GTCO’s profit dips to 4yr-low as Ghana’s debt default bites

Guaranty Trust Holding Company Plc (GTCO)’s profit after tax dropped 3.2 percent to N169.2 billion in 2022, on the back of the impact of Ghana’s debt default.

The holding company’s profit after tax dipped 3.2 percent in the year under review from N174.8 billion in 2021. Profit before tax amounted to N214.2 billion, a 3 percent decline from N221.5 billion in the comparable period.

“Guaranty Trust Holding Company Plc is exposed to Ghana’s Sovereign Debt Restructuring, as a result of its investment in GTBank Ghana, which is a direct subsidiary of GTBank Nigeria Ltd (98% ownership),” the holding company said in its financial statement.

The holding company further revealed that as a means of deploying US Dollar Liquidity, the group also has exposures to Eurobonds issued by the government of Ghana, through the following entities: GTBank Nigeria Limited, GTBank Sierra Leone, GTBank Liberia and GTBank Rwanda.

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The breakdown of GTCO’s exposure to securities issued by the Ghanaian government reveals treasury bills net position at N33.7 billion with 3.1 percent loss rate, after excluding settlements post year-end.

The holding company’s eurobond’s net position stood at N27.8 billion with a 30 percent to 45 percent loss rate during the period.

GTCO’s exposure to local USD bonds stood at N27.4 billion net position with 13 percent loss rate and local Cedis bonds amounted to N43.3 billion net position on 27 percent loss rate.

The bank’s net interest income amounted to N259.3 billion in 2022, 18 percent increase from N220.6 billion in 2021.

“Net Loans and advances to Customers were up only 4.6 percent year on year. The bank has been very reluctant to increase risk assets amidst the negative headwinds,” CSL Research said in a note.

The holding company interest expense grew 42.8 percent to N66.1 billion while on a quarter on quarter basis, interest expense recorded 41.6 percent growth.

During the period, the group’s management proposed a final dividend of N2.80 per share while in 2022, the company declared and paid an interim dividend of 30 kobo per share resulting in the total dividend proposed for the year to be N3.10 per share.