It was a very busy day on the Nigerian Stock Exchange (NSE) on Wednesday, as Guaranty Trust Bank became the third major company to present its unaudited 2019 first quarter outing to investors, all of which showed that the operating environment in first three months of this year may not have been friendly.
GTBank reported a slowdown in interest income, the effect of which was reduced by the containment of interest expenses, a drop in loan impairment charges helped ensure profit before and after tax rose faster than gross earnings, among others.
GTBank’s Q1 gross earnings stood at N110.328bn, up by a marginal 1.25% from N108.97bn in the corresponding period of 2018; with interest income, a major source of every bank’s revenue, accounting for N74.483bn, after dropping by 7.79% from N80.772bn. The decline followed the drop in interest from customer loans and advances to N43.742bn, compared to the N48.735bn reported in prior Q1, just as investment securities at face value fell to N18.719bn from N22.06bn.
Interest expense dropped by 22.85% from N21.084bn in 2018 to N16.266bn, mainly the slide in interest on customer deposits from N17.005bn to N13.301bn; resulting in net interest income of N58.217bn, which 2.47% lower than the N59.688bn reported in the prior first quarter.
Loan impairment charges dropped 60.27% from N1.639bn to N651.24m, following which net interest income after loan impairment charges stood at N57.565bn, as against the previous N58.049bn.
Fee and commission income rose 21.9% up from N15.224bn to N18.557bn, boosted by the N4.546bn credit-related fees and commission, up from N2.373bn; just as the N3.044bn account maintenance charges from N2.744bn; and e-business income from N2.106bn to N3.181bn, among others.
Also, fee and commission expense dropped by 25.65% from N736.788m to N547.796m, as bank charges fell from N445.332m to N270.526m; and loan recovery expenses from N291.456m to N277.27m, which helped ensure profit remained healthy. Net fee and commission income, therefore, climbed to N18.01bn, up by 24.32% from N14.487bn in 2018Q1.
Net gains on financial instruments classified as held for trading dropped 17.52% from N5.153bn to N4.25bn; other income soared by 66.7% from N7.82bn in 2018 to N13.036bn, propelled by the N6.115bn from ‘recoveries and others,’ a first time item, even as gains on trading investments and others stood at N2.222bn, as against the N17.306m loss in 2018Q1. It could have been better, but for the drop in foreign exchange revaluation gain from N5.463bn to N2.637bn.
Personnel expenses stayed flat also at N9.134bn from N9.478bn; depreciation and amortization rose slightly from N4.246bn to N4.591bn; just as other operating expenses inched 15.03% from N18.54bn to N21.326bn, after contribution to the Asset Management Corporation of Nigeria (AMCON) sinking fund soared from N4.391bn to N7.724bn.
Profit before tax, therefore, stood at N56.984bn, representing 8.29% rise from N52.624bn; income tax expense dropped marginally from N7.954bn to N7.682bn; resulting in profit after tax of N49.302bn, up 10.37% from N44.67bn. Earnings Per Share also recorded rose from N1.58 to N1.74 each.
On the balance sheet, the total asset was flat at N3.555tr compared to the N3.506tr of the previous Q1, boosted by customer loans and advances of N1.281tr, up marginally from N1.259tr in prior Q1. Total liabilities inched from N2.711tr to N2.928tr, after customer deposits rose from N2.273tr to N2.41tr, following which shareholders’ funds appreciated from N575.567bn to N627.177bn.