By Grace Kehinde
Guaranty Trust Holding Company Plc (GTCO) in its half-year ended June 30, 2022 maintained its positive performance with 11 per cent increase in profit before tax to N103.25billion from N93.06billion in H1 2021.
For second quarter (Q2) 2-22 standalone, profit before tax rose by 24.4per cent y/y and profit after tax gained 0.9per cent y/y. On the H2 2022, Earning Per Share (EPS) of N2.79, the board proposed an interim dividend of N0.30 (flat y/y), in line with our expectations.
Interest income grew by 16.7 per cent y/y in H1 2022 and was primarily supported by a 13.1per cent y/y (Q2 22: +11.4 per cent y/y) growth in Interest earned on loans to customers.
The rise came as the group recorded a 27basis points y/y increase in the average yield on customer loans and growth in gross loans (+12.3 per cent y/y; +1.6 per cent y-t-d).
Interest expense rose by 38.4 per cent y/y in H1 2022, driven by a 44.6 per cent y/y increase in Interest paid on Customer deposits as the group’s Current and Savings Account (CASA) mix deteriorated to 85.9 per cent, compared with 86.7 per cent in H1 2021.
Consequently, the group’s cost of funds increased by 20basis points y/y to 1.2 per cent. Nonetheless, Net Interest income grew by 12.9 per cent y/y, while the Net Interest Margin (NIM) compressed slightly by 12basis points y/y to 5.8 per cent.
Non-interest income grew by a decent but lower-than-expected 6.6 per cent y/y in H1 2022. The growth was driven by a 33.4 per cent y/y surge in Trading revenues following a substantial rise in Net FX trading gains. However, Other income faltered, declining by 13.7 per cent y/y following a slump in FX revaluation gains.
Elsewhere, Operating expenses (Opex) grew by 11.3 per cent y/y, mainly on Communications, technological related expenses and administrative expenses (+36.0 per cent y/y) and Occupancy costs (+58.0 per cent y/y).
According to the financials, the former is inclusive of the administrative fee due to the group’s Staff Investment Trust (SIT) for the management of the shares held by the scheme while the latter relates to diesel, fuel, and electricity cost as well as ground rates and water cost.
As a result, the group’s Cost-to-Income ratio increased to 48.2 per cent (H1 21: 47.7 per cent), reflecting that the bank’s efficiency is still tracking below its historical levels (5-year average: 37.3 per cent).
However, following the larger growth in net revenue than costs, Pre-provision operating profits rose by 9.2 per cent y/y.
Further down the P&L, Loan Loss Provisions declined by 25.4 per cent y/y, following an improved outlook for the macroeconomic variables used in the Expected Credit Losses (ECL) model in the period. As a result, the group’s Cost of Risk declined to 0.2 per cent (H1 2021: 0.5 per cent).
The Group’s loan book (net) increased by 1.8per cent from N1.80trillion recorded as at December 2021 to N1.83trillion in June 2022 while deposit liabilities increased by 6.4per cent from N4.13trillion in December 2021 to N4.39trillion in June 2022.
The Group’s balance sheet remained well structured and resilient with total assets and shareholders’ funds closing at N5.7trillion and N845.7billion, respectively.
Full Impact Capital Adequacy Ratio (CAR) stayed very strong, closing at 22per cent, while asset quality was sustained as IFRS 9 Stage 3 Loans ratio and Cost of Risk (COR) closed at 6.2 per cent and 0.2 per cent in June 2022 from six per cent and 0.5per cent in December 2021, respectively.
The Group Chief Executive Officer, GTCO, Mr. Segun Agbaje, in a statement said “Our results show an increase in key revenue lines and a strong performance in other financial metrics which reinforce our growth prospects as a leading financial services company.
“Our priority at the start of the 2022 financial year was to bring the Group’s new businesses on-stream, starting strong with a focus on long-term viability.
“At present, we have successfully expanded our financial services ecosystem to include HabariPay Ltd, Guaranty Trust Fund Managers Ltd, and Guaranty Trust Pension Managers Ltd, and all of them are P&L positive.”
He further stated that, “These newly created businesses will operate alongside our flagship banking franchise to offer increased value to our growing customer base as well as other stakeholders.
“We will continue to build on our core strengths of service excellence, innovation, and flawless execution to deliver our corporate objectives for the year and further our vision of being Africa’s leading financial services institution.”
Overall, the Group continues to post one of the best metrics in the Nigerian Financial Services industry in terms of key financial ratios i.e., Pre-Tax Return on Equity (ROAE) of 23.9per cent, Pre-Tax Return on Assets (ROAA) of 3.7 per cent, Full Impact Capital Adequacy Ratio (CAR) of 22per cent and Cost to Income ratio of 49.1 per cent.
GTCO is a fully-fledged financial services group with banking operations across West and East Africa and the United Kingdom as well as non-banking businesses in several key industry segments including Payment, Funds Management and Pension Fund Management.
With N5.7trillion in assets and over 28 million customers, the Group remains one of the most profitable and best managed financial services companies out of Nigeria providing commercial banking services and non-banking financial services across eleven countries. Its leadership in the banking industry and efforts at empowering people and communities has earned it many prestigious awards over the years including Best Banking Group in Nigeria and Most Innovative Bank in Nigeria at the 2022 World Finance Banking Awards. It also retained its position as Africa’s Most Admired Financial Services Brand in the 2022 ranking of The Brand Africa 100: Africa’s Best Brands.
