EUR 48.04 For Business Accounts Only

GUARANTY TRUST BANK - Earnings trump bears, EPS up 5% y/y

​Amidst the tough operating environment, GUARANTY’s earnings was largely ahead of consensus estimate; EPS was 6% ahead of our N3.20 and N3.37 consensus estimate. Although Gross Earnings was down 5% q/q in Q4’15, the top line figure for FY’15 came in 8% higher y/y and marginally better than our estimate (1% variance). The relatively weaker top line performance in Q4’15 was pressured by both Interest and Non-Interest Income, down 5% and 6% respectively. Despite an impressive 7.5% loan growth, the lower yield environment constrained Interest Income. The most significant deviation from our estimate came from loan loss provision. Although the expense line rose 75% y/y to N12.4 billion (translating to a 0.9% CoR, NPL ratio of 3.7%), it was 26% better than our N16.7 billion estimate. Furthermore, with a 9% q/q moderation in Q4’15, Operating Expense was constrained to 2% y/y rise (5% better than our estimate). Overall, PBT and PAT rose 4% and 5% y/y – beating our forecast by 8% and 6% respectively. We revise our TP to N30.07 (Previous: N28.00).