Guaranty Trust Holding Company Plc H1:2024 Earnings Note | Riding on Interest Income and Unrealized Gains
In its recently released audited H1:2024 results, GTCO’s Gross Earnings jumped by 107.04% YoY to NGN1.39trn mainly due to the spike in interest income (+173.47% YoY to NGN617.89bn) and non-interest income (+111.94% YoY to NGN774.30bn), an offshoot of the unrealized fair value gain on financial instruments on its FCY balance sheet. Elsewhere, Operating Expenses increased by 60.70% YoY to NGN201.80bn, following higher personnel expenses and technology-related expenses in the period. Profit Before Tax (PBT) and Profit After Tax (PAT) grew massively by 206.59% YoY and 222.86% YoY each to NGN1.00trn and NGN905.57bn respectively. Overall, Net Profit Margin improved to 65.03% in the period (vs. 41.70% in H1:2023).We expect to see improvement in the Group’s interest income and non-interest income for the rest of the year riding on an elevated interest rate environment, consequently leading to robust profitability.
We have revised our target price for GTCo to NGN59.44 for 2024FY. At its current price of NGN46 as of 13th September 2024, this translates to an upside prospect of 29%. Thus, we put a “STRONG BUY” rating on the stock.
ARM Securities Limited is a full-service brokerage house that offers best-in-class brokerage services to local as well as foreign private and institutional investors. Formerly known as Hamilton Hammer, the Company commenced operation in 1994 and was acquired by ARM Investment Managers in 2008--an acquisition which has successfully re-positioned the company as a recognized brokerage firm in Nigeria. The Company is a dealing member of the Nigerian Stock Exchange (NSE) and is regulated by Securities and Exchange Commission (SEC). ARM Securities research team provides insightful commentaries on the Nigerian economy and its equity and debt markets using an approach which incorporates a thorough understanding of the fundamentals of the industries and companies under coverage. The research therefore adopts an integrated methodology of top-down analysis and bottom-up stock selection, which focuses on publicly quoted companies on the Nigerian Stock Exchange that are judged to offer the highest potential for earnings growth. In addition, its analysts provide periodic commentaries on a range of topical global and local issues which provide investing clients with a holistic view of the opportunities and risks in today’s financial market landscape.
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