Guaranty Trust Bank Plc. (otherwise called “GTBank” or “Guaranty”), one of Nigeria’s foremost tier-1 lenders in its Q1’2020 unaudited financial statements released to the investing public on Thursday 23rd April 2020 grew its Gross Earnings and Profit After Tax (PAT) marginally by 2.3% and 1.6% respectively compared to the corresponding period in Q1’2019.
The improvement in its topline item (Gross Earnings to ₦112.86bn) was jointly driven by a 3.4% year-on-year (y/y) increase in Interest Income to ₦77.03bn, and a 21.6% decline in Interest Expense to ₦12.75bn compared to ₦74.48bn and ₦16.27bn in Q1’2019 respectively.
On the low side, however, the bank recorded a 22.1% drop in Fee & Commission Income to ₦14.46bn compared to ₦18.56bn in Q1’2019. This could be largely attributed to the new CBN policy (which commenced on January 1, 2020) which reduced charges of ATM usage on other banks’ machine to ₦35 from ₦65 (after third withdrawal), and quarterly ATM card maintenance fee to ₦50 from ₦156 (₦52 monthly) in the prior year.
Besides, the bank’s Fee & Commission Expenses also jump by 66% to ₦909.25Mn, due to a simultaneous increase of 84.7% and 47.9% in Charges paid to Other Banks (₦499.05Mn) and Loan recovery expenses (₦410.21Mn). This suggests amongst others that more of GTBank customers used other ATM in Q1’2020 due to the reduced cost of using other bank’s ATM machine.
Despite the pockets of pressure on noticed on some cost items, the bank’s PAT settled at ₦50.06bn; 1.6% higher than ₦49.30bn in Q1’2019, while EPS settled at 177k; 1.7% higher than the 174k of Q1 2019.
Going forward, we expect the disruption caused by the Covid 19 pandemic (which had minimal impact on the bank’s activities in Q1’20) to have a divergent impact on the bank’s performance in the remaining quarters of 2020. On the positive, we expect the bank to see a modest increase in Fee & Commission Income due to increased preference for online and ATM transactions since the commencement of lockdown in major states across the federation. On the negative, however, we expect this development to further pressure Interest Income and Non-Performing Loan (due especially to the crash in crude oil prices) in the remaining quarter of the year.