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GTCO PLC H1'22 Earnings Release - Earnings up 15% y/y amid Interest Income Growth

GTCO recently released its H1’22 results, reporting a 15% y/y growth in Gross Earnings to ₦239 billion. The earnings improvement came as the result of a 17% y/y  rise in Interest Income to ₦147 billion. This was driven by the combination of a 13% y/y increase in interest from loans and a 37% y/y increase in income from T-bills and investment securities. Meanwhile, Non-Interest Revenue (NIR) grew 7% y/y to ₦85 billion, thanks to a 21% increase in fees and commissions, specifically corporate finance and asset management fees.                                                            

Meanwhile, Net Interest Income (NII) also grew by 13% y/y to ₦121 billion, despite a 38% jump in Interest Expense to ₦26 billion, which was caused by a 45% increase in interest paid on customer deposits. Meanwhile, Impairment charges fell 25% y/y to ₦3.5 billion, even as the bank reported a 12% y/y increase in Loans and Advances. Furthermore, Opex grew 11% y/y to ₦99 billion as the bank reported AMCON charges in excess of ₦23 billion, 6% higher than last year’s figure. Overall, this led to an 11% y/y increase in PBT to ₦103 billion, while PAT fell 2% y/y to ₦77 billion on the back of a higher tax bill of ₦26 billion (H1’21: ₦13.6 billion).                                                  

Q2 performance dampens growth forecast

GTCO’s Q2 numbers showed a decline in NIR which outweighed the growth in Net Interest Income. Despite seeing 8% higher interest returns in Q2 than Q1, as well as a 4% lower interest expense, the bank’s gross earnings remained flat q/q after NIR fell 16% to ₦39 billion.

The reason for this decline was a drop-off in trading revenue, specifically foreign exchange trading gains from ₦13 billion in Q1 to ₦7 billion in Q2. Due to this decline, we have adjusted our FY’22 NIR projection to ₦177 billion (Previous: ₦197 billion) as we anticipate minimal quarterly growth across the line item in H2.