How GTCO HY 2023 Milestone Profit Crossed N300bn Mark

Guaranty Trust Holding Company Plc (GTCO) half year (H1) ended June 30, 2023 audited result and accounts showed a milestone performance in profit before and total assets that translated into robust interim dividend to shareholders.

In the history of the financial institution, profit before tax crossed the N300 billion mark, and the management for the first time in its history is paying shareholders N0.50 per share as an interim dividend.

GTCO’s growth in H1 2023 is on the backdrop of weak global oil price, tied with economies across African countries continuing to experience monetary tightening in reaction to persistent inflation rate.

In the 2022 full financial year, GTCO declared N214.15billion profit before tax, and in the 2021 financial year, N221.5billion. Further findings showed that GTCO in 2020, it announced N238.1billion profit before tax and in 2019 and 2018, the Group announced N231.711billion and N215.6billion profit before tax, respectively.

GTCO latest result stunned industry watchers as It exceeded analysts’ forecasts in all parameters that account for growth and excellence.

Although attributed largely to the forex windfall arising from the new government’s pro-market policies, a touch of smart management strategies manifested in the group’s audited half-year financial statements.

Gross Earnings Surge

The group recorded an unprecedented revenue surge of 181.2 percent to N672.6 billion against N239.2 billion in the corresponding period of 2022. There were no signs of the massive haul earlier in the first quarter when it posted N158.09 billion as gross earnings in Q1 2023 from N119.59 billion in 2022.

Soaring Assets

The balance sheet looks set to hit the N10 trillion mark by 2023 year-end. It increased by 32 percent to N8.5 trillion in H1 2023, from N6.4 trillion as of December 31, 2022. The expanding loan book amid adequate impairments provision on the back of a strong CAR puts the group on a good stead for rapid assets expansion during the year.

The Company shows it is determined to drive the growth further till year-end and create the base to launch it onto a higher pedestal next year.

Robust Profits Growth

Pre-tax profit jumped to N327.3 billion, representing a 217.2 percent increase compared to N103.2 billion in half-year 2022. Post-tax profit of N280.4 billion far exceeded the N77.5 billion posted in the equivalent period of the preceding year with N202.9 billion, representing a 261.9 percent rise.

Significant Interest, Commission Income

Interest income of N225.9 billion recorded during the review period significantly surpassed N147.1 billion in H1 2022 by 53.6 percent. Net Interest Income toed the same trend to hit N177.45 billion in H1 2023 as against N120.84 in H1 2022.

A bulk of the interest income amounting to N129.84 billion accrued from loans and advances to customers. The facilities grew to N2.31 trillion during the review period, against N1.88 trillion as of December 31, 2022, representing a 22.9 percent.

The group raked in N21.21 billion from e-banking income, compensating for the huge investments in ICT, which drives its superior service delivery ahead of its peers. This was 13.3 percent above N18.57 billion in the 2022 half year.
Loan-to-Deposit Ratio (LDR)

Notwithstanding the N1.5 trillion restricted deposit (under CRR policy) and other assets, the strong deposit base will enable the group to achieve the regulatory 65 percent LDR threshold by year-end. While loans and advances to customers was N2.31 trillion during the reporting period, deposits by customers grew to N6.31 trillion compared to N4.61 trillion as of December 31, 2022.

Forex Revaluation Windfall

Like its peers, GTCO harvested its lot from the forex windfall arising from the massive 60 percent devaluation of the Naira by the CBN on June, 14, 2023. The group raked in N357.47 billion in six months against N1.86 billion in H1 2022, representing a jump of 19,118.9 percent. This will boost the balance sheet and support enhanced growth within a short time.

Earnings Per Share (EPS)

Shareholders recorded huge value on their investment with the group’s earnings per share (EPS) hit N22.0 in the 2013 half year from N9.94 in the corresponding period of 2022, a valuation appreciation of 111.26 percent. GTCO began the year with a share price of N23.00 and has since gained 69.6% on that price valuation, ranking it 48th on the NGX in terms of year-to-date performance.

Impairment Charges/CAR

The Naira rain enabled the group to dole out N82.96 billion for impairment charges in the 2023 half year, as against N3.51 billion in 2022 H1. Enhanced capital adequacy was provided in line with regulatory threshold regarding the group and its subsidiaries’ paid-up capital and equity/equity reserves.

“Guaranty Trust Holding Company manages its capital base to achieve a prudent balance between maintaining capital ratios to support business growth and investor confidence and providing competitive returns to shareholders,” the group said concerning its capital and risk management policies.

Financial Inclusion

GTCO Plc adopted an aggressive strategy in the financial inclusion drive. The aim was to provide adequate financial services to individuals and communities that have limited or no access to the formal financial sector. This resulted in the opening of 749,710 accounts through partnership with the CBN SANEF initiative.. It also received deposits of N514 million through its agent banking locations during the period.

Management and Expert Reaction

Speaking on the half-year result, Group Chief Executive Officer, Guaranty Trust Holding Company Plc, Segun Agbaje, said, “Our half year audited results reflect the strong business fundamentals underpinning the GTCO franchise, the quality of our past decisions in future proofing our balance sheet for challenging times, and the sound practices that guide our day-to-day operations.”

He said, “Despite the challenges in the business environment, notably inflationary pressures and exchange rate fluctuations, we are starting to see the gains in the transformation of our businesses following our transition to a Holding Company structure. Improved profitability and a solid performance across key metrics reflect efficiencies and justify the investments we continue to make in technology, product development, and our people.”

A Stockbroker and Head of Securities Trading at Planet Capital, Dr Paul Uzum, attributed the profit windfall by the banks to the foreign exchange revaluation gains that the devaluation of the Naira threw at them.

“FX translation gain was the factor. You will see it across the big banks GTco, Zenith, Access and UBA. FBNH equally had impressive results. The banks have been keeping a part of their reserves in FX and some of their loans to clients are also in FX, so it is natural that with the steep dévaluation, they will make large profits,” Dr Uzum told this newspaper in a note.

Guaranty Trust Bank Ltd, the major subsidiary of the group, was named Best Bank in Nigeria at the Euromoney Awards for Excellence 2023. This marks a record 12th time that Guaranty Trust Bank has been recognised as the leading financial institution in Nigeria.

The current share price of GTCO is N39.00. It closed its trading day (Thursday, September 7, 2023) at N39.00 NGN per share on the Nigerian Exchange (NGX), recording a 0.5% gain over its previous closing price of 38.80 NGN.

GTCO is the eighth most traded stock on the NGX over the past three months (Jun 8 – Sep 7, 2023). Findings showed it has traded a total volume of 1.95 billion shares—in 25,339 deals—valued at N66.8 billion over the period, with an average of 30.9 million traded shares per session.

A volume high of 208 million was achieved on June 13 and a low of 2.64 million on August 28 for the same period.