FSDH Initial Reaction: Guaranty Trust Holding FY22 results
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April 17, 2023/FSDH

Key Performance Highlights:

• In FY22, Guaranty Trust Holding reported a 20.4% YoY growth in gross earnings to N539.2 billion compared to N447.8 billion in FY21. The robust growth in gross earnings was powered by a 21.9% YoY growth in interest income (60.3% of total gross earnings), partially offset by a 42.8% YoY increase in the interest expense, resulting in a 17.5% YoY jump in the net interest income. Moreover, the increase in gross earnings was supported by a 22.2% YoY jump in the fee & commission income (16.8% of total gross earnings) and a 15.4% YoY rise in other income (15.4% of total gross earnings) and higher net gains on financial instruments held at FVPL (7.5% of total gross earnings). However, the bank recorded a 3.2% YoY decrease in profit to N169.2 billion in FY22 as the bottom-line performance was affected due to higher impairments.
   
• The interest income rose by 21.9% YoY to N325.4 billion in FY22, driven by a 15.2% YoY rise in interest income calculated using the effective interest rate to N224.7 billion and a 96.3% YoY jump in interest income on financial assets at FVTPL to N30.3 billion in FY22. The interest expense grew 42.8% YoY to N66.1 billion in FY22, mainly driven by increased customer deposits of N59.7 billion in FY22 (FY21: N41.6 billion). This led to a rise of 17.5% YoY in net interest income from N220.6 billion in FY21 to N259.3 billion in FY22. Moreover, the loan impairment charges grew 40.59% YoY to N12.0 billion in FY22, resulting in net interest income after impairment charges at N247.3 billion, a 16.6% YoY expansion.
   
• The fee and commission income maintained robust momentum, with a 22.2% YoY spurt to N90.6 billion in FY22, driven by higher commissions, account services/maintenance charges, and corporate finance fees. With the fee and commission expenses increasing 55.3% YoY to N13.2 billion in FY22 due to higher bank charges, the company reported an 18.0% YoY jump in the net fee & commission income to N77.5 billion in FY22 as compared to N65.6 billion in FY21. The net gains on financial instruments held at FVPL climbed 35.9% YoY in FY22 to N40.3 billion, mainly due to foreign exchange trading gains. Other income increased 7.5% YoY to N82.9 billion compared to N77.1 billion in FY21.
   
• In FY22, the company’s net impairment charges on other financial assets spiralled to N35.9 billion compared to N0.8 billion in FY21. Moreover, personnel expenses surged 7.9% YoY to N36.1 billion due to higher wages, and the other operating expenses vaulted 35.1% YoY to N126.4 billion in FY22, primarily due to higher communications, administrative, and technology-related costs. Consequently, the profit before tax declined 3.3% YoY to N214.2 billion in FY22 versus N221.5 billion in FY21. The effective tax rate remained flat at 21.1% in FY22 as against 21.0% in FY21, and the company reported a profit after tax of N169.2 billion, a 3.2% YoY decline compared to N174.8 billion in FY21. The earnings per share came in at N5.95/share in FY22 versus N6.14/share in FY21. The Directors have recommended the payment of a final dividend of N2.80 (bringing the total dividend for FY22 to N3.10).

Market Reaction: Investor reaction to the FY22 results was positive as the stock jumped 2.46% to close at N25.00 versus a 1.48% fall for the All-Share Index (17/4).

Guaranty Trust Holding FY22 Earning Highlights

Source: FSDH, Company data
Note: ^Includes life time Expected Credit Loss (ECL) of N35.6 billion relating to group exposure to securities issued by Ghanaian Government