Guaranty Trust Holding Company Plc showed a mild signal of ending six years of decelerating profit with a 5.6 percent improvement in after tax profit to the region of N53 billion in the third quarter.
The bank’s interim financial report at the end of September 2022 shows an upward push from a profit decline of 2.3 percent at half a year to an increase of 5.6 percent quarter-on-quarter.
That stepped up the closing profit for the nine months of operations to flat at over N130 billion.
The profit figure for the third quarter accounted for 40.5 percent of the nine-month figure, pointing to a new phase of earnings growth for the bank
The strength of the improvement in the quarter reflects the ability to curb credit losses, which dropped from N1.3 billion in the same period last year to N180 million at the end of the third quarter.
There was also a drop of 42.5 percent in fee and commission expenses, which led to an increase of 23.8 percent in net fee and commission income quarter-on-quarter.
Two expense lines however grew ahead of earnings and diluted the improvements obtained.
One is interest expenses, which grew ahead of interest earnings at 26 percent compared to 23.7 percent. Net interest income grew by 23 percent quarter-on-quarter to almost N69 billion.
The other is other operating expenses that rose by more than 27 percent in the quarter.
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The drops in loan impairment and fee and commission expenses enabled the bank to absorb the cost increases in interest and operating expenses in the quarter, leaving pre-tax profit improved by 13 percent to N66.5 billion.
GTCO’s year-on-year position shows an improvement of 19.5 percent in interest income to N 232.5 billion for the nine months of operations.
The challenge of interest expenses encroaching on earnings has remained with the bank. The cost of funds grew ahead of interest earnings at 33.4 percent. The sharp drop in loan impairment expenses in the third quarter reflected in the nine-month position with a drop of over 38 percent year-on-year to N3.7 billion.
However, the drop in fee and commission expenses in the third quarter failed to impact the closing figure. Instead, the expense line advanced by 81 percent to N8.6 billion.
Further cost increase came from the inflation-driven other operating expenses, which rose by 19 percent year-on-year to nearly N82 billion. The final restraint on profit improvement is a high growth of as much as 75 percent in tax expense year-on-year to over N39 billion.
GTCO closed the third quarter with earnings per share of N4.55 per share, inching up from N4.54 per share in the same period in 2021.
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