March 28, 2025/CSL Research

GTCO’s FY 2024 audited numbers showed a strong 143.6%y/y growth in Interest Income to N1.34trn driven by growth in both average volume of earning assets and average yield. Net Loans and advances to Customers grew 12.3% y/y (inclusive of the impact of devaluation of foreign currency loans). Interest Expense also grew strongly, up 148.3% y/y to N283.2bn. Customer Deposits grew moderately, up 35.1% (inclusive of the impact of devaluation). Overall, Net Interest Income grew 142.4% y/y to N1.1trn compared with N436.7bn for FY 2023 bringing Net Interest Margin (NIM) to 10.9%, up from 7.9% in 2023.

Net Fee and Commission Income grew strongly, up 73.4% y/y to N189.7bn but 10.3% lower than our forecast. Q/q, Net Fee and Commission was down 45.8% in Q4 compared to Q3. 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.

Other Income (comprising net gains on financial instruments held at FVTPL and other income sources) grew by 14.4% y/y, reaching N585.3 billion. However, the group also reported an unrealized foreign exchange (FX) revaluation loss of N1.9 billion in 2024, a sharp contrast to the gain of N74.5billion recorded in FY 2023.

OPEX grew significantly, up 60.9% y/y to N403.0bn. The moderately lower y/y growth in Opex, compared with a 73.4%y/y growth in Total Operating Income led to a slight improvement in the bank’s Cost to Income Ratio ex-provisions (CIR ex-provisions) to 22.0% in FY 2024 compared with 23.7% in FY 2023.

Total Impairment Charge (Loan impairment charges and net impairment charges on other financial assets) declined y/y to N164.3bn in FY 2024 compared with N197.9bn in FY 2023. Q/q, total Impairment Charge grew significantly, increasing to N100.4bn in Q4 compared to N16.1bn in Q3 and contributing to the Q4 loss. The group reported Loan Impairment Charge of N136.7bn bringing FY 2024 Cost of Risk (COR) to 4.9% compared with 4.5% for FY 2023. Coverage for lifetime credit impaired loans closed at 217.7% (31 December 2023: 351.5%) while at Group, it closed at 138.7% (31 December 2023: 191.1%)

PBT grew significantly, rising 107.8% y/y to N1.3 trillion, while Net Profit grew slower by 88.6% y/y to N1.0 trillion in FY 2023 due to a significantly higher tax charge in 2024. Post-tax Return on Average Equity (ROAE) for FY 2024 was 48.6%, compared to 44.8% in FY 2023. The total tax paid amounted to N248.8 billion, including a windfall tax of N51.2 billion.

The bank’s management proposed a final dividend of N7.03/s. This in addition to the N1.00/s interim dividend brings total dividend paid for the year to N8.03/s and implying a dividend yield of 11.7% based on today’s closing price of N68.80/s.

We have a Buy recommendation on the stock and a target price of N80.32/s. Current Price N68.8/0/s.