March 28, 2025/Cordros Report

Guaranty Trust Holding Company Plc (GTCO) published their 2024FY audited financials today (28 March), reporting a net profit of NGN1.02 trillion (2023FY: NGN539.65 billion), translating to an earnings per share of NGN35.44 (2023FY: NGN19.07). The group’s performance was driven by the sturdy growth in both interest (+143.6% y/y) and non-interest (+42.1% y/y) income lines. Notably, the board proposed a final dividend of NGN7.03/share (2023FY: NGN2.70/share), translating to a dividend yield of 10.9% based on the last closing price of NGN64.25/share (27 March), bringing the total dividend for 2024FY to NGN8.03/share (2023FY: NGN3.20/share).

GTCO reported a 143.6% y/y growth in interest income to NGN1.34 trillion, driven by higher income from key contributory lines. In nominal terms, the group generated higher revenue from investment securities (+228.8% y/y to NGN599.32 billion) and loans & advances to customers (+75.2% y/y to NGN509.25 billion), placements with other banks (+242.5% y/y to NGN226.83 billion), which was sufficient to offset the decline in income from loans and advances to banks (-44.7% y/y). We highlight that the increase in funded income was driven by the combined impact of elevated rates in the fixed income market and increases in the HoldCo’s earning assets (+59.9% y/y to NGN11.61 trillion). Consequently, earnings yield increased significantly by 397bps to 11.6%. However, non-performing loan ratio increased to 4.9% (2023FY: 4.2%), primarily due to the exchange rate impact on the group’s FCY-denominated loans.

Elsewhere, interest expense surged by 148.3% y/y to NGN283.22 billion, primarily driven by the elevated interest rate in the environment, which led to increased funding costs. Accordingly, the Holdco’s interest cost on customers’ deposit holdings rose by 114.5% y/y to NGN220.47 billion, driven by deterioration in the group’s funding mix (CASA 2024FY: 83.6% vs FY-23: 88.6%). At the same time, borrowing costs grew by 543.5% y/y to NGN47.34 billion. Consequently, the net interest income rose by 142.4% y/y to NGN1.59 trillion. Ultimately, the net interest income (ex-LLE) settled 176.2% y/y higher at NGN921.92 billion, following an increase in loan impairment charges (+32.7% y/y to NGN136.66 billion).

Non-interest income (NII) grew by 42.1% y/y to NGN747.36 billion, spurred primarily by the fair value gains on financial instruments (+16.7% y/y to NGN515.55 billion). Aside from the fair value gains, the rise in the income generated from net fees and commission (+73.4% y/y to NGN189.71 billion) and FX trading (+31.1% y/y to NGN76.83 billion) further supported the income line.  The expansion in NII, alongside the growth in net interest income, led to a 94.2% y/y increase in operating income to NGN1.67 trillion.

Further down, GTCO’s operating expenses grew by 60.9% y/y to NGN403.03 billion, with pressure stemming from personnel expenses (+89.4% y/y to NGN85.40 billion), technological costs (+48.4% y/y to NGN88.04 billion), and AMCON levy (+34.2% y/y to NGN36.66 billion). Nonetheless, the group maintained impressive operational efficiency, with the cost-to-income ratio (ex-LLE) settling at 24.2% (2023FY: 29.1%).

Overall, profit before tax advanced by 107.8% y/y to NGN1.27 trillion, while profit after tax grew by 88.6% y/y to NGN1.02 trillion), after accounting for the income tax expense of NGN248.44 billion – Windfall tax (NGN51.25 billion).

Following the substantial transfer to retained earnings (+NGN910.08 billion), the group’s capital adequacy ratio (CAR) increased precipitously to 39.3% (2023FY: 21.9%), marking the highest level in the industry.

Comment: GTCO’s performance was impressive, with financial indicators surpassing peers. First, the group continues to seal the title of the most efficient lender, with a CIR of 24.2%. Additionally, the group now holds the industry’s highest buffers relative to risky assets, with a CAR of 39.3%. Furthermore, following the sizeable dividend proposed, GTCO boasts the highest dividend yield of 10.9%. Looking ahead to 2025E, we expect continued positive momentum underpinned by improved credit creation. Although the stability of the naira may limit earnings growth, we expect the group’s strong operational efficiency to continue to support earnings. Our estimates are under review.