Nigeria’s biggest bank by market value hits record N1 trillion profit

Nigeria’s biggest bank by market value, Guaranty Trust Holdings Company (GTCO), hit a new profitability milestone in the nine months to September as net profit jumped to N1.1 trillion, compared to N367.4 billion.

The net profit is the highest ever to be recorded by a publicly quoted company in Nigeria.

It is worthy of note, however, that 90.6 per cent (N523.2 billion) of other income, which was among the two biggest drivers of revenue, was unrealised fair value gains on financial instruments.

It means that value may depreciate if the prevailing market conditions are on the downside at the point the instruments are realised or sold.

The strong performance rested on the interest income boom created by the same high interest rate environment in Nigeria, where the Central bank has not stopped raising borrowing costs in the past twenty-nine months as it looks to decelerate the country’s steep inflation rate at all costs.

Total interest income for GTCO leapt 161.7 per cent to N950.9 billion in the period under review, according to its newly issued earnings report.

GTCO’s share price jumped by 4.7 per cent in early trade in Lagos on Wednesday following the news, making it the fourth-best performer out of the 152 listed equities.

Subsidiaries outside Nigeria, where GTCO’s presence spans nine African markets and the UK, accounted for 43.2 per cent of total interest income compared to 37.6 per cent a year ago, meaning its international operations are yielding bigger fruits.

Net interest income was up by 162.6 per cent at N781.5 billion. The corporation pared back the cash it provisioned to cover loan defaults by 29 per cent to N63.5 billion in a mark of improved credit quality.

Fees and commission roughly doubled to N180.2 billion, deriving strength from dramatic increases in e-business income and account services, maintenance & ancillary banking services.

In July, GTCO launched a public officer to raise N400.5 billion on the road to meeting the new capital requirements in Nigeria, mandating banks with international banking authorisation to scale their capital base to a minimum of N500 billion.

Profit before tax for the review period climbed to N1.2 trillion from N433.2 billion. Total assets rose 61 per cent to N15.6 trillion.

Return on equity advanced to 41.2 per cent from 24.9 per cent a year ago.

Guaranty Trust Bank, the banking subsidiary of GTCO, has been facing a litany of complaints from customers in the last few weeks.

The complaints became more pronounced after the switch of its core banking software to Finacle, an Indian banking solution, disrupted services across its e-business channels.

Customers have complained of hitches varying from failed transfers to erroneous debits as well as credits, as the bank faces teething problems from the move.