GTBank drives efficiency, grows other income by 305%

Guaranty Trust Bank has released its 2018 first quarter results, declaring a profit after tax of N44.7bn.

The profit represented a 7.7 percent growth from N41.5 billion recorded in the same period of 2017.

Gross earnings grew by 4.6 percent to N108.97bn while income tax expense dropped 10.8 percent to N7.95bn. Net Assets, however, fell 14.4 percent to N535.1bn from N625.2bn recorded one year ago.

An analysis of the released income statement shows that interest income that constitutes 74.12 percent of total Gross Earnings dropped by 3.97 percent from N84.1bn recorded in the first quarter of 2017, to N80.8 billion.

This depicts a significantly lower interest rate environment compared to last year. Specifically, interest earned on financial assets held for trading, loans and advances to customers, and available for sale financial instruments recorded significant year on year declines of 54.58 percent, 7.68 percent, and 1.91 percent to N849.37 million, N48.65 billion and N22.06 billion respectively. These muted the 111.87per cent year on year surge in interest via bank loans and advances, which makes up a meagre 0.10 percent (N84.17 million) of total interest income.

Interest expense increased 17.3 percent driven by the 27.2 percent increase in interest paid on customer deposits. This coupled with the decrease in interest income, caused a decline in net interest income by 9.74 percent to N59.69 billion.

Meanwhile, following the surge in other income that grew an impressive 305.51 percent in one year, as well as the increase in gains on financial instruments that recorded a 40.1 percent increase in the review period, Non-Interest Revenue (NIR) grew by 41.28 percent to N27.46 billion. Net fee & commission income was higher by 10.63 per cent at N14.49 billion, from the previous year’s restated sum of NGN13.09 billion (previously NGN16.34 billion), as 11.29 per cent growth in fee and commission income, outweighed the 25.89 per cent increase in fee and commission expenses.

A review of the bank’s balances sheet revealed that loan impairment charges came in lower by 57.01 percent. The total loan book also declined by 6.55 percent to N1.35 trillion, against the N1.45 trillion recorded in FY-2017, while total deposit increased by 7.70 percent by N2.31 trillion. As a result, the loan-to-deposit ratio dropped to 58.56 percent, from 67.49 percent. Accordingly, the annualized cost of risk tapered 10 bps to 0.74 percent, while the ratio of non-performing loans to total loans dropped by 151 bps to 6.15 percent and Cost-to-income ratio improved by 20 bps to 38.46 percent, from 38.66 percent.

Report by Afolabi Adesola