TUES, MAY. 02 2023-theGBJournal|Guaranty Trust Holding Company Plc (GTCO) interest expense rose by 63.2% y/y Q1-23 to N21.93 billion, primarily driven by the higher fees expensed on customer deposits (+57.3% y/y to N19.94 billion), the bank’s unaudited financial statements showed.
The report published last Friday showed costs of borrowings (+60.6% y/y to N1.03 billion) and financial institutions deposits (+794.7% y/y to N85.00 million) came in higher in the period under review.
Despite this expense expansion, the Holdco recorded an improvement in its funding mix (CASA as at Q1-23: 89.5% vs FY-22: 87.1%). Accordingly, the Holdco recorded a 43.6% y/y increase in net interest income. Following higher charges for loan impairments (+184.8% y/y), the net Interest income (ex-LLE) settled at NGN78.71 billion, translating to a 40.6% y/y growth.
Interest income advanced by 47.3% y/y to N104.08 billion, boosted by all contributory lines. Specifically, the Holdco generated higher income from loans and advances to customers (+25.0% y/y to N63.59 billion), investment securities (+49.3% y/y to N27.70 billion), cash and balances with banks (+962.4% y/y to N12.77 billion), and loans and advances to banks (+264.2% y/y to N2.00 million).
The Holdco reported an 11.1% y/y increase in its non-interest income to N51.52 billion, majorly driven by the higher income from net fees and commission (+59.6% y/y to N29.94 billion), which offset the lower gains from FX trading (-31.2% y/y to N9.07 billion) and investment securities (-26.0% y/y to N1.55 billion).
Operating expenses (Opex) increased by 16.8% y/y to N56.14 billion following the higher expenses incurred on regulatory fees – AMCON levy (+17.8% y/y to N13.72 billion), deposit insurance premium (+15.9% y/y to N4.22 billion) – and personnel expenses (+5.8% y/y to N10.39 billion). Given that operating income (27.2% y/y) grew faster than Opex, the group’s operational efficiency improved as its cost-to-income ratio (ex-LLE) settled at 43.1% (Q1-22: 47.0%).
Overall, GTCO’s profitability was stronger, with profit-before-tax settling 36.5% higher year-on-year to N74.09 billion.
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