EUR 48.04 For Business Accounts Only

GUARANTY TRUST BANK PLC - Earnings beat estimates albeit weaker 4% y/y

GUARANTY released Q1’16 results posting similar performances across key line items to those reported by other Tier I banks. Despite reporting a mild 2% y/y rise in Interest Income (just in line with our estimate), Gross Earnings was down 5% y/y - pressured by an 18% declined in Non-Interest Income (N19.0 billion) albeit better than our N16.7 billion estimate. The weaker Non-Interest Income was largely pressured by significant decline in FX revaluation gains and net gains from financial instruments. In spite of a strong 10% deposit growth, Interest Expense declined 5% y/y (16% better than our estimate), supported by the moderated interest rate environment within the quarter. Also, with loan loss provision down 4% y/y to N3.4 billion and 20% better than our estimate, Operating Income was down 4% y/y but 12% ahead of our estimate. Furthermore, whilst Operating Expense moderated 2% y/y, the expense line came in 7% higher than our estimate (a 14% uptick from Q4’15 number.) Consequently, PBT moderated 6% y/y to N30.7 billion (16% better than our N26.4 billion estimate). Overall, with an effective tax rate of 16% vs. our 17% estimate and prior year’s 19%, PAT moderated 4% y/y – 17% ahead of our estimate.