GTBank Q2 2020 Results Review: Reiterating Outperform Rating

Must Read

How To Block Your Bank Account And SIM Card In Case Of Emergency

Losing your phone and wallet or having them stolen can be very frustrating. However, in case that happens to...

List of Mobile Banking USSD Codes For All Banks in Nigeria and how to use them

The introduction of USSD codes (Unstructured Supplementary Service Data) has changed the Nigerian banking system completely. Today, mobile banking...

List of United Bank for Africa (UBA) Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number that usually identifies both the bank and the branch where an account is held. The sort...
- Advertisement -

GT Bank‘s Q2 2020 PAT surprised positively relative to our forecast. However, the surprise was due to a significant result on the other comprehensive income (OCI) line.

Above the tax line, pre-tax earnings missed by high-single-digits because of negative surprises in impairment for credit losses – due to the lockdown related to the pandemic – and opex. Despite the sharp rise in impairment charges and opex, GTBank’s management maintained its guidance of <1% and 40% for cost-of-risk and cost-to-income ratio respectively.

Following the negative surprise on both lines, we have increased our 2020E cost of risk forecast by 30bps to 0.8% and our opex forecast by c.7%. GTBank’s asset quality (NPL) ratio worsened slightly to 6.8% (+80bps q/q).

However, following the gradual pick-up in economic activity, management does not see a significant risk of further asset quality deterioration in H2. Nevertheless, we have increased our NPL forecast by 200bps to 7% (vs. 5% guidance).

Despite these downward revisions, our 2020E EPS forecast is up by 6% because of the positive OCI. Nonetheless, we have cut our 2021E EPS forecast by c.2%. Regardless of the cut, our new price target of N53.3 is 2% higher because we have rolled over our valuation to 2021E.

- Advertisement -

In terms of changes to its operating model, management affirmed that plans to transition to a holding company (Holdco) structure (with four operating regions) have gained significant momentum.

The change will see the bank’s shareholders swapping shares in a one-for-one exchange for Holdco shares. Having shed -12.8% ytd vs -4.7% for the ASI, our new price target implies a healthy potential upside of 106% from current levels. Consequently, we reiterate our Outperform rating on GTbank’s shares.

Q2 PBT down 12% y/y due to the spike in impairments and opex

GTBank‘s Q2 PBT declined by 12% y/y, due to the combination of a 261% y/y spike in loan loss provisions and a 28% y/y rise in opex. Above the provisions line, pre-provision profit was up by 7% y/y on the back of single-digit increases in both revenue lines.

Read Also:  Shipping goods to Nigeria from the US is more expensive than any other destination

The 9% y/y growth in funding income outpaced the 3.0% y/y growth delivered by the non-interest income line.  Below the tax line, PAT advanced by 23% y/y to N59.3bn. However, the y/y growth was only because of a positive result of N15.7bn in OCI.

- Advertisement -

Sequentially, the growth trends mirrored those on a y/y basis. GTBank’s PBT fell by 12% q/q while PAT expanded by 26% q/q. Compared with our forecasts, PBT missed by -9%. However, PAT beat by around 25%.

GTBank Q2 2020, GTBank Q2 2020 Results Review: Reiterating Outperform Rating
GTBank |


54gene, US firm Illumina to launch Lagos genomics facility

Nigerian genetics startup 54gene has partnered US firm Illumina to power the creation of a world-class genomics facility in Lagos.

- Advertisement -
Read Also:  See how to apply for a Free Retail Stall at the 2019 GTBank Food and Drink Festival

Coca-Cola empowers 1,000 women, 4,000 more to go (Photos)

Over 1,000 women of the Magboro Makogi community, through a Coca-Cola Foundation-sponsored program; Catalyst For Change,  were trained for over four weeks on relevant skills with more than 200 empowered to start their own businesses.

September 2020 FGN Savings Bonds Offer for Subscription

The Debt Management Office (DMO), on behalf of the Federal Government of Nigeria (FGN), has introduced a retail savings product that will be accessible to all income groups – the FGN Savings Bonds.

67% of Consumers Have Returned to Non-Essential In-Store Shopping – Report

With COVID-19 lockdown measures around the world easing, just under three-quarters of global consumers (71%) now report feeling comfortable returning to physical stores since local lockdowns have eased, according to research published today by Mood Media, the world’s leading on-premise media solutions company dedicated to elevating the Customer Experience.

Six most popular tech companies stock ROI soars 352% in five years

In the stock market, the technology sector is among the best performing categories in recent years based on their Return on Investment (ROI). Despite being vulnerable just like other stocks, the category has remained resilient.

- Advertisement -
GTBank Q2 2020 Results Review: Reiterating Outperform Rating - Brand SpurGTBank Q2 2020 Results Review: Reiterating Outperform Rating - Brand Spur

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.

- Advertisement -


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

GTBank Q2 2020 Results Review: Reiterating Outperform Rating - Brand SpurGTBank Q2 2020 Results Review: Reiterating Outperform Rating - Brand Spur

Latest News

How British American Tobacco sells nicotine to young people

In this report by the Bureau of Investigative Journalism, Campaign reveals the marketing strategies used by tobacco companies to...
- Advertisement -
BrandsPur Weekly Cartoons
- Advertisement -GTBank Q2 2020 Results Review: Reiterating Outperform Rating - Brand SpurGTBank Q2 2020 Results Review: Reiterating Outperform Rating - Brand Spur