FREE

GTCO PLC Q1'22 Earnings Release - Gross Earnings improve on steady Asset yield

GTCO recently released its Q1’22 results, reporting a 13% y/y growth in Gross Earnings to ₦120 billion. The earnings improvement came as the result of  a 17% y/y  rise in Interest Income to ₦70 billion. This improvement was interesting, as it was driven by a 15% y/y increase in earnings from loans, which came despite a 5% shrinkage in the loan book from FY’21. Meanwhile, Non-Interest Revenue (NIR) grew 8% y/y to ₦46 billion after Net fees and commissions grew 28% y/y to ₦19 billion.

Net Interest Income (NII) also grew by 9% y/y to ₦57 billion, despite a 71% jump in Interest Expense to ₦13 billion; this was mainly due to an 84% increase in interest paid on customer deposits. Meanwhile, Impairment charges fell 35% y/y to ₦1.2 billion, as nominal NPLs improved to ₦107 billion from ₦114 billion as of FY’21, although overall NPL ratio was 30bps higher at 6.3% due to the smaller loan book. Furthermore, Opex grew 21% y/y to ₦48 billion amid a 23% y/y growth in AMCON charges to ₦11.6 billion. Overall, this led to a 1% y/y increase in PBT to ₦54 billion, while PAT fell 5% y/y to ₦43 billion on the back of a higher tax bill of ₦11 billion (Q1’21: ₦8 billion).

Tighter balance sheet forecast moderates earnings projection GTCO’s Loan book shrank in Q1’22 to ₦1.7 trillion from ₦1.8 trillion as of FY’21. A 10% drop in Term loans to ₦1.5 trillion during the period appears to have occurred across several of the company’s international subsidiaries, with Nigeria contributing 74% of the ₦84 billion decline, while Ghana contributed 14%. However, despite the drop yield on assets remained steady at 7.5%,thus interest income improved. The drop in loans follows the trend set in Q1’21, when loans fell 1% from FY’20, before rebounding in subsequent quarters. Having said that, we have nonetheless adjusted our FY’22 loan book projection to ₦1.9 trillion (Previous: ₦2.0 trillion), a 3% y/y increase. We also maintained our FY’22 Asset yield estimate of 7.4% (FY’21: 7.6%), giving us a new Interest Income projection of ₦286 billion (Previous: ₦291 billion).