GTCO 2021-9M: Amid Shrinking Margins, Can HoldCo Structure Do The Magic?

Rating: Hold
Current Market Price: N28.55

Year High: N36.00
Year Low: N27.85
Fair Value: N33.95
Equity AnalystTunde Segun Jeariogbe


  • This report reviews the recently released nine-month scorecard of Guaranty Trust Holding Company for the period ended 30th September, 2021, compares it with those for the corresponding period of 2020 to establish growth and make recommendations accordingly.
  • Nevertheless, we have explored the full-year numbers of previous years to help our projections and valuation.
  • Presented below are comparison between the current result and that of 2020.
SourcesNGX, Company reports, Investdata Research

Company Figures

  • Estimated Gross Earnings for the period stood at N300.03 billion, as against the N310.96 billion in the similar period of 2020, representing a marginal drop of 3.52%.
  • In the same trend, Interest Income dropped against that of the prior nine months by 13.08% to N195.03 billion, compared to N224.37 billion.
  • Interest Expense dipped by 16.62% to N32.09 billion, down from N38.49 billion in 2020.
  • Operating Expenses OPEX grew north by 9.10% to N96.87 billion, versus N88.79 billion in same period of last year.
  • Profit Before Tax therefore was estimated at N151.90 billion, 9.23% below the N167.35 billion in the first nine months of 2020 nine.
  • Having provided for Tax Expense, a total of N129.40 billion was reported as the Profit for the period, as against N142.28 billion reported in the corresponding period.
  • On the other hand, Total Comprehensive Income dipped by 28.23% against the corresponding period
SourcesNGX, Company reports, Investdata Research
  • Total Assets is currently valued at N5.14 trillion, 12.46% improvement over the N4.57 trillion at the end of last year.
  • Similarly, Total Liabilities grew over the corresponding period by 12.65% to N4.30 trillion against N3.81 trillion in 2020.
  • Net Assets is now estimated at N842.46 billion, against N755.54 billion in 2020
  • Retained Earnings at the end of the quarter was N206.49 billion same as 40.46% above the N147.01 billion achieved at the end of 2020 third quarter
  • Total Deposit improved by a marginal 18.09% to N3.90 trillion as against N3.30 trillion in the corresponding quarter
  • Similarly, Total Loans & Advances improved by 10.72% against the previous quarter number

Financial Strength/Solvency Ratios

  • Debt Ratio was stable through the two compared periods inching north from 83.48% to 83.62%, signifying a controlled assets ratio through the period
  • Total Debt used through the period will replicate Equity 5.11 times, as against the 5.05 times replicate estimated similar quarter
  • Similarly, Equity Ratio dipped by marginal 0.85% to stand at the current estimate of 16.38% as against the previously estimate 16.52% in the corresponding quarter
  • We have currently estimated a Beta value slightly above the market Beta for GTCO shares. Please note that at 1.01 beta value, it’s below the industrial average of 1.11.
SourcesNGX, Company reports, Investdata Research

Profitability Ratios

  • Pre-Tax Margin stood at 50.63% down from the last estimate of 53.82% at the end of 2020 nine months business
  • Interest Expense figure posted for the period is same as 10.70% of the Estimated Gross Earnings figure; this is a reduced position against the previously estimate of 12.38%
  • Return Achieved on Average Equity used through the period was estimated at 15.36% this is below the 18.83% return achieved in 2020 numbers
  • See below table for detailed profitability ratios and comparison
SourcesNGX, Company reports, Investdata Research

Efficiency Ratios

  • Operating Expenses is estimated to be 32.29% of the Gross Earnings Value estimated for the period, this is an improvement in efficiency when compared to the 28.55% estimated from 2020 financial statistics
  • Similarly, Gross Earnings was estimated to be 5.83% of Total Assets, this is a 14.21% marginal drop in efficiency when compared to estimate from the corresponding period
  • Total Loan to Deposit Ratio achieved at the end of the quarter stood at 44.54% down from the 47.51% achieved in 2020.
SourcesNGX, Company reports, Investdata Research

Investment/Valuation Ratios

  • Profit made on each units of GTCO shares at the end of the quarter had been estimated at N4.40 as against the previously estimated N4.83
  • Total Comprehensive Income per unit shares is estimated for N3.68 versus N5.12 in corresponding period of 2020
  • Our adjusted Price to Earnings Ratio adjusted for nine months stood at 2.16x as against 2.55x in 2020
  • The said earnings per share is same as 15.43% of the current market price of Guaranty Trust Bank Holdings shares on the floor of the exchange when the result was released this is a better yield when compared to the previous half year estimate
  • The current Book Value of Guaranty Trust Bank Holdings is N28.62, a 11.50% improvement from the N25.67 estimated in the corresponding quarter
  • Confirming a fair price status of Gtbank Holdings is the Price to Book Value that stood at unity
SourcesNGX, Company reports, Investdata Research


As noted in our intro above, we adjusted down of fair value for each units of Guaranty Trust Bank Plc’s shares to N33.95. Considering the distant between the current market price of the equity on the floor of the exchange and our achieved fair value, we rated it a Hold.