Guaranty Trust Bank (GTBANK) plc recently released its full-year 2019 audited financial report recording Gross Earnings of N435.40 billion in FY, 2019 representing a marginal growth of 0.31% in earnings from N434.04 billion in the corresponding period of 2018. This was enhanced by Non Interest Income, majorly Fees and Commission and other Operating Income which grew by 19.19% and 9.86% respectively.
Interest Income declined by 3.50% from N306.96 billion in FY 2018 to N296.20 billion in FY 2019 as a result of a drop in Interest on Loans and Advances granted and Investment Securities by 5.04% and 1.24%.
Furthermore, the bank’s stake in investment Securities spiked by 19.88% to N764.03 billion, however, due to the declining yield on fixed income securities resulted in the drop in interest received on Investment Securities. Interest Expense declined by 23.29% from N84.53 billion in FY 2018 to N64.84 billion in FY 2019.
The plunge in Interest Expenses was driven by 21.95% and 2.40% drop in interest on deposit from customers and interest paid on borrowed funds respectively. Also, drop-in Interest Expense supported the growth in Net Interest Income, having spiked to N231.36 billion in FY 2019.
Non-Interest Income advanced by 8.18% from N125.83 billion in FY 2018 to N136.12 billion in the period of 2019, this was enhanced by the rise in other Operating Income and Net Fees and Commission which grew by 9.86% and 17.78% to N55.79 billion and N59.44 billion respectively. The bank’s Profit before Tax (PBT) increased by 7.48% in FY, 2019 from N215.58 billion in the corresponding period of 2018 to N231.70 billion.
Meanwhile, the Profit after Tax (PAT) increased by 6.57% to N196.84 billion from N184.71 billion in 2018.
Asset Quality; Net Loans and advances expanded by 19.02% to N1.50 trillion from N1.26 trillion in FY 2018. Loan to deposit ratio stood at 58.89% when compared with FY 2018 which settled at 53.54%. The total deposit also expanded by 12.02% from N2.35 trillion in FY 2018 to N2.64 trillion at the end of FY 2019.
The Bank declared a final dividend per share of N2.50K (interim of N0.30k), representing a dividend yield of 11.01%. Our blended target price is N41.18. We recommend a BUY at the current market price, as the stock trade’s at a discount to our estimated value.