Guaranty Trust Holding Company Plc (GTCO) faced a substantial challenge in the 2023 financial year, experiencing the most significant credit and financial asset losses in recent years, totaling N148.6 billion by the end of the third quarter.
This figure exceeds the total net impairments on loans and financial assets recorded by the bank in the past six years, marking a concerning trend.
Despite this surge in costs, the bank managed to counterbalance the impact through a substantial boost in revenue.
A foreign exchange revaluation gain of N334.4 billion at the end of the third quarter played a pivotal role, allowing the bank to absorb the asset losses and achieve exceptional bottom-line growth.
The bank reported a remarkable 182 percent increase in profits, reaching N367.4 billion at the end of nine months of operations.
The unaudited financial report for the third quarter, ending in September 2023, reveals that financial asset losses comprise net loan impairment charges of N89.5 billion and a net impairment charge on other financial assets amounting to N59.1 billion.
This surge in credit charges represents a significant escalation from only N3.7 billion in the same period last year.
While the numbers indicate a challenging scenario with a notable increase in financial asset losses, the windfall in revenue, particularly the foreign exchange inflow, has mitigated the impact on the income statement.
GTCO’s after-tax profit soared from N130.3 billion in the same period in 2022 to close at N367.4 billion at the end of the third quarter, marking a distant new profit high for the bank.
The foreign exchange gain contributed substantially to the group’s gross earnings of N850.3 billion at the end of the third quarter, representing 39.3 percent of the total.
Despite the robust bottom-line growth, the bank faces persistent weakness in non-interest earnings, particularly with net trading income dropping by 20.3 percent to N29.2 billion.
GTCO’s full-year operating results will be closely monitored to understand how the opposing factors of revenue windfall, moderated operating costs, increasing credit losses, and rising cost of funds will influence the overall financial performance in the final quarter of the year.