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Tuesday, March 28, 2023

GTCO Reins in Costs as Returns Jump

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Guaranty Trust Holding Company (GTCO) plc has been able to deliver higher returns to shareholders as it rein in on operating cost even amid regulatory charges, spiraling inflation, and foreign exchange volatility.

Return on average equity (ROAE), a key measure of profitability, increased to 23.89 percent in June 2o22 from 19.71 percent the previous year. According to MoneyCentral calculations.

An efficient cost management gives a glimmer of hope that the lender will continue to record strong profit growth needed to bolster capital levels and strengthen investors’ confidence.

A cursory look at the financial statement shows operating expenses (OPEX) grew by 11.3 percent to N99.50 billion in June 2022 from N89.3 billion the previous year.

OPEX growth of 11.33 percent was below headline inflation which closed at 18.6% in June 2022. Operating cost was significantly impacted by increased Regulatory Costs – 20.4 percent growth in Deposit Insurance Premium and 6.39% growth in AMCON Expenses.

Banks in Africa’s largest economy are reeling from rising operating costs that are brought on by regulatory costs such as the Asset Management Corporation Charge (AMCON) charge and inflationary pressures.

GTCO saw pre-tax profit increase by 11 percent to N103.24 billion in the period under review from N93.05 billion the previous year.

Net interest income was up 12.88 percent to N120.84 billion for the quarter ended June 30, 2022.

Net interest income is defined as the difference between interest revenues and interest expenses. For financial institutions, interest revenues represent the interest payments the bank receives on their interest-bearing assets, while interest expenses are the cost of servicing interest payments to customers on their deposits.

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