Restructuring: GTB Gains New Strengths To Build N93bn Profit At H1

Guaranty Trust Bank Plc now restructured to operate under Guaranty Trust Holding Company Plc (GTCO) developed new operating strengths on both sides of cost and income that powered a towering pre-tax profit of N93 billion at half-year ended June 2021.

This is consistent with the bank’s track record of stability in earnings performance through the high volatility in the operating environment.

Against industry-wide constraints in revenue growth since last year, the bank’s management took steps to build in new strengths that significantly preserved its ability to build wealth for shareholders.

A major operating strength for the bank this year is coming from non-interest earnings, which is helping to counter a decline in interest revenue. Non-interest income grew by over 9 per cent year-on-year to N81.5 billion at half-year, the best growth rate in three years.

The bank’s management also built in new strengths on the side of cost-saving that supported the gain in non-interest earnings. It moved further on the side of low cost with interest expenses going down for the third year running.

Interest expenses went down by over 27 per cent to close the six months of the current financial year at N19 billion. The expense line claimed a reduced share of interest income at 15 per cent at half-year compared to 17.5 per cent in the same period last year.

This is a significant cost saving coming from interest expenses, which helped management to moderate the decline in interest income over the period.

Another operating strength for GTB so far this year is in respect of loan impairment charges, which dropped by 30 per cent year-on-year to N4.7 billion at the end of June 2021. This is a major positive change of direction from a massive increase in loan impairment expenses last year.

It is also a sharp change of direction from a 52 per cent jump in loan loss expenses year-on-year in the first quarter. The indication is a major improvement in the overall credit quality standard of the bank.

Some strength was also drawn from a tight control on operating costs, which prevented personnel and some other expenses from rising. This helped to defend the bank’s high-profit margin and therefore the profit capacity.

The bank closed the half-year operations with an after-tax profit of N79.4 billion with which it maintained its lead in terms of ability to convert revenue into profit among peers. It achieved a top record net profit margin of over 38 per cent at the end of June 2021, one of the highest profit margins in the Nigerian banking industry.

GTB generated gross earnings of over N207 billion at the end of half-year operations, which is a drop of 9 per cent year-on-year. The bank hasn’t seen a revenue drop in more than a decade.

The bank’s management successfully balanced revenue challenges with cost reductions and was able to maintain a strong bottom line position for shareholders. It applied a reduction in interest expenses to balance the other side of the decline in interest earnings.

The bank’s management remains confident of navigating operations to deliver the best results possible under the challenging business environment. Group chief executive officer of Guaranty Trust Holding Company Plc, Segun Agbaje, while commenting on the operating results, assured of his bank’s commitment to building on its track record of solid financial performance.

He said the bank reserves a high capability to constantly innovate and stay ahead of the curve at all times. “We are counting on the enduring support of our loyal customers and the hard work of our dedicated staff to continually make end-to-end financial services easily accessible to everyone and to create the best outcomes for all our customers and the communities in which we operate,” he said.

Agbaje hinted at what to expect from the bank in its new operating model as a holding company. “Looking forward, we are focused on bringing to bear the full benefits of our new corporate structure by consolidating our leading position in all the economies where our franchise operates.

“We will also diversify our earnings from core banking, continue to empower businesses across Africa and beyond and generate long-term returns for our shareholders,” he assured. The holding company model is also expected to position the bank to compete in the emerging scenario of fintech and payment service banks.

GTB closed the half-year operations with earnings per share of N2.79, a decline from N3.32 per share in the same period last year.