Guaranty Trust Holding Company Plc (NGX: GTCO) recorded a decline in gross earnings and profit for the period ended 30 June 2021, according to the financial statements released by the company.
The gross earnings decreased by 7.7% to N207.91 billion, while the profit after tax declined by 15.8% to N79.41 billion, compared to the H1 2020 figures.
An interim dividend of 30 kobo per 50 kobo ordinary, subject to appropriate withholding was proposed by the directors.
Income statement
GTCO saw its gross earnings drop by 7.7% or N17.22 billion to N207.91 billion in H1 2021 from the N225.14 billion reported in H1 2020.
The decline is mainly a result of a 22.3% or N22.62 billion drop in interest income to N116.86 billion in H1 2021, from N150.49 billion in H1 2020.
Interest income represents 56.2% of GTCO’s gross earnings during the period under review. This is a decline compared to the 66.84% contribution in H1 2020.
On the other hand, fees and commissions income increased by 44.7% or N11.83 billion to N38.28 billion in H1 2021, from N26.46 billion in H1 2020.
GTCO recorded N10.430 billion as ‘net gains on financial instruments held at fair value through profit,’ slightly lower than N10.79 billion in H1 2020.
Foreign exchange revaluation gain of N13.49 billion was recorded in H1 2021. This comprises of N9.41 billion from forward transactions and N4.08 billion from FX revaluation.
Another N15.60 billion was reported as ‘Discounts and recoverables (FX)’ in H1 2021 up from N5.23 billion recorded under the category in H1 2020.
GTCO’s other operating expenses increased to N54.34 billion in H1 2021 from N50.88 billion in H1 2020, whereas personnel expenses narrowly decreased to N17.23 billion in H1 2021 from N17.45 billion in H1 2020.
The profit before tax fell by 15.2% or N16.66 billion to N93.06 billion in H1 2021, from N109.71 billion posted in H1 2020.
Income tax expense amounted to N13.64 billion for the period under review, down from N15.44 billion spent in H1 2020.
The profit for the period decreased by 15.8% or N14.86 billion to N79.41 billion from N994.27 billion in H1 2020.
Similarly, the basic earnings per share dropped to N2.79 from N3.32 per share in H1 2020.
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Balance sheet
The company’s total assets increased by 1.5% or N72.63 billion to N5.02 trillion as at 30 June 2021 compared to N4.94 trillion as of 31 December 2020.
Major components of the assets
Loans and advances to customers: N1.63 trillion (N1.66 trillion in December 2020).
Restricted deposits and other assets: N1.07 trillion (N1.23 trillion in December 2020). This includes a restricted balance of N854.46 billion with the CBN as at 30 June 2021 (December 2020: N1.01 trillion); N40.42 billion contribution to the Agri-Business/Small and Medium Enterprises Investment Scheme (AGSMEIS).
The scheme is aimed at supporting the Federal Government’s effort at promoting agricultural businesses as well as Small and Medium Enterprises.
AGSMEIS is an initiative of the Bankers’ Committee in which Banks are required to set aside 5% of their Profit After Tax for investment in qualified players. The fund is domiciled with the Central Bank of Nigeria.
Also, total liabilities increased by 2.2% or N89.44 billion to N4.22 billion from N4.13 billion in December 2020.
The major component of liabilities is ‘deposits from customers,’ which increased by 3.3% or N115.90 billion to N3.63 trillion in H1 2021, from N3.51 trillion in December 2020 and represents 85.9% of the total liabilities.
Total equity of declined by 2.1% or N16.81 billion to N797.58 billion in H1 2021 from N814.40 billion in December 2020, mainly due to a decrease in retained earnings to N163.87 billion.
Cash flow
Net cash flow provided by operating activities increased to N364.30 billion in H1 2021 from N111.29 billion in H1 2020.
Net cash flow of N216.12 billion was used in investing activities in H1 2020, compared to N103.01 billion generated in H1 2020.
Net cash flow used in financing activities fell to N85.57 billion in H1 2020 from N94.53 billion used in H1 2021.
Cash and cash equivalents at end of the period rose to N761.45 billion from N721.76 billion in H1 2020.
At the close of trading on Friday, the equity price of GTCO fell to N27.05 per share. YTD the share price is down by 16.23%. The 52-week high and low prices are N38.20 and N24.3 per share respectively.
During the first half of the year, Guaranty Trust Bank Plc restructured and converted into Guaranty Trust Holding Company Plc, which would hold the Bank, the Banking Subsidiaries and other permissible non-banking entities.
The benefits of the conversion were listed to include: greater strategic flexibility and opportunity for diversification of the Group’s revenues; Better positioning to deal with emerging competition, for example, fintechs and payment service banks; More focused regulatory oversight of the various arms of the Group among others.
Ifunanya Ikueze is an Engineer, Safety Professional, Writer, Investor, Entrepreneur and Educator.
