GTCO Profit Up 11.73% As Holding Company Gains Traction

As its financial Holding Company continues to gain traction, Guaranty Trust Holding Company’s (GTCO) revenue has surged as the lender continues to record double digit growth in profit.

The most efficient lender in Africa’s largest economy has an attractive valuation that makes it an entry point for investors who want to add the stock to their portfolio.

For the first nine months through September 2022, GTCO’s pre-tax profit was up 11.72 percent to N130.34 billion from N129.40 billion as at September 2021.

Interest income from loans and advances were up 19.20 percent to N232.48 billion in September 2022, thanks to growth in average volumes of Earning Assets.

The aggressive monetary policy of the central bank to tame inflation added impetus to GTCO’s earnings as it earned more interest on loans to customers than the interest it pays them.

The Central Bank of Nigeria (CBN) has raised the Monetary Policy Rate (MPR) to 15.5 percent, from 14 percent in an aggressive move to fight inflation in the country.

Nigeria’s inflation rate reached an all-time high of 20.77 per cent in September 2022, from 20.52 per cent recorded in August of the same year, the highest in 17 years.

GTCO’s fees and commission income jumped by 12.48 percent to N58.30 billion in the period under review from N51.83 billion the previous year.

Fee and Commission performance was enabled by significant increase in fee based transaction volumes with consequent growth in earnings from Account Maintenance Charges, Account Services and Corporate Finance.

Analysts expect income from Non-Banking Subsidiaries (i.e., Payments, PFA, and Asset Management) to strengthen the lender’s performance with resultant improvement in profitability metrics.

The fund managers’ asset under management (AUM) now stands at N73.80 billion, and that compares with pre-acquisition figures of N28.30 billion.

Guaranty Trust’s AUM has hit N54.36 billion, and that compares with pre-acquisition amount of N48.70 billion.

The pension industry is one of the fastest growing sectors in Nigeria as it benefits from a rapidly growing population and good regulation, but penetration remains low compared to emerging market peers.