November 05, (THEWILL) – Guaranty Trust Holding Company (GTCO) Plc posted impressive results for its third quarter (Q3) operations ended September 2023, which reflects a robust growth trajectory that excites the stakeholders.
This tremendous turn of events is coming after a period of heavy-footed performance on low earnings that put growth on a slow, downward slope.
After the peak performance in 2020 when it posted a profit after tax of N201.43 billion, the Tier-1 financial services institution saw its post-tax profits tumble to N174.83 billion and N169.17 billion in FY 2021 and 2022 respectively.
The Q3 2023 results, therefore, repositioned the group for a better result in 2023 when it is set for a bountiful year-end harvest, going by the nine months figures.
Admittedly, the group’s Q3 2023 performance could be seen as reflective of its resilience and underpins the strategy to generate sustainable value for its stakeholders.
However, the forex revaluation windfall, which loaded Nigeria’s deposit money banks with enormous benefits, forklifted GTCO to an unprecedented level of profitability.
GTCO’s interim unaudited financial statement for Q3 2023 showed that the group recorded robust expansion in profit after tax of N367.41 billion against N130.34 in the corresponding period of 2022 representing 181.8 percent.
The remarkable leap stemmed from a profit before tax of N433.20 billion compared to N169.72 billion in the equivalent period or 155.2 percent growth.
The group’s net interest income recorded a remarkable 155.2 percent increase to N433.20 billion from N169.72 billion in the previous period of 2022.
In all, the expansion trajectory reflected on the group’s loan book (net) which grew by 17.7 percent from N1.89 trillion recorded as at December 2022 to N2.22 trillion in September 2023, while deposit liabilities increased by 37.9 percent from N4.61 trillion in December 2022 to N6.36 trillion in September 2023.
The group’s balance sheet remained well structured and resilient with total assets and shareholders’ funds closing at N8.6 trillion and N1.3 trillion, respectively.
The giant holco informed that its Full Impact Capital Adequacy Ratio (CAR) remained very strong, closing at 25.1 percent, while asset quality was sustained as IFRS 9 Stage 3 Loans improved to 3.8 percent in September 2023 from 5.2 percent December 2022.
It noted that Cost of Risk (COR) closed at 4.1 percent from 0.6 percent in December 2022 owing to Management’s conservative stance on provisioning as macros worsened year-on-year, weighing negatively on the ECL variables.
The major boost to both top-line and profit came from a mind-blowing surge in the amount of forex revaluation gain, which ballooned to N334.35 billion against loss of N7.39 billion in Q2 2022.
Shareholders who spoke to THEWILL expressed optimism that the group’s Q3 performance signals a robust year-end result that will deliver handsome dividends.
“The result is really satisfactory; we are sure of enhanced returns at the end of the year from what we are seeing now,” said Ambrose Kehinde.
Another investor, Benjamin Akoh said that GT Bank, which has a large customer base, remains investors’ toast because of the unique brand it built over the years.
“These are fantastic results, powered indirectly by the convertible rate of dollar to naira. I am sure other banks’ results will toe the same line but we should not expect bigger leap in the last quarter because the exchange rate should stabilised lower than what it is now.
As an investor, I expect growth in the price of the stock and also more businesses that will engender better performance in the current quarter.
How I hope these banks will in collaboration with other banks try and lower our exchange rate to the dollar which will indirectly help in reflating the economy!” said Prince Anthony Omojola, National Coordinator, Independent Shareholders Association of Nigeria (ISAN), in a note to THEWILL
A Stockbroker and Head of Securities Trading at Planet Capital, Dr Paul Uzum, attributed the profit windfall to the banks to the foreign exchange revaluation gains that the devaluation of the Naira threw at them.
“FX translation gain was the factor. You will see it across the big banks GTco, Zenith, Access and UBA. FBNH equally had impressive results. The banks have been keeping a part of their reserves in FX, and some of their loans to clients are also in FX, so it is natural that with the steep d’évaluation, they will make large profits,” said Dr Uzum.
Doyen of Nigerian Stockbrokers, Sam Ndata, said the impressive performance of GTCO will attract more investors to it.
Commenting on the results, the Group Chief Executive Officer of Guaranty Trust Holding Company Plc, Mr. Segun Agbaje, said; “Our 3rd Quarter performance underpins our strategic positioning as a leading Financial Holding Company and reaffirms our strong capabilities to successfully navigate the challenges in our operating environment.
“Going into the final quarter of the year, we will continue to leverage the strengths within our growing financial services ecosystem to improve our products and service offerings, enhance customer experience, and maximise shareholder value.”
He further said; “We are proud of our work towards Promoting Enterprise across the African continent over the years and remain committed to helping indigenous small businesses thrive through our consumer-focused fairs. The 6th Edition of the GTCO Fashion Weekend is scheduled to be held in Lagos, Nigeria, on 11/12 November 2023, and will give entrepreneurs in the Nigerian fashion retail space a free-business platform to showcase their diverse talents and creativity to a global audience.”
The current share price of Guaranty Trust Holding (GTCO) is N35.15. GTCO closed its last trading day (Friday, November 3, 2023) at N35.15 per share on the Nigerian Exchange (NGX), recording a 0.4 percent gain over its previous closing price of N35.00. GTCO began the year with a share price of N23.00 and has since gained 52.8 percent on that price valuation, ranking it 58th on the NGX in terms of year-to-date performance.
GTCO is the eighth most traded stock on the Nigerian Exchange over the past three months (Aug 7 – Nov 3, 2023). It has traded a total volume of 1.02 billion shares—in 19,323 deals—valued at N37 billion over the period, with an average of 16.2 million traded shares per session.
A volume high of 54.8 million was achieved on September 4th, and a low of 1.97 million on October 16th, for the same period.
Guaranty Trust Bank Ltd, the major subsidiary of the group, was named Best Bank in Nigeria at the Euromoney Awards for Excellence 2023. This marks a record 12th time that Guaranty Trust Bank has been recognised as the leading financial institution in Nigeria.
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
