Report

GUARANTY TRUST BANK PLC Q1'18 - Strong start to the year as PAT beats

Strong start to the year as PAT beats                                                        

Early filer GUARANTY released its Q1’18 results, starting the year on a positive note with earnings coming mildly better than expected. Whilst top line (₦109.0 billion) came largely in line with our estimate, bottom line (₦44.7 billion) was 4% ahead of our estimate as the bank maintained the decent run rate from Q4’17. Save for notable deviations in loan loss provision and effective tax rate estimate for Q1’18, we note a stable q/q earnings trend in most of the other line items. With Operating Expense (₦32.9 billion) coming marginally better than our ₦33.5 billion estimate, PBT (₦52.6 billion) was 3% ahead of our ₦51.3 billion estimate. Overall, with an effective tax rate of 15% vs. our 16% estimate and prior year’s 18%, PAT rose 8% y/y to ₦44.7 billion – 4% ahead of our ₦43.1 billion estimate. The long-awaited implementation of IFRS 9 has kicked in with GUARANTY taking a one-time charge of ₦132 billion on its equity. In line with the guideline, the one-time charge was taken directly through other comprehensive income as against the income statement.                                                    

We have updated our model to reflect the mild deviations across a few line items. Particularly, with loan book moderating in Q1’18, we revise our loan growth forecast for FY’18 to 5% (Previous: 8%). Consequently, we cut our Interest Income forecast to ₦331 billion (Previous: ₦333 billion) amidst the lower interest rate environment. With our Operating Expense estimate little changed at ₦128 billion, we forecast a PAT of ₦182 billion for FY’18. Supported by market leading RoAE and RoAA of 29.9% and 5.2% respectively, GUARANTY trades at a premium to industry peers with P/B and P/E ratios of 2.3x and 7.2x vs. Tier I average of 1.0x and 5.1x respectively.

                                               

Underlying
Guaranty Trust Bank PLC

Provider
Vetiva Capital Management
Vetiva Capital Management

​Vetiva provides clients with independent and unbiased access to analysis and opinion. We keep our clients on the cutting edge of market information and provide up to date market intelligence on quoted companies. Our services allow brokers, investment firms, and asset managers focus their energies on developing investment strategies and client relationships.

Other Reports on these Companies
Other Reports from Vetiva Capital Management

ResearchPool Subscriptions

Get the most out of your insights

Get in touch