GTCO Jumps by 18.2% on Sky-high Earnings, Dividend
GTCO Plc reached new height in the equities market last week following a sky high earnings performance, and its strong dividend proposal. The orange branded financial services group posted more than N1 trillion in net income for financial year 2024, and declared N7.03 per share as the final dividend.
As a results of the feat, equities investors hunting for high performers rushed the bank’s stocks, with about 69 million shares valued at N4.574 billion exchanging hands on Friday alone. Briefly, GTCO tested N70 per share and retreated on the back of mild sell by investors who quickly take early profit.
In its audited financials, Guaranty Trust Holding Company Plc reported a strong 88.6% year on year growth in profit after tax which settled at N1.0 3trillion, driven by a 2.4 times surge in net interest income (NII) and a 1.3 times increase in non-interest income (NIR).
Despite funding cost pressures, net interest margin (NIM) expanded by 3.3 percentage points to 11.1%, reflecting the robust 143.6% year on year growth in interest income. This was fuelled by higher yields on an expanded Interest-Earning Assets (IEA) base.
CardinalStone Securities Limited said in a note that GTCO prioritized money market placements, benefiting from the attractiveness of fixed-income securities, while gross loan growth remained modest at 11.7% year on year.
The bank non-interest revenue growth was supported by strong improvements in net fee and commission income and maintenance & ancillary banking charges.
Additionally, unrealized fair value gains on financial instruments worth N517.5 billion significantly boosted the group non-interest revenue, according to CardinalStone
Amid rising cost pressures, the 73.4% surge in operating income helped cushion profitability. Despite a 60.9% rise in operating expenses (OPEX) to N403.0 billion, the cost-to-income ratio (CIR) improved by 1.7 percentage point to 22.0%.
Elsewhere, GTCO reported a 38.1% increase in Stage 3 loans, pushing its Non-Performing Loan (NPL) ratio above the regulatory threshold of 5.0% to 5.18% from 4.19%. Similarly, NPL coverage declined to 90.4% from 94.1% in 2023.
Earnings per Share (EPS) settled at N35.44, with a Return on Assets (ROA) of 8.3% versus 6.6% in 2023 and a Return on Equity (ROE) of 48.6%, up from 44.0%.
The bank declared a final dividend of N7.03, bringing the total dividend to N8.03, representing a 22.6% pay out ratio. #GTCO Jumps by 18.2% on Sky-high Earnings, Dividend Naira Tumbles as FX Demand Pressures Heat Up, Spread Reduces
