Earlier this week, Guaranty Trust Holding Company Plc (GTCO) released its audited consolidated and separate financial statements for the half-year (H1) period ended June 30, 2022.
The half-year financials
The GTCO’s half-year financials at the Nigerian Exchange Group (NGX) and London Stock Exchange (LSE) show the Group reported gross earnings growth by 15.09percent to N239.288billion from N207.914billion in H1’2021.
Profit Before Tax (PBT) of N103.2billion represents an increase of 11percent over N93.1billion recorded in the corresponding H1 period ended June 2021. The Group’s loan book (net) increased by 1.8percent from N1.80trillion recorded as at December 2021 to N1.83trillion in June 2022 while deposit liabilities increased by 6.4percent from N4.13trillion in December 2021 to N4.39trillion in June 2022.
The Group’s balance sheet remained well structured and resilient with total assets and shareholders’ funds closing at N5.7trillion and N845.7billion, respectively. Full Impact Capital Adequacy Ratio (CAR) stayed very strong, closing at 22percent, while asset quality was sustained as IFRS 9 Stage 3 Loans ratio and Cost of Risk (COR) closed at 6.2percent and 0.2percent in June 2022 from 6percent and 0.5percent in December 2021, respectively.
The Group continues to post one of the best metrics in the Nigerian financial services industry in terms of key financial ratios – that is, Pre-Tax Return on Equity (ROAE) of 23.9percent, Pre-Tax Return on Assets (ROAA) of 3.7percent, Full Impact Capital Adequacy Ratio (CAR) of 22percent and Cost to Income ratio of 49.1percent.
Sustaining dividend payout
In the half-year (H1) period under review, the directors of GTCO proposed the payment of an interim dividend in the sum of 30kobo per ordinary share on the issued capital of 29,431,179,224 shares. The interim dividend will be paid to shareholders whose names appear in the register of members as at Tuesday September 20 for ordinary shareholders and on Monday September 12 for holders of GTCO’s Global Depository Receipts (GDR). On Friday September 30, the interim dividend will be paid electronically to shareholders.
Group Chief Executive Officer comments
“Our results show an increase in key revenue lines and a strong performance in other financial metrics which reinforce our growth prospects as a leading financial services company,” said the Group Chief Executive Officer of Guaranty Trust Holding Company Plc, Segun Agbaje.
“Our priority at the start of the 2022 financial year was to bring the Group’s new businesses on-stream, starting strong with a focus on long-term viability. At present, we have successfully expanded our financial services ecosystem to include HabariPay Limited, Guaranty Trust Fund Managers Limited, and Guaranty Trust Pension Managers Ltd, and all of them are P&L positive,” he added.
“These newly created businesses will operate alongside our flagship banking franchise to offer increased value to our growing customer base as well as other stakeholders. We will continue to build on our core strengths of service excellence, innovation, and flawless execution to deliver our corporate objectives for the year and further our vision of being Africa’s leading financial services institution,” Agbaje further said.
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For analysts, GTCO is still a BUY
In a September 5 note, Ope Ani, senior analyst at Lagos-based Coronation Research rated GTCO stock a BUY, with a target price (TP) of N36.63. The N19.90 per share GTCO traded at the beginning of this week implies potential upside of 84.1percent when compared with the Coronation Research target price.
“On the H1’ 22 earnings per share (EPS) of N2.79, the board proposed an interim dividend of N0.30 (flat y/y), in line with our expectations. This implies an interim dividend yield of 1.5percent on the stock’s last closing price. On balance, earnings were weighed by increased tax expenses, following the expiration of the tax exemption period for government securities. When annualised, net profits were behind our and consensus forecasts for FY 22 by 19.8percent and 17.6percent, respectively, owing to negative surprises on the tax expense and other income lines. Despite the earnings decline, we expect the market’s focus to be on the sustained dividend payout and the still-attractive yield. Hence, we do not foresee an adverse market reaction,” the Coronation analyst said.
“As we expected, interest rates have risen significantly in recent weeks. As a result, the benefits of rising asset yields are likely to filter through to funded income and support earnings in third-quarter (Q3). In addition, the stock has declined by 23.5percent year-to-date (YtD) and is trading at a deep discount to its peers and historical valuation. This presents an attractive entry opportunity for investors. Accordingly, we maintain our BUY recommendation on the stock”, the Coronation research analyst further said.
Also, Joshua Odebisi, equity research analyst at Vetiva Capital Management Limited in a September 5 commentary noted that GTCO gross earnings in H1’22 was up 15percent year-on-year (y/y) amid interest income growth. Though, Vetiva revised its target price (TP) for GTCO shares to N31 (previous: N35.50), they still maintained BUY rating for the stock. “GTCO is currently trading at a P/B ratio of 0.6x and P/E ratio of 3.3x vs. Tier I averages of 0.5x and 2.6x respectively. The stock has lost 23percent year-to-date (YtD) and is trading at a 55percent discount to our TP,” the analysts said.
The fully-fledged financial services group
GTCO is publicly quoted on the Nigerian Exchange Limited (NGX) with Global Depositary Receipts (GDRs) listed on the London Stock Exchange (LSE). Listed on the banking sub-sector of the NGX financial services sector, GTCO has shares outstanding of 29,431,179,224 units.
GTCO is a fully-fledged financial services group with banking operations across West and East Africa and the United Kingdom as well as non-banking businesses in several key industry segments including Payment, Funds Management and Pension Fund Management.
With N5.7trillion in assets and over 28 million customers, the Group remains one of the most profitable and best managed financial services companies out of Nigeria providing commercial banking services and non-banking financial services across eleven countries.
Its leadership in the banking industry and efforts at empowering people and communities has earned it many prestigious awards over the years including Best Banking Group in Nigeria and Most Innovative Bank in Nigeria at the 2022 World Finance Banking Awards. It also retained its position as Africa’s Most Admired Financial Services Brand in the 2022 ranking of The Brand Africa 100: Africa’s Best Brands.
Committed to founding values
Guaranty Trust Holding Company Plc (GTCO) remains committed to its founding values which endeared the brand to millions of people across Africa and beyond, and which continues to drive financial success.
As a Proudly African and Truly International brand, the Company continues to live by these values of excellence, hard work and integrity, even as it creates faster, cheaper, safer and more diverse products for people and businesses of varied types and sizes.
As a Company, GTCO continues to subject its operations to the highest standards of corporate governance, which is an essential foundation for sustainable corporate success. GTCO remains dedicated to its duties and pledge to safeguard and increase investor value through transparent corporate governance practices. The company’s Code of Corporate Governance provides a robust framework for the governance of the Board and the Company.
In view of globalisation, digitalisation and increased penetration of artificial intelligence in the world and specifically in the financial industry, the resolve to maintain good corporate governance principles is important to GTCO. The company is committed to upholding the creed and principles of good Corporate Governance in all its operations and implementing initiatives that will improve corporate governance for the benefit of all stakeholders.
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