GTCO’s first-half profit jumps 262% to N281 billion after steep surge in forex revaluation gain

 

Nigeria’s biggest lender by market value Guaranty Trust Holding Company (GTCO) built a record half-year profit for the year to June on a vast expansion in foreign exchange revaluation gain.

 

The gains contributed more than half of the revenue reported for the period.

 

The financial institution, whose flagship commercial banking division has a chunk of its loans denominated in the US dollar, benefitted enormously from roughly 40 per cent weakening of the naira in June. This allowed repayments on such credit to surge in local currency, consequently boosting revenue and profit.

 

Gross earnings quickened by 181 per cent to N672.6 billion, with the corporate banking unit accounting for 68.9 per cent of revenue. Net interest income scaled up 46.8 per cent to N177.5 billion.

 

Like other lenders, GTCO has been amassing earnings from interest income following an unbroken chain of interest rate hikes since last May. But the high interest rate environment also means problematic loans are sharply on the rise as borrowers struggle meet up their obligations.

Credit impairment for the period sprang to N82.9 billion from N3.5 billion, translating to an increase of 2,257.5 per cent within a year.

“As at 30 June 2023, the group reported total gross loans and advances to customers of N2,493.92 billion, allowance for ECL (estimated credit loss) of N178.58 billion and ECL impairment charges of N82.96 billion,” independent auditors Ernst & Young noted in their report.

Other income rose by 2,482.5 per cent to N372.2 billion, supported by an unusually foreign exchange revaluation gain, which contributed 96 per cent of that sum.

Profit for the period climbed to N280.5 billion from N77.6 billion a year earlier. Net profit margin, which measures how much of revenue has turned into profit, stood at 41.7 per cent. It was 31.7 per cent a year earlier.

The directors have proposed an interim dividend of N0.50 per share, translating to a payout of N14.7 billion.

Besides commercial banking, the group’s operations span asset management, pensions and payments.

(Premium Times)