GTCO Profit Falls 13.2% in 2021
Guaranty Trust Holding Company Plc, (GTCO Plc) profit after tax for the year 2021 falls by 13.2% to N174.8 billion, according to the group audited financial statement filed with the regulators.
Gross earnings dipped 2% to N447.810 billion from N455.229 billion in 2020. Details of the financial statement submitted to the Nigerian Exchange showed that the group profit before tax printed at ₦221.5 billion, down 7.0 per cent from ₦238.1 billion recorded in 2020.
A further breakdown in interest income was down 11.3% to N266.9 billion, driven by weak revenue from interest yielding assets – following the impact of a low interest rate environment on income from investment securities.
Total investment securities printed at N1.126 trillion at the end of 2021, from N980.228 billion in the comparable period in 2020, according to the audited report.
The group raised its appetite for Federal Government of Nigeria (FGN) long-tenored bonds and Sukuk. However, it also increased appetite for non-Nigerian Treasury bills investment – from N4.035 billion to N13.358 billion. In the period, GTCO double down on non-Nigerian trading bonds, surging to N48.395 billion at the end of 2021 from N27.273 billion in 2020.
In an effort to boost performance, GTCO raised its lending appetite as net loans and advances to customers grew moderately, up 8.4% in December 2021, compared with December 2020. On the other hand, interest expense declined 1.7% to N46. 3 billion but increased 8.7% in the fourth quarter of 2021 compared with the third quarter of the same year.
Overall, net interest income dropped off 13.0% year on year but was up 3.2% in the fourth quarter compared to the third quarter of 2021. Customer deposits grew strongly in the latter part of the year, bringing total deposit growth at 14.3% year on year compared with 6.7% in September 2020. Net fee and commission income grew significantly, up 39.9% year on year.
While all the Fee lines grew year on year, the major drivers were a 33.5% increase in account maintenance charges, a 79.1% rise in E-business Income, and a 146.4% increase in account services, maintenance and ancillary banking charges.
The bank recorded strong growth in E-banking Income, which implies increasing transaction volumes to make up for the regulatory induced decline in E-banking fees, according to analysts’ review. Operating expenses for the year grew 10.1% year on year amidst a steep headline inflation rate in the Nigerian market.
It was noted that the growth in operating expenses, coupled with a 3.2% year on year decline in total operating income led to a deterioration in the bank’s cost to income ratio ex-provisions to 41.4% in 2021 compared with 36.4% in 2021, CSL Stockbrokers analysts said in a commentary note.
A capital adequacy ratio of 23.8% was reported for the group compared with 25.90% in December 2020 with full International Financial Reporting Standards (IFRS) impact, which is well above the 15% regulatory minimum. The group’s management proposed a final dividend of N2.70, bringing the total dividend for the year to N3.00 per share.
Commenting on this, Mr Segun Agbaje, the Group Chief Executive Officer, GTCO Plc said: “Our performance reflects the strength of our franchise and underscores our ability to deliver long-term value for our stakeholders, in spite of challenges in the business environment and shifting economic conditions.
“As a group, we have continued to explore newer ways to connect with customers and better our communities by offering greater and more rewarding experiences.
“With the recent addition of Pension Fund and Wealth Management businesses to the group, we are well on our way to rapidly scale operations and strengthen foothold in the key industry segments.
“Our goal is to consolidate our place at the top of Africa’s financial services value chain by leveraging technology to provide end-to-end financial solutions to more people and businesses across Africa.” # GTCO Profit Falls 13.2% in 2021
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