Guaranty Trust Bank Plc (NSE: GUARANTY) has released (pdf) its consolidated unaudited financial statements for the 9 months period ended 30 September, 2020 to The Nigerian Stock Exchange, its shareholders and the investing public.
The Bank with the second most expensive banking stock on the Nigerian Stock Market, reported slight changes in its revenue, its profit before tax and profit after tax.
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Analysis of the report: Income Statement
For the nine months period from January to September of the year, the bank earned a total interest income (calculated at effective interest rates) of N219.544 billion, just 0.09% lower than the N219.353 billion reported in the same period in 2019.
Most of this income came from the interest on loans and advances to customers, which contributed N137.335 billion, representing 62.55% of the total interest income. Other major components of the interest income are from investment in securities FVOCI (N55.338 billion), and investment securities at amortised cost (N5.997 billion).
The Net Interest Income for the period rose by 10% to N189.7 billion, up from N172.9 billion recorded in the preceding year. This growth in interest income despite the negligible growth in the interest income calculated using effective interest rate can be attributed to the robust growth in the interest income on financial assets FVTPL, and the reduction in Interest Expense.
While the Interest Income on financial assets at FVTPL rose by 79.60%, the Interest Expense reduced by 24.90%. The interest on “deposit from customers” component reduced significantly, from N42.904 billion paid out as at September to 2019 to N33.295 billion paid out as at September 2020, thus contributing significantly to the N12.760 billion drop in Interest Expense.
The Fee and Commission income revenue stream endured a 22.69% decline, as 7 out of the 9 components of this revenue stream saw declines.
Credit related fees and commissions dropped from N8.078 billion in 9M 2019 to N4.585 billion, while the E-business Income saw a reduction to N8.205 billion from the N11.039 billion reported at the same time in 2019. Five other components suffered declines; Corporate finance fees (N4.332 billion to N1.648 billion), Commission of foreign exchange deals (N5.454 billion to N4.731 billion), Commission on Touch Points (N1.348 billion to N1.199 billion), Income from financial guarantee contracts issues (N2.423 billion to N2.121 billion) and Account services, maintenance & ancillary banking charges (N4.862 billion to N2.454 billion).
On the other hand, the Account Maintenance Charges component saw an increase from N8.540 billion reported in 2019 to N9.544 billion. The other component to record growth is the Transfer related charges, which grew from N2.300 billion to N2.909 billion.
The Net gains on financial instruments held at FVPL doubled year-on-year, from N9.643 billion to N18.987 billion. The Bonds FVPL component decreased from N3.357 billion to N2.827 billion, while the Treasury bills FVPL component almost doubled (N2.287 billion to N4.057 billion), and the Foreign Exchange trading gain enjoyed the highest growth from N3.998 billion to N12.103 billion.
There were marginal changes in the “Other Income”, “Personnel Expenses”, and “Other operating expenses”. The Bank’s total wage bill for its staff was N27.624 billion (9M 2019: N27.159 billion).
The Profit Before Tax (PBT) declined by 1.93% to N167.531 billion from the N170.651 billion reported in the nine months ended September 30, 2019.
GUARANTY paid a total tax of N25.068 billion comprising of;
- Company income tax: N21.140 billion (9M 2019: N16.224 billion)
- Education tax: N789.621 million (9M 2019: N828.687 million)
- Police Trust Fund Levy: N4.027 million (9M 2019: nil)
- NITDA levy: N913.044 million (9M 2019: N971.381 million)
- Previous year’s under provision: N40.798 million (9M 2019: N334.903 million)
- Deferred tax expenses (Origination of temporary differences): N2.180 billion (9M 2019: N5.301 billion)
The Profit After Tax decreased by 3.20%; N142.283 billion from N146.989 billion in 9M 2019. The Bank reported an Earnings Per Share (EPS) of N5.02, with a Return of Average Equity (ROaE) at 19.72%.
Analysis of the report: Statement of Financial Position (Balance Sheet)
The Bank’s balance sheet remained robust, as it grew its total assets and equity, with a continued increase in liability albeit slower than it grew its deposits from customers.
As at 30 September 2020, 83.48% of the Bank’s Total Asset was funded by its Liabilities, while 16.52% of its Total Asset was funded by Shareholders Equity (as at 31 Dec. 2019, Total Asset was funded by 81.71% Liability and 18.29% Equity).
- Total assets increased by 21.68% to N4.573 trillion from N3.758 trillion. Over 50% of the total asset is from Loans and advances to customers (N1.569 trillion) and Restricted deposits and other assets (N1.170 trillion).
- Total liability increased by 24.30% to N3.818 trillion from N3.071 trillion. An overwhelming contributor to the liability is the Deposits from customer which stands at N3.191 trillion (31 Dec. 2019: N2.532 trillion).
- Total Shareholders Equity increased by 9.92% to N755.548 billion from N687.337 billion. The share premium (N123.471 billion), the retained earnings (N147.013) and “Other components of equity” (N461.877 billion) make up most of the Shareholders Equity.
Analysis of the report: Statements of Cash Flows
The Bank’s cash flow as at 30 September was positive, as it reported a Cash and cash equivalents of N592/.659 billion (31 Dec. 2019: N592.522 billion.
- OPERATING ACTIVITIES: N158.271 billion was generated from operating, up from N138.66 billion.
- INVESTING ACTIVITIES: N74.097 was used in investing activities, more than N68.996 used as at 31st Dec. 2019.
- FINANCING ACTIVITIES: N103.630 billion was used in financing activities, higher than the N80.728 billion used as at 31 Dec. 2019, as the bank reduced its long term borrowings.
About the Company
Guaranty Trust Bank Plc is a company incorporated in Nigeria. The address of the Bank’s registered office is Plot 635, Akin Adesola Street, Victoria Island, Lagos. The Parent and the Group are primarily involved in investment, corporate, commercial and retail banking.
Share Price Movement
The share price of GUARANTY has recovered from the low prices it dropped to at the onset of the Covid-19 pandemic.
Its 52 week low price is N16.70 and its 52 week high price is N38.45. It is currently traded at N35.45, N0.35 (0.98%) lower than its opening price of N35.80.
Analyst’s view
Investogist Analysts have a HOLD rating on the stock.
By; Nnamdi M.
