GTCO’s quarterly profit leaps eightfold to record N457 billion

Guaranty Trust Holding Company (GTCO) posted its biggest after-tax quarterly profit in history in the first quarter of the year from the fair value gain on financial instrument in the sum of N331.6 billion resulting from unrealised foreign exchange gains.

The financial services group, with operations spanning banking, pensions, payments and funds management, reported N457.1 billion in net profit for the period compared to N58.2 billion a year earlier, according to its financials issued on Friday.

“They had some unrealised gains from FX. It’s mostly the impact of devaluation. That’s where the bulk of their income came from,” Matilda Adefalujo, banking analyst at Meristem Securities, told PREMIUM TIMES.

“We had series of depreciation or even devaluation in Q1. You know how the exchange rate moved to about N1,800, N1,900. So the impact of that is what they booked here.”

Nigeria devalued its currency for the second time in seven months in January in a bid to close the gap between the official and the parallel market rates, allowing the naira to weaken 31 per cent against the dollar.

That allowed lenders holding assets denominated in foreign currencies, particularly the US dollar, to earn big after converting foreign exchange income from such assets into naira.

Other income, which was dominated by income from FX-related transactions, came to N324.9 billion compared to N11 billion a year ago for GTCO which, apart from his base Nigeria, has footprints in Ghana, Gambia, Tanzania, Uganda, Kenya, Cote D’Ivoire, Sierra Leone, Liberia and the UK.

Net profit accelerated 176.7 per cent to N227.3 billion, helped by two sharp upward adjustments in the benchmark interest rate by the Central Bank of Nigeria in the first quarter, allowing lenders to charge more for loans and advances.

Pre-tax profit jumped to N509.3 billion from N74.1 billion a year earlier, translating to a 587.3 per cent increase.

GTCO earned N189.5 billion from foreign currency translation gains as a windfall income, which helped lift its total comprehensive income for the period to N580.3 billion from N44.5 billion one year prior.