October 30, 2024/CSL Research

GTCO’s 9M 2024 unaudited numbers showed a strong 161.7%y/y growth in Interest Income to N980.4bn driven by growth in both average volume of earning assets and average yield. Q/q (Q2 2024 compared with Q1 2024) Interest Income was also up 7.8%. Net Loans and advances to Customers grew 21.8% in 9M 2024 relative to FY 2023 (inclusive of the impact of devaluation of foreign currency loans). Interest Expense also grew strongly, up 158.2% y/y to N198.9bn. Customer Deposits grew moderately, up 44.1% (inclusive of the impact of devaluation) in 9M 2024 compared with FY 2023. Overall, Net Interest Income grew 162.6% y/y to N781.5bn compared with N297.5bn in 9M 2023.

Net Fee and Commission Income grew strongly, up 92.2% y/y to N158.6bn and 17.8% q/q (Q3 2024 compared with Q2 2024). Main drivers of the y/y growth were strong growth in credit related fees, account maintenance charges, E-business income, commission on foreign exchange deals, Income from financial guarantee contracts issued, account services, maintenance and ancillary banking charges and transfer related charges.

9M 2O24

​

Source: Company’s Financials, CSL Research.

Other Income (comprising net gains on financial instruments held at FVTPL and other income sources) surged by 65.9% y/y, reaching N637.7 billion. This impressive y/y growth was primarily fuelled by a strong rise in unrealized fair value gains on financial instruments, which amounted to N523.2 billion in the first nine months (9M) of 2024, compared to N242.1 billion during the same period in 2023. However, the group also reported an unrealized foreign exchange (FX) revaluation loss of N1.7 billion in 9M 2024, a sharp contrast to the gain of N92.2 billion recorded in 9M 2023. Quarter-on-quarter (q/q), Other Income fell substantially, declining by 107.3% to a net loss of N23.1 billion in Q3 2024, down from an income of N318 billion in Q2. This decline was mainly due to reduced fair value gain of N30.2 billion in Q3 2024, compared to N161.5 billion in Q2, and an unrealized loss on forward transactions of N98.0 billion in Q3 2024, a reversal from the gain of N130.1 billion reported in Q2 2024.

OPEX grew significantly, up 61.1% y/y to N294.4bn. Q/q, OPEX was down 9.7%. The significantly lower y/y growth in Opex, compared with a 106.4%y/y growth in Total Operating Income led to a drop in the bank’s Cost to Income Ratio ex-provisions (CIR ex-provisions) to 18.7% in 9M 2024 compared with 23.9% in 9M 2023.

Total Impairment Charge (Loan impairment charges and net impairment charges on other financial assets) was down to N63.9bn in 9M 2024 compared with N148.6bn in 9M 2023. The group reported Loan Impairment Charge of N63.6bn bringing 9M 2024 annualised cost of risk (COR) to 2.9% compared with 4.5% for FY 2023.

Overall, PBT grew significantly, up 181.5% y/y to N1.2trn while Net Profit was up 195.3% y/y to N1.1trn in 9M 2024 bringing 9M 2024 annualised post -tax ROAE to 70.4% compared with 44.8% for FY 2023.

We have a Buy recommendation on the stock and a target price of N65.20/s. Current Price N50.60/s. Our estimates are being reviewed.

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

​​​​​​​CSL GTCO 9M 2024 Quick Take.pdf​​​​​