May 2, 2025/Cordros Report
Guaranty Trust Holding Company Plc (GTCO) published their unaudited Q1-25 financials after the close of business on Wednesday (30 April), recording a significant decline in EPS (-51.7% y/y) to NGN7.84. The decline stemmed from the lower non-interest income (-70.1% y/y) recorded.
The group reported a 41.1% y/y increase in interest income to NGN397.39 billion, supported by increases across major contributory lines. Specifically, GTCO recorded higher income from investment securities (+59.1% y/y), loans to customers (+23.9% y/y), and placement with banks (+42.4% y/y).
On the flip side, interest expenses increased by 45.4% y/y to NGN79.03 billion, largely due to higher costs on customer deposits (+27.4% y/y), borrowings (+601.3% y/y), and deposits from financial institutions (+2.4% y/y). Nonetheless, net interest income ex-LLE grew by 42.6% y/y, supported by the stronger growth in interest income and lower impairment charges (-0.5% y/y).
Non-interest income (NII), however, declined by 70.1% y/y to NGN118.09 billion, primarily due to a sharp drop in fair value gains (Q1-25: NGN1.50 billion vs Q1-24: NGN331.55 billion). This outweighed improvements in net fees and commission income (+36.5% y/y), FX trading income (+17.4% y/y), and gains from investment securities (+106.6% y/y). As a result, operating income contracted by 30.5% y/y to NGN423.03 billion.
Operating expenses increased by 23.5% y/y to NGN122.65 billion, as the group incurred higher costs on personnel expenses (+23.1% y/y), and regulatory expenses – AMCON (+38.0% y/y) & NDIC (+24.8% y/y) – during the review period. Eventually, cost-to-income ratio (ex-LLE) declined to 28.1% (Q1-24: 16.0%).
Overall, profitability declined, with profit before tax and profit after tax falling by 41.0% y/y and 43.5% y/y, respectively.
Comment: Expectedly, the relative stability of the naira weighed on GTCO’s non-core income given their foreign equity position. Nonetheless, we believe profitability will remain supported by (1) resilient contributions from sustainable income lines such as fees and commissions, (2) GTCO’s strong cost efficiency, and (3) the prevailing high-interest-rate environment. Our estimates are under review.
