FREE

GUARANTY TRUST HOLDING COMPANY PLC H1'21 Earnings Release - Profit slides 16% y/y in H1'21

GTCO recently released its H1’21 results, posting a 16% y/y decline in Gross Earnings to ₦208 billion. This came as the result of an 18% y/y decline in Interest Income to ₦126 billion, despite a 9% q/q improvement in the line item caused by a 326bps increase in yield on loans and advances. Meanwhile, Interest Expense also fell by 27% y/y, despite a 42% q/q rise in interest paid, as cost of funds rose to 1.2% from 0.8% in Q1. This meant a 16% y/y drop in Net Interest Income to ₦107 billion.

On a more positive note, Non-Interest Revenue (NIR) growth persisted, rising 11% y/y to ₦80 billion despite a 13% q/q decline. Net fees and commissions was the largest contributor, rising by 52% q/q to ₦37 billion. The bank reported weaker gains on forward transactions of ₦13 billion, a 38% y/y decline, although in Q2 the bank doubled Q1 returns to ₦9 billion.                                               

Cost-wise, Impairment charges fell 30% y/y to ₦5 billion, although Q2 impairments actually grew 53% to ₦3 billion, while NPLs improved further to 6.0% from 6.1% in Q1. On the other hand, Opex grew 7% y/y to ₦89 billion amid a 27% y/y growth in AMCON charges to ₦22 billion, however, occupancy costs remained lower y/y at ₦2 billion. Overall, this led to a 15% y/y reduction in PBT to ₦93 billion, while PAT fell 16% y/y to ₦79 billion, giving an ROAE of 21% (FY’20: 27.1%; Q1’21: 24.2%). The bank also proposed an interim dividend of ₦0.30/share (H1’20: ₦0.30/share).