…Profitability was robust as profit before tax grew by 206.6% y/y to N1.00 trillion.
…PAT grew by 222.9% y/y to N905.57 billion, despite the 109.3% y/y increase in tax expense
…The group reported a 173.5% y/y increase in interest income to N617.89 billion, supported by increases across major contributory lines.
…Records lower impairment charges on loans (-42.9% y/y) and financial assets
THUR SEPT 12 2024-theGBJournal| Guaranty Trust Holding Company Plc (GTCO) earnings per share (EPS) rose to N32.12 Wednesday (vs NGN9.94 in H1-23) as H1-24 revenue and profit beat estimates supported by increases across major contributory lines.
GTCO’s sturdy growth in earnings was supported by the increases across the group’s funded (+173.5% y/y) and non-funded (+112.5% y/y) income lines.
The board declared an interim dividend of N1.00/s (H1-23: N0.50/s), which equates to a dividend yield of 2.2% based on the last closing price of N45.45/s (11 September).
The group reported a 173.5% y/y increase in interest income to N617.89 billion, supported by increases across major contributory lines. Specifically, GTCO recorded higher income from investment securities (+296.0% y/y to N266.66 billion), loans to customers (+86.6% y/y to N242.30 billion), and cash and balances with banks (+352.4% to N105.92 billion).
Cordros Research analysts attribute the higher interest income to the combined impact of the elevated interest rates and the increase in key earning assets – cash & cash equivalents (+93.4% YTD to N4.47 trillion), investments securities (+56.7% YTD to N3.87 trillion) and loans & advances to customers (+25.5% YTD to NGN3.11 trillion) – during the review period.
Interest expenses inched higher by 160.6% y/y to N126.38 billion, triggered majorly by higher costs on deposits from customers (+134.4% y/y) following a deterioration in the group’s CASA mix (86.7% | 2023FY: 88.6%) in H1-24.
Also, GTCO incurred higher costs on borrowings (+431.6% y/y) and deposits from financial institutions (+412.1% y/y). Notwithstanding, net interest income ex-LLE grew by 177.0% y/y to N491.51 billion supported by the faster growth in interest income than expenses amid lower loan impairment charges (-42.9% y/y to N47.4 billion).
As expected, non-interest income (NII) grew by 112.5% y/y to N761.81 billion, supported by fair value gains on financial instruments (+94.4% y/y to N493.02 billion), derivative gains (+712.1% to N130.21 billion), and higher net fees and commission income (+96.1% y/y to N101.07 billion). The preceding offset the FX revaluation loss of N3.92 billion recorded.
Further down, operating expenses increased by 61.0% y/y to NGN202.15 billion, as the group incurred higher costs on technological expenses (+115.1% y/y), personnel expenses (+99.6% y/y), and regulatory expenses – AMCON (+33.6% y/y) & NDIC (+48.3% y/y) during the review period.
Eventually, owing to the stellar growth in operating income (+166.2% y/y) to OPEX, the Holdco’s operational efficiency improved as its cost-to-income ratio (ex-LLE) declined to 16.8% (H1-23: 27.7%).
Profitability was robust as profit before tax grew by 206.6% y/y to N1.00 trillion. Likewise, the PAT grew by 222.9% y/y to N905.57 billion, despite the 109.3% y/y increase in tax expense.
HoldCo recorded lower impairment charges on loans (-42.9% y/y) and financial assets (-99.6% y/y).
”Over the rest of the year, we believe the group will maintain positive momentum, particularly as the higher interest rates and revaluation gains remain upside factors,” Crodros Research said.
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