, such as in combined heat and power plants and also in complex industrial applications.
Rolls-Royce offers its customers a comprehensive portfolio of energy systems that contribute to decarbonization – from simple storage solutions to complex microgrids that intelligently combine battery storage with renewable energies and diesel or gas gensets.
A microgrid solution that combines heat and power from a gas genset such as the new MTU Series 500 with photovoltaics and a battery storage system can cut energy costs by over 40 percent compared to a conventional system, significantly reducing its carbon footprint.
Series 500 replaces Series 400 with more power and efficiency
The new genset series replaces the previous MTU Series 400 products and, with the new gensets based on the Series 500, increases efficiency by about three percent and available power by over 30 percent. Spare parts and service will be maintained for Series 400 customers in accordance with contractually agreed terms. Series 400 products can be ordered until mid-2021 and series production will end in late 2021.
In its recently released 9M’2020 results, Guaranty Trust Bank (GTBank) reported a slower gross earnings growth relative to what was reported in H1’2020. Gross earnings in 9M’2020 grew by 2% year-on-year (YoY) from N326.14bn in 9M’2019 to N333.06bn in 9M’2020.
Net interest income increased by 10% YoY from N172.94bn in 9M’2019 to N189.74bn in 9M’2020, while non-interest income grew by 3% YoY from N101.96bn in 9M’2019 to N104.84bn in 9M’2020.
Operating income grew by 4% YoY from N270.25bn in 9M’2019 to N279.75bn in 9M’2020. Owing to a 300 basis points increase in cost-to-income ratio from 37% in 9M’2019 to 40% in 9M’2020, profit before tax dipped slightly by 2% YoY from N170.65bn in 9M’2019 to N167.35bn in 9M’2020. Profit after tax declined at a higher rate of 3% YoY (from N146.99bn to N142.28bn), due to a higher effective tax rate.
High-Risk Environment Dampen Prospects of BottomlineGrowth
On a YoY basis, GTBank’s total deposits rose by 29%, from N2.55trn in 9M’2019 to N3.30trn in 9M’2020. As noted in our previous report, the sustained liquidity glut in the financial system, induced by the policies of the monetary authorities, was accretive to fund generation by the Group. On a quarter-on-quarter basis, total deposits rose by 7% from N3.09trn as of H1’2020 to N3.30trn as of 9M’2020.
Nonetheless, despite the rise in total deposits, GTBank’s loan book grew by 14% YoY from N1.38trn in 9M’2019 to N1.57trn in 9M’2020. We note that the growth in loan book was less than half the increase in growth of total deposits. Also, on a QoQ basis, total loans declined by 3%. The numbers reported suggests that the Group was possibly hesitant to take risks during the period.
The less-than-expected growth in loan book, despite regulatory demands, opines that lending opportunities were limited during the period. In our view, we posit that rather than extend credit facilities with a high likelihood of default, the Group invested in risk-free assets instead. Investments in financial securities rose by 13% on both YoY and QoQ basis.
Financial assets held for trading also grew by 407% and 46% on a YoY and QoQ basis, respectively.
As expected, the inability to grow loan book (as mandated by the Central Bank of Nigeria’s (CBN) 65% minimum Loan-to-Deposit (LDR) policy) resulted in higher CRR debits as the Group’s restricted deposits rose materially by 104% and 11% on a YoY and QoQ basis, respectively.
Consequent to the factors emphasised above, interest income on loans and advances grew by 2% YoY from N224.19bn in 9M’2019 to N228.23bn in 9M’2020. On a quarter-on-quarter basis, however, interest income declined by 5% from N47.05bn in Q3’2019 to N44.52bn in Q3’2020. The quarterly decline in interest income was reflective of a combination of lower yields and decline in loan book in Q3’2020.
Cost of Fund Sustains DownwardTrend
The Group’s cost of fund lowered to 1.66% in 9M’2020, from 2.54% in 9M’2019, as interest expense declined by 25% YoY from N51.25bn in 9M’2019 to N38.49bn in 9M’2020. The lower interest expense incurred during the period also reflected the composition of the Group’s total deposit base.
Notably, the portion of savings (the cheapest) deposits rose from 25% of total deposits as of 9M’2019 to 33% of total deposits as of 9M’2020. Also, the portion of term (the costliest) deposits declined from 16% as of 9M’2019 to 12% as of 9M’2020.
As a result, of a 25% YoY decline in interest expense, relative to a 4% YoY growth in interest income, net interest income grew by 10% YoY from N172.94bn in 9M’2019 to N189.74bn in 9M’2020. Meanwhile, impairment charges on loan spiked by 267% YoY from N2.76bn in 9M’2019 to N10.15bn in 9M’2020.
The spike in loan impairment charges is attributed to elevated risk expectations induced by the COVID-19 pandemic which grounded the economy. Net interest income after impairment charge grew by 6% YoY from N170.18bn in 9M’2019 to N179.59bn in 9M’2020.
FX Trading Gains Drive Non-InterestIncome
Non-interest income advanced by 3% YoY from N101.96bn in 9M’2019 to N104.84bn in 9M’2020, primarily driven by a 203% YoY increase in FX trading gains from N3.99bn in 9M’2019 to N12.10bn in 9M’2020.
The other line items that supported the growth in non-interest income include FX revaluation gains (+74% YoY from N12.43bn to N21.62bn), writeback on impairment of financial assets (+2710% YoY from N111.00mn to N2.53bn). GTBank’s net fee and commission income declined materially by 30% YoY from N46.49bn in 9M’2019 to N32.73bn in 9M’2020.
The decline in net fee and commission income is attributed to the decrease in fees from transaction-related activities, as the COVID-19 pandemic took a toll on economic activities. GTBank’s net fee and commission, however, recorded an improvement on a QoQ basis (+19% QoQ growth), resulting from a gradual reopening of the economy.
Operating income grew by 4% YoY from N270.25bn in 9M’2019 to N279.75bn in 9M’2020, mainly driven by the 6% YoY growth in net interest income. Meanwhile, operating expense grew by 13% YoY from N99.59bn in 9M’2019 to N112.40bn in 9M’2020.
As a result of higher operating expenses incurred during the period, profit before tax declined by 2% YoY from N170.65bn in 9M’2019 to N167.35bn in 9M’2020. Profit after tax declined by 3% YoY from N146.99bn in 9M’2019 to N142.28bn in 9M’2020.
OtherInformation
GTBank’s Capital Adequacy Ratio (CAR) stood at 23.85% as of 9M’2020 (H1’2020: 22.93%, FY’2019: 22.50%). The Group’s CAR stood above 15% regulatory threshold during the period.
Non-Performing Loan (NPL) ratio improved to 6.51% (H1’2020: 6.80%, FY’2019: 6.50%). The Group’s NPL ratio was above the 5% regulatory threshold during the period.
The Group’s liquidity ratio lowered to 38.78% as of 9M’2020, from 43.15% as of H1’2020 and 49.30% as of 9M’2020. Nonetheless, the Group’s liquidity ratio was above the 30% regulatory threshold.
Update on Restructuring into aHoldCo.
The Group recently announced its plan to reorganise the bank to a financial holding company, which will be implemented through a scheme of arrangement between the bank and its shareholders.
According to the information provided by GTBank, the issued shares in the bank will be exchanged on a one-for-one basis in the financial holding company. The bank’s existing Global Depositary Receipts (GDRs) will also be exchanged on a one-on-one basis for new GDRs to be issued by the financial holding company.
The rationale for the business reorganisation resulted from a comprehensive strategic evaluation of the operating environment of the Nigerian banking sector in the near term. The Board expects to drive future growth by exploring other markets and industries.
A meeting with the shareholders was ordered by the Federal High Court, concerning the business reorganisation. Although there is no official statement from the GTBank’s Board yet, it was reported that shareholders approved the decision.
Historical Income Statement
Source: Company Accounts, WSTC Research
Outlook
We note the significant rise in GTBank’s restricted deposits as of 9M’2020. We also note the persistent decline in its liquidity ratio, which suggests that the liquidity of the bank is under pressure.
Thus, we think that GTBank is careful in creating risk assets, given the regulatory challenge it is faced with, in combination with a weak macroeconomic environment. In our view, we believe that the recent policy decision by the CBN to issue special bills could improve the liquidity position of the Group.
Due to the lack of clarity around several considerations, we are unable to precisely estimate the potential impact. However, on an overall assessment, we posit that the idea behind the CBN’s special bills is to refund the excess CRR to banks, to shore up the liquidity base of banks which would facilitate increased lending activities to the private sector. We, therefore, expect to see an improvement in loan growth going forward.
Also, we think that as the economy gradually exits recession, the heightened risk associated with businesses could lower; thus, encouraging financial institutions to increase lending activities.
Given the outcome of the Group’s Q3’2020 operating performance and our expectations for Q4’2020, we further lowered our FY’2020 EPS forecast from N6.71 to N6.42. We also lowered our growth expectations for GTBank in the near to medium term, owing to heightened regulatory risk and weak macroeconomic fundamentals. However, we have not factored in the possible value accretion that the Group’s business reorganisation into a financial Holdco could bring.
We estimate a fair value of N50.55 for the stock, which implies a justified P/E and P/B of 7.79x and 1.78x, respectively. Currently, the stock trades at a forward P/E of 5.16x. In our view, we think that the stock is significantly undervalued.
From a fundamental point of view, we believe that the stock is worth more than the current market price suggests. Also, the stock offers an 8% dividend yield, which is significantly higher than what is obtainable in the fixed income markets. For context, the yield on the 10-year FGN Bond is c.4%.
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