GTCO delivers remarkable Q1 financial results as gross earnings up 330.4%

In the first quarter of 2024, Guaranty Trust Holding showcased an exceptional performance, reporting a staggering 330.4% year-on-year growth in gross earnings, soaring to N680.4 billion compared to N158.1 billion in the corresponding period of 1Q23.

This remarkable growth in gross earnings was propelled by a 170.6% year-on-year surge in interest income, accounting for 41.4% of total gross earnings, and an extraordinary 29.7x year-on-year spike in other income, totaling N324.9 billion.

Additionally, the increase in gross earnings was reinforced by a 72.7% year-on-year jump in fee and commission income, contributing 8.2% of total gross earnings, and a 67.4% year-on-year rise in net gains on financial instruments held at fair value through profit or loss, constituting 2.6% of total gross earnings.

Consequently, the bank recorded a remarkable 7.9x year-on-year surge in net profit, reaching N457.1 billion in 1Q24.

Interest income surged by 170.6% year-on-year to N281.7 billion in 1Q24, driven primarily by increased loans and advances to customers, cash and cash equivalents, and investment securities. However, this was partially offset by a 147.9% year-on-year increase in interest expense to N54.4 billion due to rising customer deposits.

Loan impairment charges also rose to N13.5 billion from N3.4 billion in 1Q23, resulting in a 171.7% year-on-year increase in net interest income after loan impairment charges to N213.8 billion.

Fee and commission income continued its robust momentum, surging by 72.7% year-on-year to N56.0 billion in 1Q24, driven by higher commissions, account maintenance charges, and asset management fees.

With fee and commission expenses increasing by 50.0% year-on-year to N3.7 billion in 1Q24, the company reported a notable 74.5% year-on-year jump in net fee and commission income to N52.3 billion.

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Furthermore, net gains on financial instruments held at fair value through profit or loss rose by 67.4% year-on-year in 1Q24 to N17.8 billion, primarily attributed to net foreign exchange realized trading gains. Other income also surged by an impressive 2886.0% year-on-year to N324.9 billion.

However, personnel expenses increased by 114.4% year-on-year to N22.3 billion due to higher wages, while other operating expenses vaulted by 73.7% year-on-year to N63.2 billion in 1Q24, primarily due to higher insurance premiums, AMCON expenses, communications, and technology-related costs.

Consequently, the profit before tax rose by a remarkable 587.5% year-on-year to N509.3 billion in 1Q24 compared to N74.1 billion in 1Q23.

Despite the effective tax rate declining to 10.3% in 1Q24 from 21.5% in 1Q23, the company reported a substantial 685.9% year-on-year jump in profit after tax to N457.1 billion in 1Q24 from N58.2 billion in 1Q23. The earnings per share stood at N16.24/share in 1Q24 versus N2.04/share in 1Q23.

In terms of sequential performance, gross earnings increased by 102.4% quarter-on-quarter to N680.4 billion in 1Q24. A 59.8% quarter-on-quarter increase in interest income and a 46.7% quarter-on-quarter rise in interest expense led to a 63.3% quarter-on-quarter jump in net interest income to N227.3 billion in 1Q24.

Net fee and commission income surged by 93.9% quarter-on-quarter in 1Q24 to N52.3 billion, while other income surged to N324.9 billion in 1Q24 from N94.1 billion in 4Q23, a 245.4% quarter-on-quarter increase.

The profit before tax stood at N509.3 billion in 1Q24, a significant 189.2% quarter-on-quarter increase from N176.1 billion in 4Q23. Although the company paid an effective tax rate of 10.5% in 1Q24, compared to the effective tax rate of 2.2% in 4Q23, Guaranty Trust Holding reported a notable 165.4% quarter-on-quarter rise in profit to N457.1 billion in 1Q24 against N172.2 billion in 4Q23.

Market Reaction: The investor response to the 1Q24 results was overwhelmingly positive as the Guaranty Trust Holding stock surged by 7.61% to close at N41.00 compared to a 0.89% decline in the All-Share Index on 6/5.

However, the stock witnessed a decline of 5.98% to close at N38.55 compared to a 0.48% fall in the All-Share Index on 7/5.