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**Rating**: Hold**Current Market Price**: N28.55

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

**Introduction**

- This report reviews the recently released nine-month scorecard of Guaranty Trust Holding Company for the period ended 30
^{th}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.

**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

- 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.

**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

**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.

**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

**Valuation**

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**.