GTCO posts 12% drop in nine-month profit amid soaring costs

Guaranty Trust Holding Company (GTCO) reported a 12.2 per cent decline in net profit for the nine months to September, compared to the corresponding period of last year, as mounting costs strained earnings, its unaudited accounts issued on Tuesday showed.

The financial services group posted an improvement in interest income, its major source of revenue, but faced increased pressure from interest expense, which jumped 27.7 per cent year on year.

Interest expense as a percentage of interest income stood at 27.6 per cent, relative to 22.6 per cent a year ago.

Consequently, net interest income, which implies the difference between the cash generated by banks and financial institutions on interest-bearing assets and what they pay out to depositors, fell to N935.9 billion from N952.1 billion.

The banking group set aside N29 billion as provision for bad debt, marking a 58.4 per cent drop.

Net fee and commission income slightly dropped by 0.4 per cent to N182.4 billion, despite a higher gross fee and commission income amid escalating costs.

Depreciation and amortisation jumped 41 per cent to N82.5 billion, following a notable increase in depreciation of property equipment, while other operating expenses rose 6.5 per cent to N228.8 billion, eroding pre-tax profit.

Other income fell 12.9 per cent to N74.8 billion, driven by unrealised fair value loss on financial instruments and a much weaker unrealised foreign exchange revaluation gain.

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Profit before tax decreased to N879.9 billion from N900.8 billion

GTCO recorded a 31.9 per cent surge in income tax spending, weakening profit after tax, which slid to N614.6 billion from N699.6 billion.

Last July, the banking group completed the secondary listing of its shares on the main market of the London Stock Exchange, replacing years of trading through global depositary receipts, a financial instrument that enables investors to hold shares in a foreign company and trade in them on the stock exchanges of their own countries.