GTCO posts N357.47bn Foreign Exchange gains, N280.48bn Profit after Tax

Guaranty Trust Holding Company Plc (NGX: GTCO) has reported foreign exchange revaluation gain of N357.47bn for the half-year period ended 30 June, 2023.

In its audited consolidated and separate financial statements for the period, the company reported a profit of N280.48bn for the period, despite the N357.47bn foreign exchange gains.

Also read; OANDO Plc to acquire 100% of Nigerian Agip Oil Company Limited

A review of the statements by Investogist showed that GTCO expanded a significant chunk of the gains it made in the period to pay loan impairment charges and impairment charges on other financial assets.

N86.96bn was spent on loan impairment in H1 2023 (H1 2022: N3.51bn), while an impairment charge of N81.31bn was reported in H1 2023 (H1 2022: N543 thousand).

The Board of Directors of GTCO proposed an interim dividend of N0.50 per ordinary share, subject to the deduction of appropriate withholding tax for the half-year period ended 30 June, 2023.

Review of the Financial Statements

Income Statement:

Gross Income: GTCO reported a 181.08% growth in Gross income, as it posted N672.60bn for H1 2023, against N239.28bn reported in H1 2022.
Interest Income: The group’s interest income grew by 53.50% from N147.19bn to N225.94bn. Interest from loans and advances to customers was the biggest contributor with N129.84bn (H1 2022: N103.30bn). N48.48bn was recorded as interest expense, N26.35bn interest expense was reported in H1 2022.
Fee and commission income: GTCO reported a modest 8.02% growth in Fee and commission income, as it posted an N58.41bn income (H1 2022: N54.07bn). E-business income of N21.21bn (H1 2022: N18.57bn) and account maintenance charges of N10.48bn (H1 2022: N9.43bn) were the top contributors to the income segment. The group incurred fees and commission expense amounting to N6.86bn (H1 2022: N6.71bn). Fee and commission expense primarily relates to charges raised by switching platforms on holders ATM cards, who make use of the other banks machines while transacting business, and SMS alert related expenses.
Foreign exchange income: GTCO reported N357.47bn gain from foreign exchange revaluation (2021: N1.86bn). The foreign exchange revaluation gain relates to unrealized gain. An unrealized gain occurs when the current price of a security is higher than the price the investor initially paid for the security, including any fees associated with the purchase.
Personnel expenses: The personnel expenses of the group rose by 12.16% from N18.53bn in H1 2022 to N20.79bn. A bulk of this was spent on wages and salaries; N19.89bn (H1 2022: N17.77bn), while the rest were on contributions to defined contribution plans and defined benefit costs. The report showed that GTCO employs 5,597 persons comprising of 5,379 non-management staff, 216 management staff and 2 Executive directors.
Other operating expenses: The Banking Group’s operating expenses increased by 34.38% from N63.56bn to N85.42bn. AMCON expenses of N27.43bn (H1 2022: N23.28bn) was the biggest item on the operating expenses list.
Profit Before Income Tax: There was a 217.09% growth in the profit before tax, from N103.24bn to N327.39bn.
Profit After Tax: GTCO posted a profit after tax of N280.48bn, 261.65% higher than the N77.55bn it reported in H1 2022.
Earnings Per Share: N9.94 against N2.70 reported in the preceding year.

Balance Sheet:

Total Assets: The Banking Group’s total asset grew by 32.01%, from N6.44tn to N8.50tn. Loans and advances to customers amounting to N2.31tn (31 Dec. 2022: N1.88tn) was the biggest component of the Group’s asset, followed by cash & bank balances with N2.29tn (31 Dec. 2022: N1.62tn).
Total Liabilities: The total liabilities also increased by 32.53% from N5.51tn to N7.30tn. Deposits from customers constituted a bulk of the liabilities, accounting for N6.23tn (31 Dec. 2022: N4.48tn) of the N7.30tn.
Shareholders’ Fund: The shareholders’ fund went up by 28.93%, from N931.14bn to N1.20tn. The retained earnings, the biggest component of shareholders’ fund accounted for N360.67bn (31st Dec. 2021: N214.85bn).

Cashflow:

Operating activities: N166.97bn was used in operating activities, as against N320.24bn generated in H1 2022.
Investing activities: N414.60bn was used in investing activities, while N3.41bn used in H1 2022.
Financing activities: N104.03bn was used in financing activities, against N134.62bn used for the same activity in 2021.
Cash and cash equivalents: As at 30 June 2023, GTCO had cash and cash equivalent of N2.25tn (30 June 2023: N1.03tn).

About the Company

Guaranty Trust Holding Company PLC is a company incorporated in Nigeria. The address of the Company’s registered office is Plot 635, Akin Adesola Street, Victoria Island, Lagos.

The Group is primarily involved in the provision of banking and other financial services to corporate and individual customers.

Guaranty Trust Holding Company PLC (GTCO PLC) commenced operations on August 1, 2021, after the transitioning of Guaranty Trust Bank PLC into a Financial Holding Company in accordance with the Central Bank of Nigeria (CBN)’s Guidelines for Licensing and Regulation of Financial Holding Companies in Nigeria on July 1, 2021.

The transition was sequel to receipt of shareholders’ approval in November 2020 by way of a scheme of arrangement which allows the Group to hold equity investments in non-core banking businesses under a subsidiary arrangement.

It is therefore expected that the restructuring would afford the Group greater strategic agility to harness opportunities across the financial services landscape while strengthening the Group’s resilience in the face of regulatory/consumer behaviour changes.

Under the terms of the approved scheme of arrangement, the Bank’s shareholders agreed to exchange their shares on a one-for-one basis for shares in Guaranty Trust Holding Company Plc (the Holding Company), and holders of Global Depositary Receipts (GDRs) representing shares issued by the Bank (the Bank GDRs) have agreed to exchange their GDRs on a one-for-one basis for GDRs representing shares issued by the Holding Company.

The Holding Company’s shares were admitted on the Official List of the Nigerian Exchange (NGX) on June 24, 2021 and the GDRs were admitted to trading on the main market of the London Stock Exchange on July 1, 2021. Pursuant to the listings, the Bank was registered as a Limited Liability Company with the Corporate Affairs Commission (Nigeria) under the name Guaranty Trust Bank Limited.