April 12, 2024/Cordros Report
Guaranty Trust Holding Company Plc (GTCO) published its 2023FY audited financials on Monday (08 April), in which the Holdco reported a 220.5% y/y surge in EPS to NGN19.07 (2022FY: NGN5.95) supported by both funded and non-funded income lines. For context, non-funded income was propelled by the group’s net FX gains increase of 588.7% y/y to NGN441.79 billion amid a 69.3% y/y uptick in funded income. The board proposed a final dividend of NGN2.70/s (2022FY: NGN2.80/s), which translates to a dividend yield of 5.9% based on the last closing price of NGN46.00/s (08 April).
The group’s interest income grew by 69.3% y/y to NGN550.76 billion supported by the interest earned on loans and advances to customers (+32.2% y/y to NGN290.67 billion), investment securities (+112.4% y/y to NGN182.28 billion) and cash and balances with banks (+343.3% y/y to NGN66.22 billion).
Similarly, interest expense increased by 72.6% y/y to NGN114.06 billion, primarily driven by higher interests incurred on deposit from customers (+72.0% y/y to NGN102.76 billion), due to a combination of the depreciation of the currency and higher interest in line with the elevated interest rate environment. Following the increased income and cost on interest-bearing liabilities, the Holdco recorded a 68.4% y/y expansion in net interest income. After accounting for loan impairment charges of NGN102.95 billion, net interest income (ex-LLE) settled 34.9% higher year-on-year to NGN334.74 billion.
Non-interest income spiked by 219.3% y/y to NGN525.98 billion, underpinned by the strong gains generated from FX revaluation (+588.7% y/y to NGN441.79 billion), net fees and commission income (+41.3% y/y to NGN109.43 billion) and FX trading (+67.7% y/y to NGN58.59 billion) during the period.
Meanwhile, operating expenses increased by 26.5% y/y to NGN250.42 billion, with notable pressure arising from other expenses (+37.5% y/y to NGN121.91 billion), personnel expenses (+25.0% y/y to NGN45.10 billion) and regulatory charges – deposit insurance premium (+18.2% y/y to NGN17.01 billion) and AMCON levy (+17.3% y/y to NGN27.31 billion). Notwithstanding, the group’s operational efficiency surged significantly as cost-to-income ratio (ex-LLE) moderated to 29.1% (2022FY: 48.0%).
Overall, profitability was quite impressive as the Holdco’s profit before tax grew by 184.5% y/y to NGN609.31 billion. Likewise, profit after tax settled 219.0% y/y higher to NGN539.65 billion, despite the 54.9% y/y increase in the income tax expense.
The group will hold a conference call today (12 April) at 3 pm Lagos time to discuss the results. Kindly click here to register.
Comment: We highlight that GTCO’s 2023FY performance was in line with broad-based expectations for the banking sector following the devaluation of the local currency. Meanwhile, we like that the Holdco’s core income and operating efficiency came in strongly amid challenging business environment and rising cost pressures. For 2024E, we expect sustenance in the aforementioned positives coupled with further business expansion to help ensure favourable performance. Our estimates are under review.
