Nigeria’s largest lender by market capitalisation Guaranty Trust Holdings Company (GTCO) Plc’s second quarter profit declined on a slump in unrealised gains on financial instruments and forward transactions.
For the first six months through June 2025, GTCO’s profit after tax (PAT) dipped by 50.41 percent to N449.01 billion from N905.56 billion as at June 2024.
The sharp fall at the bottom line (profit) was caused by deterioration in exceptional gains which has been a major driver of earnings growth in the past.
For instance, the lender incurred unrealised Fair value loss on financial instruments to a tune of N4.35 billion in the period under review from gains of N493.02 billion as at June 2024.
Similarly, unrealised gains on forward transactions reduced by 91.62 percent to N10.90 billion as at June 2025 from N130.20 billion the previous year.
Investors fret that the stabilisation in the foreign exchange market and a gradual pulsing of a hike in the monetary policy rate by the central government that is winning the war on inflation could undermine banks’ future earnings growth.
Nigerian banks were the largest beneficiary of a sharp depreciation in the value of the Naira as they made a lot of money from foreign exchange revaluation gains. However, such foreign exchange gains have faded on the back of relative stability in the foreign exchange market.
It seems banks’ core business of lending has not been generating enough money to sustain the desired profit growth needed to underpin the return on equity.
Interest income from loans and advances increased by 31.86 percent to N798.84 billion in the period under review from N607.69 billion the previous year.
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