Guaranty Trust Holding Company posted impressive performance metrics in its recently released half-year 2021 results as its non-performing loans ratio to total loans dropped to 5.99% from 6.39% recorded as of the corresponding period of 2021.
The non-performing loans ratio which is a key metric in measuring the effectiveness of a bank in receiving repayments on its loans, shows that GTCO has ramped up efforts to reduce its delinquent loans to its barest minimum.
Similarly, the most capitalized listed financial entity on the Nigerian Exchange was able to boost its liquidity ratio to 44.71% as of June 2021. This is well above the regulatory minimum of 30%, which is a significant boost as the group maintained an average liquidity ratio of 40.71% in the review period.
The foremost financial institution was able to increase liquidity in the firm despite the pressure of the COVID-19 pandemic restrictions, reopening of the economy, fiscal and economic quagmire, as well as regulatory debits, recorded in the period under review.
Below are the highlights of the financials
GTCO generated a sum of N207.91 billion as gross earnings in the period under review.
Non-Interest Income was boosted by improved transactional volumes and turnover stemming from the reopening of the economy after the Covid 19 induced lockdown. These actions prompted a positive inflow from e-business and account maintenance revenue unit of the business as they improved by N3.9 billion and N2.3 billion respectively.
Profit before taxation in the review period recorded a 15.18% decline to N93.06 billion from N109.71 billion printed in the corresponding period of 2020.
The total asset of the group increased marginally in the first six months by 1.47% to close at N5.02 trillion as of June 2021 compared to N4.94 trillion as of December 2020.
According to the bank’s investor presentation, in response to the declining yields on loans and FIS, the Group reduced its Cost of Funds to 0.7% in H1 2021 from 1.5% in the corresponding period of 2020 as interest expense decreased by 46% to N10.9 billion in H1 2021 from N20.3 billion in H1 2020.
Deposits from other banks increased significantly by 27.61% to close at N129.54 billion as of June 2021 while deposits from customers rose by N115.89 billion between January and June 2021, which brought the total customer deposits as of the end of Q2 2021 to N3.63 billion.
AMCON levy also increased by 27.3% due to the growth recorded in the total asset and Contingents to N4.37 trillion in FY 2020 from N3.44 trillion in FY 2019. Note that AMCON levy is computed as 0.5% on preceding year’s total asset and contingents.
Despite the challenges presented by the operating environment in H1 2021, the Group was able to navigate efficiently, deploying appropriate strategies to deliver a Post tax Return on Average Assets of 3.33% and Post tax Return on Average Equity of 19.56% The Group delivered a Post tax ROAE of 19.71% Post Tax ROAA of 3.19% and NIM of 6.98%.
The Group maintained strong capital positions with Full and Transitional IFRS 9 impact Capital Adequacy Ratio (CAR)of 24% and 26.3% respectively, which is well above the regulatory minimum of 15%.
Investment securities by the bank increased by 17.8% year-on-year to N1.23 trillion in H1 2021 from N1.04 trillion recorded in the corresponding period of 2020.
The Group closed the first half of the year delivering a PBT of N93.1 billion. As the Group restructures to a Financial Holding Company, it is expected that the revenue base will be further strengthened and result in improved performance across all key profitability metrics.
Recall, that Guaranty Trust Holding Company announced the restructuring of the bank in July 2021, with the aim of strengthening its long-term competitiveness and growth prospects. The Group also announced the appointment Mr. Segun Agbaje as the new Group CEO of GTCO while Mrs. Miriam Olusanya was appointed as MD of GT Bank.
It is worth noting that despite the decline in the Group’s profit after tax, it declared an interim dividend of 30 kobo per share for the half year period ended June 2021, which is the same as declared to its shareholders in the corresponding period of 2020.
What this means
GT Bank is one of the foremost major financial institutions in Nigeria, with track record of impressive performance of the years which it demonstrated in its recent financial statement despite the economic doldrums in the past year caused by the covid-19 lockdown. The Bank continued in its move to give value to its investors having declared an interim dividend of 30 kobo per share in H1 2021 despite the drop in its bottom line.