NIGERIA | GUARANTY Plc | Earnings Flash | 18-Oct-2017 | Elixir Research


18 Oct NIGERIA | GUARANTY Plc | Earnings Flash | 18-Oct-2017 | Elixir Research

Dear Valued Investor,

Guaranty Trust Bank Plc. today disclosed its Q3-2017 result. The numbers came-off weak on a quarter-on-quarter (q/q) basis, stemming from the base effect of FX revaluation gains booked over a year ago following the June 20, 2016 Naira float. However, the result is positive when compared year-on-year (y/y) which shows that performance remains on track to meet our 2017 projections. We like the lower impairment level which is very supportive of earnings but we note the contraction in loan and deposit book.

Key highlights below:
• Year-to-date, the bank reported 10.13% contraction in loans to ₦1.43 trillion and 4.48% de-growth in deposits to ₦1.90 trillion.
• Though down 5.3% q/q to ₦60.0 billion, Net interest income (NII) was up 42.8% y/y to ₦189.57 billion, driven by a 365% jump in interest income and a slower 19.4% growth in interest expense. The attractive yield environment boosted NII given the contraction in loan book over the period.
• Loan impairment charges dropped by 85.4% y/y to ₦8.36 billion but grew 15.8% q/q from ₦7.21 billion H1-2017. Total operating expenses increased to ₦90.36 billion, up 9.2% y/y from ₦82.77 billion Q3-2016.
• PBT was lower by 3.5% q/q to ₦48.9 billion but 8.73% y/y higher to ₦150.03 billion. PAT was down 0.7% q/q to ₦41.9 billion but rose 7.26% y/y to ₦125.58 billion. Notwithstanding, the bank is on track to meet our 2017 full year forecasts.
Generally, the outlook is positive for the banks as they consolidate on favourable yield on investment assets and stable foreign exchange market to deliver solid numbers for 2017, though impairment levels remain a major worry—GUARANTY has this under control. Going into 2018, the pressure to grow earnings from risk asset creation would be more given lower outlook on interest rates.
Kindly see snapshot of the result below: