'Income statement' GTCO's half-year profit shrinks to N79 billion

Guaranty Trust Holding Company (GTCO) saw an appreciable advance in top line for the year to June as all its income sources but other income expanded, according to the audited earnings report of Nigeria’s second biggest by market capitalisation issued on Monday.

But the growth could not propel profit as two bugbears – galloping tax spend and other operating expenses – gnawed away at income at a time inflation in Nigeria was touching new highs.

GTCO, more than half of whose revenue and profit was contributed by its corporate banking business, recorded gross earnings of N239.3 billion.

It surpassed the level reached a year ago by 15.1 per cent.

The climb drew its strength from interest income calculated using the effective interest method, which jumped 15.5 per cent to N135 billion.

Fee and commission income, summing up to N38.3 billion a year earlier, rose to N46.5 billion.

GTCO, which attained a holding company status last year, counts Stanbic Nominee, a subsidiary of rival Stanbic IBTC Holdings, as its biggest shareholder.

The latter holds 19.9 per cent stake in the corporation in custodial capacity on behalf of various investors and does not have personal voting rights on the shares.

Net trading gains on financial instruments – like bonds, treasury bills and foreign exchange – enlarged by a third to stand at N23.6 billion.

Pre-tax profit was up by 11 per cent at N103.2 billion, but a steep surge in the cash spent on income tax meant after-tax profit decline 2.3 per cent to N77.6 billion.

The financial services group committed N25.7 billion to settle its income tax bill, nearly doubling what it spent on that a year ago, about one-third of that going to deferred tax.

Other operating expenses were a major pressure point for revenue, gulping N63.6 billion in contrast to the N54.3 billion reported in the same period of last year.

All the fifteen components of this expenditure category but directors’ emoluments saw an uptick. Net profit margin stood at 32.4 per cent.

GTCO received approval from the Central Bank of Nigeria in June for its wholly owned payments unit, HabariPay.