Bright Prospects for Investors as GTBank Posts N42bn Q1 Profit

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Guaranty Trust Bank (GTBank) Plc is set to deliver impressive performance for the 2017 going by the first quarter (Q1) results released on Wednesday, which showed significant growth in performance indicators.

GTBank recorded gross earnings of N104.7 billion in Q1 of 2017, which is 38.8 per cent above the N73.4 billion posted in the corresponding period of 2016. Net interest income rose by 62.1 per cent from N40.8 billion in 2016 to N66.1 billion in 2017. Credit impairment witnessed a growth of 12.6 per cent from N3.4 billion to N3.8 billion in 2017.
However, GTBank ended the quarter with profit before tax of N50.4 billion, up by 64.3 per cent from N39.7 billion in 2016, while profit after tax stood at N41.5 billion, compared with N25.6 billion in 2016.

Assessing the results, analysts at FBN Quest said: “Q1 2017 PBT of N50 billion grew by 64 per cent while PAT more than doubled to N41billion, thanks to a positive result on the other comprehensive income line of N568 million (compared with a sizeable loss of N5.3 billion a year earlier).”

According to the analysts, the main driver behind the strong growth in earnings was a solid performance in net interest income. “In contrast, non-interest income (which had boosted the bank’s results through most of 2016 on the back of FX-related gains) was up only five per cent. Although loan loss provisions of N3.8 billion and opex of N32 billion both grew by 13 per cent and 24 per cent respectively, these increases were not sufficient to make any material impact on the results. Sequentially, the non-interest income result stood out because the Q4 result had been negatively impacted by reversals of FX gains and one-offs,” they said.

FBN Quest said the results came in well ahead of its expectations, saying: “Both PBT and PAT were 17-18 per cent ahead of our forecasts because of the strong net interest income result which surprised positively by 15 per cent. The only other notable positive surprise was loan loss provisions. GTBank booked 16per cent less in provisions than we had forecast. Having said that, given the volatility that is inherent on this line, and that this is only the first quarter of the year, we would not make too much of this variance. Non-interest income and opex were close to our forecasts.”

They added that the management of GTBank had surprised the market after the Q4 2016 results with a guidance of N168 billion in PBT for 2017.

“To put this into context, GT had just delivered N165 billion for full year 2016 at the time, thanks largely to one-off forex-related gains. As such, the guidance seemed a stretch. Management stressed that its large exposure to fixed income instruments gave it confidence and that the guidance was not aggressive,” they said.