May 6, 2024/CSL Research

GTCO’s Q1 2024 unaudited numbers showed a strong 170.6%y/y growth in Interest Income to N281.7bn driven by growth in both average volume of earning assets and average yield. Net Loans and advances to Customers grew 21.9% in Q1 2024 relative to FY 2023 (inclusive of the impact of devaluation of foreign currency loans). Interest Expense also grew strongly, up 147.9% y/y to N54.4bn. Customer Deposits grew moderately, up 24.2% (inclusive of the impact of devaluation) in Q1 2024 compared with FY 2023. Overall, Net Interest Income grew 176.7% y/y to N227.3bn compared with N82.2bn in Q1 2023.

Net Fee and Commission Income grew strongly up 74.5% y/y to N52.3bn. Main drivers of the y/y growth were strong growth in credit related fees, account maintenance charges, Commission on foreign exchange deals, account services, maintenance and anciliary banking charges and transfer related charges.

Q1 2O24

Source: Company’s Financials, CSL Research

Other Income (Net gains on financial instruments held at FVTPL and Other Income) grew significantly, up 1487.9% y/y to N342.7bn. The significant y/y growth was due to a strong fair value gain on financial instruments of N331.6bn reported in Q1 2024 compared with a loss of N99.0m booked in Q1 2023. The group reported FX revaluation loss of N12.7bn in Q1 2024.

OPEX grew significantly, up 76.9% y/y to N99.3bn. The significantly lower y/y growth in Opex, compared with a 365.5%y/y growth in total Operating Income led to a sharp drop in the bank’s cost to income ratio ex-provisions (CIR ex-provisions) to 16.0% in Q1 2024 compared with 42.0% in Q1 2023. Excluding fair value gains, CIR ex provisions comes to 34.2% in Q1 2024.

Total Impairment Charge (Loan impairment charges and net impairment charges on other financial assets) grew to N13.6bn in Q1 2024 from N3.4bn in Q1 2023. The group reported Loan Impairment Charge of N13.5bn bringing Q1 2024 annualised cost of risk (COR) to 1.8% compared with 4.5% for FY 2023. NPL ratio was down to 3.1% in Q1 2024 compared with 4.2% in FY 2023.

Management at the last conference call stated that GTCO’s balance sheet has been derisked with significant write offs in 2023 and noted that the bank is coming into 2024 with a clean balance sheet and expectations of write backs.

Overall, PBT grew significantly, up 587.5% y/y to N509.3bn while Net Profit was up 685.9% y/y to N457.1bn in Q1 2024 bringing Q1 2024 annualised post -tax ROAE to 105.0% compared with 44.8% for FY 2023. Ex fair value gains, ROAE comes to 28.8%.

The group reported Capital Adequacy Ratio (CAR) of 24.9% for Q1 2024 compared with 21.9% for FY 2023.

We have a Buy recommendation on the stock and a target price of N65.20/s. Current Price N38.10/s.

Kindly click on the below link to download the full report.

​CSL GTCO Q1 2024 Quick Take.pdf​​​​​