GTBank Plc H1 2017 Conference Call & Earnings Presentation - The Key Takeaways


Tuesday, August 22, 2017 5:51PM / Proshare Markets

Guaranty Trust Bank Plc held its H1’17 Investors and Analyst Conference Call Earnings Presentation. Proshare NG participated along with leading market analysts and professionals.

The management of the bank in its IR presentation offered a macro-economic overview for  half year 2016 as well as an overview of the regulatory environment within the period under review.

The bank’s H1 2017 financial performance review reflected that it recorded 10.42% growth in net interest margin, cost to income ratio at 40%, capital adequacy ratio at 23.10% and liquidity ratio at 48.52%

The bank was able to efficiently manage its balance sheet with interest earning assets and non-earning assets accounting for 73% and 27% respectively. CRR accounted for 40% of the Non-earning Asset owing to sterilization of 27.5% of customers’ deposits in CRR. Its loan book contracted by 6.2% due to cautious effort to de-risk the balance sheet and unwinding of trade obligations as a result of improved dollar liquidity.

The bank recorded impressive PBT in H1 2017 largely driven by optimisation of the balance sheet asset yield and efficient deposit mix with resultant low cost of funds coupled with effective Cost to Income Ratio. Despite non recurrence of FX revaluation gain and negative economic growth, its Gross Earnings went up by 2% due to 51.1% increase in Funded Income.

In a nutshell, below are the key takeaways from the H1 2017 earnings presentation made by the bank’s management;

· The bank recorded improved yield on earning assets by 299 bps from 11.52% in H1 2016 to 14.51% in H1 2017

· The  bank’s strong liquidity position enabled it to optimize its earnings from Fixed Income Securities.

· Key drivers of 24% OPEX growth are Regulatory Cost (AMCON & Deposit Insurance Premium), Depreciation and Occupancy costs and depreciation of Naira against US Dollars resulting in increased Translation Impact of Subsidiaries Opex in H1 2017. The impact of the naira depreciation was felt for only 2 months in H1 2016 as opposed to 6 months in H1 2017.

· The bank’s NIM improved by 200 bps to 10.4% from 8.4% of comparative period; and

· The  bank achieved a NPL to total loans of 3.7% in H1 2017 which is still below the 5% FY 2017 guidance.

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