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Guaranty Trust Bank Plc (GTBank) Thursday became the first bank to release its financial performance for the first quarter ended March 31, 2018. According to the results made available through the Nigerian Stock Exchange (NSE), GTBank Plc recorded a profit after tax (PAT) of N44.670 billion, up by from N41.471 billion in the corresponding quarter of 2017. The bank ended the period with net interest income of N59.689 billion, down from N66.129 billion in 2017. Loans impairment charges fell from N3.412 billion in 2017 to N1.639 billion.

Fees and commission income improved from N13.68 billion to N15.22 billion, while profit before tax (PBT) grew from N50.392 billion to N52.624 billion in 2018. A further breakdown of the results showed that deposits from customers rose from N2.062 trillion to N2.214 trillion. However, loans and advances fell marginally from N1.449 trillion to N1.354 trillion.

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Commenting on the results, analysts at FBN Quest said the single-digit in PBT growth was driven by a 52 percent y/y reduction in loan loss provisions and a 41 percent growth in non-interest income.

“The growth in non-interest income was largely underpinned by foreign exchange (FX) revaluation gains of N5.5 billion (vsN306.4 million Q1 2017). In contrast, funding income declined by 10 percent. Further down the PAT grew by eight per cent to N44.4 billion, thanks to a lower effective tax rate of 15.1 percent vs. 17.7 percent Q1 2017. Sequentially, PBT grew five per cent quarter on quarter (q/q), again, the reduction in loan impairment charges was the major driver. However, PAT fell by 13 percent q/q because of a 50 percent q/q spike in taxation. Compared with our forecasts, PBT and PAT beat by six percent and eight per cent respectively, because non-interest income surprised positively.

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They explained that in terms of balance sheet trends, GTBank’s loan book declined by around seven percent q/q, while deposits grew by seven percent q/q.

“On its Q4 conference call, management had guided to loan growth of around 10 percent year-on-year (y/y), underpinned by improvements in macroeconomic fundamentals. As such, we had expected to see some level of loan growth in Q1 2018. Management had also guided to subdued PBT growth of around 2.4 percent for 2018E. The Q1 2018 results suggest that it may be tracking slightly ahead of guidance and imply a 2018E Return on average equity (ROAE) of more than 25 percent,” FBN Quest said.

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