GUARANTY H1’15 Conference Call & Earnings Presentation: The key takeaways


Tuesday, August 25 2015 5:22 PM / Research


In the face of sustained macro-economic challenges, with corresponding strict industry regulations, which have capacity to adversely impact both liquidity position and lending capacity of the industry, Guaranty Trust Bank delivered improved top-line and bottom-line performance, driven by impressive interest income posture during the period and active contribution from subsidiaries.

As mentioned above, the bank has been able to double its gross earnings performance to close at 15.05% and increased its profitability posture by 21.27% on year-on-year basis.

However, Net interest margin came in weak to close at 8.17% against 8.34% record in Q2’14- This could be traced to  8.09% and 19.93% growth in operating expenses and interest expenses respectively due to  growth in deposits liability and other borrowed funds.

Nonetheless, we observed improved cost management and sustained operating efficiency as cost-to-income ratio moderated further at 43.75% against 45.93% recorded in Q2’14.

the cost of risk closed at 0.9% against 0.97%, though the NPL ratio moved northwards with a modest growth to close at 3.73% against 3.15% recorded in previous year comparable period- this remains far below regulatory threshold of 5%.

In a similar fashion, the bank sustained liquidity and capital adequacy postures above regulatory and industry benchmark. 

Summarily, below are the key takeaways from the Half-Year earnings presentation as presented by the management of the bank;


         Increase in interest income mainly driven by 25% growth in loan book

         The Bank maximized opportunity provided by currency volatility

         Bloated LDR at 76.2%- though it closed below the regulatory threshold of 80%

         CRR harmonization to 31% led to sterilization of additional ₦70bn.

         Loan book accounts for 51% of Total Assets and 68.4% of total earning assets.

         Reduced exposure to government from 3.4% in Dec to  2.8% in H1'15

         Additional impairment charge is due to on a manufacturing firm whose proprietor passed on in mid-2014, though aggressive recovery is on.

         Capital Adequacy Ratio remained strong at 20.3%

         Loans are adequately collateralized according to CBN requirements

         Balance sheet exposure is insignificant

         The Bank recorded moderate loss to CRR harmonization and domiciliary deposits

         No plans to alter dividend payout plan

         Mobile bank is doing fine and results are encouraging

         Importation regulatory measures have no effect on the bank

         No plan to raise short term liability or Teir 1 capital in near future

         No exposure to Upstream

         Dollar loans are likely to be re-priced due to volatility


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