Operating costs, loan impairment hurt GTBank’s earnings

Guaranty Trust Bank Plc has reported a marginal drop of 3.2% in profit after tax for the nine-month period to September 2020, compared to the corresponding period of 2019, with higher loan impairment charges and soaring operational costs hurting earnings.

The publication on Thursday of GTB’s unaudited group financial statements on the website of the Nigerian Stock Exchange (NSE) made the lender the first of the country’s “Big five” banks to issue its nine-month financial report for the period.

Net interest income grew by 9.7 percent from N172.937 billion to N189.736 billion, limited by a 267.3 percent surge in loan and impairment charges.

Net fee and commission income fell 29.6 percent to N32.726 billion in contrast to the N46.497 billion posted in the corresponding period of 2019, weakened by a 148.5 percent spike in fee and commission expense.

“The containment measures implemented against the COVID-19 pandemic such as lockdowns, travel restrictions, closure of non-essential businesses, and skeletal service operations impacted economic activities during the period ended September 2020,” GTB said in the document.

Pre-tax profit fell to N167.352 billion from N170.652 billion, indicating a negative growth of 2 percent.

After-tax profit was down 3.2 percent from N146.990 billion to N142.283 billion.

On the expenditure side, depreciation and amortisation soared by 40 percent while other operating expenses jumped by 9.92 percent.

GTB recently got the consent of the Central Bank to transform to a holding company, an arrangement that will enable the bank and all its subsidiaries to pool their assets and shares together as a single entity controlled by a parent company.

A holding company owns several other companies and oversees their operations but exists solely to operate those.

On December 4, the scheme will proceed to the next phase when shareholders’ approval will be sought.

The bank’s earnings per share are N6.89 while its price-to-earnings ratio is 5.19 at the close of trade on Thursday.

Shares in GTB closed on the NSE on Thursday at N35.80 per share, down by 3.24 percent.