GTCO Plc experienced a significant upswing in its stock value last week, propelled by outstanding financial performance and a substantial dividend distribution. The financial services conglomerate, known for its orange branding, reported a net income exceeding N1 trillion for the 2024 fiscal year and announced a final dividend of N7.03 per share.
Consequently, investors seeking high-performing equities demonstrated a strong interest in the bank’s shares, with approximately 69 million shares, valued at N4.574 billion, changing hands on Friday alone. GTCO’s stock briefly reached N70 per share before experiencing a slight pullback as investors engaged in profit-taking.
In its audited financial statements, Guaranty Trust Holding Company Plc disclosed a robust 88.6% year-over-year increase in profit after tax, which amounted to N1.03 trillion. This growth was primarily attributed to a 2.4-fold rise in net interest income (NII) and a 1.3-fold increase in non-interest income (NIR).
Despite pressures on funding costs, the net interest margin (NIM) expanded by 3.3 percentage points to 11.1%, reflecting the substantial 143.6% year-over-year growth in interest income. This was facilitated by higher yields on an expanded base of interest-earning assets (IEA).
CardinalStone Securities Limited, in a research note, indicated that GTCO prioritized money market placements, capitalizing on the attractiveness of fixed-income securities, while gross loan growth remained moderate at 11.7% year-over-year.
The bank’s non-interest revenue growth was supported by significant improvements in net fee and commission income, as well as maintenance and ancillary banking charges.
Furthermore, unrealized fair value gains on financial instruments, amounting to N517.5 billion, significantly bolstered the group’s non-interest revenue, according to CardinalStone.
Amidst increasing cost pressures, the 73.4% surge in operating income helped mitigate the impact on profitability. Despite a 60.9% rise in operating expenses (OPEX) to N403.0 billion, the cost-to-income ratio (CIR) improved by 1.7 percentage points to 22.0%.
Additionally, GTCO reported a 38.1% increase in Stage 3 loans, pushing its non-performing loan (NPL) ratio above the regulatory threshold of 5.0% to 5.18% from 4.19%. Similarly, NPL coverage decreased to 90.4% from 94.1% in 2023.
Earnings per share (EPS) reached N35.44, with a return on assets (ROA) of 8.3% compared to 6.6% in 2023, and a return on equity (ROE) of 48.6%, up from 44.0%. The bank announced a final dividend of N7.03, bringing the total dividend to N8.03, representing a 22.6% payout ratio.
