BREAKING: GTCO posts highest first quarter profits in Nigerian banking history

Guaranty Trust Holding Company (GTCO), one of the most efficiently managed banks in Nigeria, has just announced the highest pre-tax profits in the history of Nigerian banking.

According to information contained in its first quarter results, the bank recorded a profit before tax of N509.3 billion, more than six times earnings it did so in the same period in 2023.

Profits after tax for the period under review amounted to N457.1 billion, while the bank’s total assets increased to N13 trillion from N9.6 trillion at the end of 2023.

GTCO’s total profit after tax for 2023 was N539.6 billion, underscoring how important this result is for the bank and its shareholders.

Featured Key Results

The Holding Company, which includes its main Nigerian bank and its fledgling subsidiaries, reported net interest income of N213.8 billion after deducting credit losses.

The news continues after this announcement.

The news continues after this announcement.

  • Net interest income tripled the previous year’s figure, highlighting the significant profits that banks are generating from loans and advances to their customers.
  • In a season of high interest rates and weak exchange rates, commercial banks tend to put up impressive numbers.
  • GTCo also made over N100 billion from securities investments. About 79% of its investment securities portfolio is made up of Treasury bills, which are generating returns of up to 19% compared to single-digit returns recorded a year earlier.

Commissions and fees also contributed another N52 billion to the bottom line, almost generating another double-digit profit year on year.

What GTB says

Mr. Segun Agbaje, Group Chief Executive Officer, Guaranty Trust Holding Company Plc, shared insights on the company’s first quarter achievements and future prospects.

  • “Our first quarter results reflect the developing value of what we have created across all our business sectors across the holding structure, from banking and payments to fund management and pensions. “We are strategically positioned to compete effectively and meet all of our clients’ needs within a unified and thriving financial ecosystem.”

Despite the challenging operating environment, Mr. Agbaje highlighted the company’s strong performance, highlighting “Significant growth in all financial and non-financial metrics.” and stated that the company remains on track to meet its goals for the full year.

The bank also highlighted the importance of the result from the perspective of the banking sector, stating that it is one of the “best metrics” in the sector.

  • “Overall, the Group continues to record one of the best metrics in the Nigerian financial services industry in terms of key financial ratios, i.e. return on equity before tax (ROAE) of 117.0%, return on pre-tax assets (ROAA) of 18.0%, total impact capital adequacy ratio (CAR) of 24.9% and cost-income ratio (CIR) of 16.3%.”

Banks gain a lot from CBN policies

The size of the bank’s profits highlights the impact that the depreciation of Nigeria’s currency has had on the fortunes of commercial banks, unlike manufacturing companies.

Zenith Bank, UBA and Access Bank, which also recently released their results, reported N320 billion, N156.3 billion and N202.7 billion respectively. Like GTCo, gains from exchange rate revaluation helped profitability. In some cases, currency revaluation contributes up to 80% of profits.

  • GTCo Performance Reveals It Booked a Loss on Revaluation Gains While Earning about 331.5 billion naira of “fair value gain on financial instruments”, a term for an increase in the market value of a financial asset, measured by the difference between its current fair value and its previous valuation or purchase price.
  • It is unclear whether this represents the bank’s investments in financial derivatives, currencies or both. In this era of massive bank profits, currency revaluation gains have become a trend that stands in stark contrast to the devastating effects they are having on the broader economy.

The Central Bank’s tough monetary policy, which has seen its benchmark monetary policy rate (MPR) increase to around 24.75% (an increase of more than 600 basis points in less than six months), allows banks to gain money with the differential between interest rates on loans and deposits. rates.

In periods of high interest rates, this spread can be quite lucrative. Banks make money from the spread between loan interest rates and deposit rates, and in periods of high interest rates, the spread can be lucrative.

Retained earnings

GTCo’s earnings will also fuel debate over the central bank’s controversial decision not to include retained earnings in the calculation of banks’ Tier 1 capital.

  • For example, the N509 billion profit is more than the N361 billion GTCo needs to raise to meet the central bank’s recapitalization requirement.
  • GTCO’s retained earnings rose to N931 billion from N737.5 billion a year earlier. However, you are not allowed to capture that as part of your share capital, as per CBN directives,

While banks cannot include this as part of the bank’s Tier 1 capital under the central bank’s recapitalization plans, GTCo can pay the money as dividends to its shareholders after its half-year results.

  • “It would only be financially advisable for its shareholders to reinvest the dividends in the bank as part of the subscription of its emission rights.” says a portfolio analyst who preferred not to be identified.

GTCO share prices gained 8.8% at the close of trading on Friday to a share price of N38.10. The stock is down 5.95% so far this year. Its highest price placed this year is about N53 per share.