GTCO reports record N539.6 billion profit in 2023, bolstered by revaluation gains

Guaranty Trust Holding has reported a gross earnings of N1.187 trillion, representing 120.03% increase from the N539.235 billion reported the year prior. 

A cursory review of the financial statements delineates the sources of the gross earnings. Interest income stands out as a substantial contributor, comprising 46.42% of the gross earnings.  

The Group also reported a profit before tax of N609.308 billion for the year ended 31 December 2023 and proposed a final dividend of N2.70. 

Additionally, foreign exchange (FX) revaluation gains of N449.347 billion played a pivotal role, contributing 37.24% to the gross earnings.

This represents a notable shift from the preceding year, where interest income accounted for 60.34% and FX revaluation gains contributed a modest 10.74%.  

Key highlights (2023 FY vs 2022 FY):  

• Gross earnings: N1.187 trillion +120.03% YoY  
• Interest Income: N550.755 billion +69.25% YoY 
• Interest Expense: N114.059 billion +72.56% YoY  
• Net interest income: N436.697 billion +68.41% YoY  
• Loan impairment charges: N102.953 billion +758.91% YoY 
• Net interest income after loan impairment charges: N333.743  billion +34.95% YoY 
• Net fees and commission income: N109.428 billion +18.95% YoY. 
• FX revaluation gain: N441.791 billion +662.54% YoY 
• Other operating expenses: N122.429 billion +31.56% YoY 
• Profit for the period N539.655 billion +218.99% YoY. 
• Earnings per share: N19.05 +220.17% YoY 
• Loans and advances to customers: N2.480 trillion +31.52% YoY. 
• Cash and bank balances: N2.310 trillion +42.47% YoY 
• Total Assets N9.691 trillion +50.33% YoY. 
• Customers’ deposits N7.411 trillion +65.23% YoY. 
• Share capital & share premium: N138.187 billion 
• Retained earnings: N580.024 billion +169.96% YoY 

Commentary

• Interest income continues to be a major driver of gross earnings, primarily fueled by growth in loans and advances.  
• However, the bank clarified that only 27% of its total maximum exposure stems from loans and advances, down from 31% in 2022, while 27% represents exposure to investment in debt securities, higher than 24% in 2022.  
• By reducing reliance on loans and advances while increasing exposure to debt securities, the bank appears to be diversifying its risk profile.
• This strategy could help mitigate concentration risk associated with a heavy reliance on lending activities, thereby enhancing the overall stability of the bank’s balance sheet.
• This likely moderated its loan provision to N103 billion; GT Bank is known for operating a conservative lending policy

Additionally, the bank has recommended a final dividend of N2.70 per share, resulting in a total dividend payout for the year of N3.20 per share.  

• This figure includes an interim dividend of N0.50 per share, which was previously declared and paid. 
• This dividend announcement signifies a 3.23% increase in payout compared to the dividends distributed in the previous year.