Strong interest income, asset growth drive GTCO’s N1trn profit

Joy Agwunobi

Guaranty Trust Holding Company (GTCO), one of Nigeria’s leading tier-one financial institutions, has reported an after-tax profit of N1.08 trillion for the first nine months of 2024, driven primarily by a rise in interest income.

The company’s report, based on data from the Nigerian Exchange Group (NGX), reveals that GTCO’s interest income increased by 161 percent year-over-year, reaching N980 billion compared to N374.5 billion recorded in the same period in 2023.

This rise in interest income has been linked to growth in average earning assets and higher yields. Additionally, net loans and advances to customers rose by 21.8 percent during this period, attributed largely to the devaluation of foreign currency loans.

Operating expenses also climbed, mirroring the broader economic climate. GTCO’s interest expenses grew by 158.2 per cent, reaching N198.9 billion, while customer deposits rose by 44.1 percent. As a result, GTCO reported a net interest income of N781.5 billion, marking a 162.6 percent increase from the N297.5 billion recorded last year.

In the area of fees and commissions, GTCO reportedly achieved notable growth with revenue in this segment rising by 97.3 per cent to N180.2 billion from N91.3 billion in 2023. This increase was largely driven by e-business income, which alone grew by 53.7 percent and represented over a quarter of the total fees and commissions.

Additional revenue streams, including account maintenance charges and ancillary banking services, also saw substantial increases, surging by 62.7 per cent and 217 per cent, respectively.

Despite these gains, GTCO faced challenges in other financial areas. According to the company, a total impairment loss of N63.9 billion on financial instruments, contrasting with a prior impairment write-back of N148.6 billion. The firm also encountered a foreign exchange loss, posting an unrealised FX loss of N1.7 billion compared to a gain of N92.2 billion in the same period last year.

Inflation and increased energy costs contributed to a 61.1 percent rise in operating expenses, totaling N297.4 billion. However, GTCO’s income from other sources rose by 65.9 per cent, mainly due to unrealised fair value gains on financial instruments, amounting to N523.2 billion.

In terms of cash flow, GTCO demonstrated strong operational efficiency, with net cash flow from operations reaching N1.87 trillion, a significant increase from N88 billion reported in 2023. Nonetheless, the holding company registered a negative cash flow from investing activities, totaling N1.14 trillion, largely due to investments in securities and property acquisitions. On the financing front, net inflows reached N122.1 billion, largely supported by proceeds from new borrowings that offset dividend payments and other liabilities.

During this period, GTCO paid dividends totaling N79.4 billion and addressed borrowings and lease liabilities amounting to N45.1 billion and N6.5 billion, respectively. New borrowings brought in N254 billion, pushing net cash flow from financing activities to N122.1 billion in the first nine months of 2024. Consequently, the company’s cash and cash equivalents increased by 102.8 percent, reaching N4.28 trillion from N2.11 trillion recorded last year.

GTCO’s total loans and advances grew by 46.1 percent, rising to N3.2 trillion from N2.19 trillion, boosting the firm’s total assets to N15.6 trillion. The bank also saw a 49.7 percent increase in deposits and current accounts, which climbed to N6.65 trillion from N4.44 trillion. Total shareholders’ funds rose, reaching N2.63 trillion from N1.63 trillion, underscoring GTCO’s strengthened financial position through 2024’s first three quarters.