GTCO reports record-breaking N905.6b profit in H1 2024

Guaranty Trust Holding Company (GTCO) has announced a record net profit of N905.6 billion for the first half of 2024, marking the highest profit ever achieved by a Nigerian-listed company. This result is approximately double the after-tax profit of Dangote Cement, Nigeria’s largest company by market value, for the previous year.

The company’s net profit margin surged to 65% during this period, a significant increase from 41.7% in the same period last year. This impressive margin indicates the substantial profitability GTCO has achieved, reflecting the bank’s ability to capitalize on current economic conditions.

Gross earnings for GTCO more than doubled to N1.4 trillion compared to the previous year, according to its audited earnings report. A large portion of this revenue, N630.3 billion, came from other income sources, including unrealized gains on financial instruments and forward transactions. This diversification of income sources has been bolstered by the recent devaluation of the naira.

The Central Bank of Nigeria (CBN) devalued the naira by 34.3% against the dollar in January 2024, causing the exchange rate to rise from 895.3 to 1,529.1 naira per dollar. This devaluation has created a significant benefit for banks like GTCO with investments in foreign currency-denominated assets. GTCO earned N153.9 billion from foreign currency translation gains during the period, up from N103.7 billion a year ago, increasing its total comprehensive income to over N1 trillion.

The unprecedented revaluation gains have led the Nigerian government to propose a one-off 50% windfall tax on such income, which was recently increased to 70% by the Senate. This move has raised concerns among banks and rating agencies about the potential impact on the financial sector.

GTCO’s net interest income also saw a remarkable increase, climbing 177% to N491.5 billion. This growth is attributed to the CBN’s aggressive monetary tightening, which has significantly raised lending costs. The CBN has raised rates by 1,525 basis points since May 2022 in an effort to curb inflation.

For the period, GTCO’s profit before tax soared to N1 trillion, while profit after tax advanced from N280.5 billion to N905.6 billion. Earlier this year, the financial services group completed a public offer of N400.5 billion to meet new minimum capital requirements set by the central bank.