Guaranty Trust Bank Plc :GUARY-US: Earnings Analysis: Q2, 2017 By the Numbers : September 22, 2017

Guaranty Trust Bank Plc reports financial results for the quarter ended June 30, 2017.

We analyze the earnings along side the following peers of Guaranty Trust Bank Plc – Fukuoka Financial Group, Inc. Unsponsored ADR and Intercorp Financial Services Inc. (FKKFY-US and IFS-PE) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 273.78 million, Net Earnings of USD 134.53 million.
  • Net interest income margins widened from 65.53% to 73.83% compared to the same period last year.
  • Earnings declined although operating margins improved from 0.71% to 53.61%.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2017-06-30 2017-03-31 2016-12-31 2016-09-30 2016-06-30
Relevant Numbers (Quarterly)
Revenues (mil) 273.78 278.11 234.3 216.3 265.14
Revenue Growth (%YOY) 3.26 -6.66 -18.94 -24.66 7.08
Earnings (mil) 134.53 133.52 38.71 132.97 234.16
Earnings Growth (%YOY) -42.55 4.73 -68.02 22.65 75.05
Net Margin (%) 49.14 48.01 16.52 61.48 88.32
EPS 0.23 0.24 0.07 0.23 0.4
Return on Equity (%) 7.69 7.88 2.45 8.41 12.39
Return on Assets (%) 5.22 5.28 1.57 5.27 7.9

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Market Share Versus Profits

Revenues History
Earnings History

GUARY-US’s change in revenue this period compared to the same period last year of 3.26% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that GUARY-US is holding onto its market share. Also, for comparison purposes, revenues changed by -1.56% and earnings by 0.76% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s year-on-year earnings decline has not come as a result of decline in net interest income margins or because of any loan loss provisions. Both net interest income margins and net interest income after provisions margins have actually improved. In fact, net interest income margins went from 65.53% to 73.83% and net interest income after provisions margins improved from 7.16% to 69.37% over this period. In addition, loan loss provisions as a percentage of net interest income were 6.04% this period , and 89.07% a year ago.

Net Interest Income Margin Versus Loan Loss Provisions Margin

Quadrant label definitions. Hover to know more

High Risk; High Reward Loans, Risky Loan Portfolio, Conservative Loan Portfolio, Safer Loan Portfolio
Net Interest Income Margin History
Loan Loss Provisions Margin History

Margins

The company’s earnings declined despite overall improvement in operating margins. Operating margins went from 0.71% to 53.61%. The decline in earnings seems to be largely because of one-time item. Pretax margins narrowed from 103.72% to 59.46%.

EBIT Margin History
PreTax Margin History
EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables

Access our Ratings and Scores for Guaranty Trust Bank Plc

Company Profile

Guaranty Trust Bank Plc engages in investment, corporate, commercial, SME and retail banking business. It operates through the following segments: Retail Banking, Corporate Banking, Commercial Banking, SME Banking and Public Sector. The Retail Banking segment provides private banking services, private customer current accounts, savings deposits, investment savings products, custody, credit and debit cards, customer loans and mortgages. The Corporate Banking segment incorporates current accounts, deposits, overdrafts, loans and other credit facilities, foreign currency and derivative products to very large corporate customers and blue chips. The Commercial Banking segment provides products for mid-size and fledgling corporate customers. The SME banking segment offers products to small and medium size enterprises and ventures. The Public Sector segment provides banking products for government ministries, departments and agencies. The company was founded by Tajudeen Afolabi Adeola and Olutayo Aderinokun on July 20, 1990 and is headquartered in Lagos, Nigeria.

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