GTCO Becomes First Nigerian Bank To Hit N1trn Pre-Tax Profit Milestone In 6 Months

Guaranty Trust Holding Company (GTCO) has made history by becoming the first Nigerian financial institution to surpass N1 trillion in pre-tax profits within just six months.

The impressive feat was disclosed in its second-quarter 2024 audited financial statements, which revealed a pre-tax profit of N494.5 billion, nearly doubling the N252.5 billion reported in the same period a year earlier.

This record-breaking result follows an already strong first quarter, where the bank reported a staggering N509.3 billion in pre-tax profit. In total, GTCO now posted N1 trillion in profits for the first half of 2024, a remarkable achievement that positions it as the highest-performing financial institution in Nigeria this year.

One of the key drivers of GTCO’s remarkable performance was the sharp increase in net interest income, which surged by 177 percent to N264.2 billion for the second quarter of 2024, up from N95.2 billion in the same quarter of 2023. This marks the best quarterly net interest income in the bank’s history and underscores the strength of its loan portfolio and risk assets.

To put this in perspective, GTCO’s total net interest income for the entire year of 2022 was N259.3 billion, a figure now comfortably surpassed in just one quarter of 2024. For the first half of the year, the bank has recorded a cumulative net interest income of N491.5 billion, compared to N436.6 billion for the whole of 2023.

A breakdown of the bank’s performance shows that N361.9 billion of the net interest income came from its Nigerian operations, while international operations contributed an additional N255.9 billion. Despite the global diversification, Nigeria remains the cornerstone of the bank’s operations, contributing N843.1 billion to the group’s total pre-tax profits.

GTCO’s remarkable profit also benefited from significant unrealised gains, particularly related to foreign exchange revaluation. The bank reported N493 billion in ‘Unrealised Fair Value Gains on Financial Instruments’ and an additional N130.2 billion from ‘Unrealised Gains on Forward Transactions,’ totalling over N520 billion of the bank’s N1 trillion pre-tax profits. These unrealised gains are linked to favourable foreign exchange movements, underscoring the impact of macroeconomic factors on the bank’s performance.

In addition to net interest income, GTCO generated N113.9 billion in gross commissions and fees. This includes N32.5 billion from e-business income, N16.3 billion in commissions from foreign exchange transactions, and N15.6 billion from account maintenance charges. These streams of non-interest income further diversified the bank’s earnings base and contributed to its overall profitability.

GTCO’s Corporate Banking Group continues to be the bank’s primary profit driver, contributing N521 billion to pre-tax profits in the first half of 2024. Meanwhile, its retail banking division also performed well, contributing N298.6 billion, a sharp increase from the N63.2 billion it posted in the same period of 2023.

In a bid to reward shareholders, GTCO declared an interim dividend of N1 per share, doubling the 50 kobo per share declared during the same period last year. Despite this, the bank’s stock price closed at N45.45 per share, down by 0.11 percent on the day of the announcement.

With record-breaking profits and robust operational performance, GTCO is setting a new benchmark for Nigerian financial institutions. While a significant portion of its profits comes from unrealised foreign exchange gains, the bank’s strong fundamentals and diversified income streams suggest that it is well-positioned to sustain growth in the months ahead.

Investors and stakeholders will be closely watching how GTCO navigates the remainder of the year, with expectations of continued growth and further value creation.