Guaranty Trust Holding Company Plc (GTCO) saw a significant rally in the equities market last week, driven by its impressive earnings performance and strong dividend declaration. The leading financial services group reported a record-breaking net income of over N1 trillion for the 2024 financial year and announced a final dividend of N7.03 per share.
Buoyed by this stellar performance, investors seeking high-yield opportunities flocked to GTCO’s stock. Approximately 69 million shares, valued at N4.574 billion, were traded on Friday alone. The stock briefly touched N70 per share before retreating due to mild profit-taking.
According to its audited financial statements, GTCO recorded an 88.6% year-on-year growth in profit after tax, reaching N1.03 trillion. This surge was propelled by a 2.4-fold increase in net interest income (NII) and a 1.3-fold rise in non-interest income (NIR).
Despite pressures from funding costs, the bank’s net interest margin (NIM) expanded by 3.3 percentage points to 11.1%, supported by a 143.6% year-on-year increase in interest income. This growth was driven by higher yields on an expanded Interest-Earning Assets (IEA) base.
In a market analysis, CardinalStone Securities Limited noted that GTCO leveraged money market placements to capitalize on the appeal of fixed-income securities, while gross loan growth remained moderate at 11.7% year-on-year.
The bank’s non-interest revenue benefited from strong gains in net fee and commission income, as well as maintenance and ancillary banking charges. Additionally, unrealized fair value gains on financial instruments, amounting to N517.5 billion, significantly bolstered non-interest revenue.
Amid rising operational costs, a 73.4% surge in operating income helped sustain profitability. While operating expenses (OPEX) climbed by 60.9% to N403.0 billion, the cost-to-income ratio (CIR) improved by 1.7 percentage points to 22.0%.
However, GTCO reported a 38.1% increase in Stage 3 loans, pushing its Non-Performing Loan (NPL) ratio above the regulatory 5.0% threshold to 5.18%, up from 4.19% the previous year. NPL coverage also declined to 90.4% from 94.1% in 2023.
Earnings per Share (EPS) settled at N35.44, with a Return on Assets (ROA) of 8.3% compared to 6.6% in 2023, while Return on Equity (ROE) improved to 48.6% from 44.0%.
With the final dividend of N7.03 bringing total dividends to N8.03 per share, GTCO maintained a 22.6% payout ratio, reinforcing its commitment to shareholder value.
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