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Guaranty Trust Holdings N35.60bn Impairment on Ghana Securities Mar Profit

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Guaranty Trust Holdings Company (GTCO) Plc has been hit by a N35.60 billion loss relating to Group exposure to the securities issued by the Ghanaian government, an exposure that hindered the lender from delivering returns to shareholders.

The net impairment charge on other financial assets is responsible for the 3.23 percent drop in net income or profit after tax (PAT) to N169.13 billion in December 2023, despite an improvement at the top lines (Revenue).

Return on average equity (ROAE) reduced to 18.64 percent in December 2022 from 20.59 percent as at December 2021.

On December 5, 2022, the Government of Ghana launched the first Ghana’s Domestic Debt Exchange programme (DDEP), in response to the Government defaulting in servicing its debts when it suspended payments on most of its external debts including Eurobonds, to ensure debt sustainability aimed at securing a $3 billion IMF economic support.

Analysts say the impairment on Ghana investment securities that has hit the books of the big Nigerian banks appears to be a one-off event and it is not expected to resurface in the near future.

It is important to note that lenders have disclosed that full provisions have been made in line with appropriate accounting principles.

Analysts at Chapel Hill Denham are not overly optimistic about the industry due to further downpricing Ghana bond coupon on the back of heightening fiscal pressure.

Last year, Fitch Ratings affirmed Guaranty Trust Bank (Ghana) Limited’s Long-Term Issuer Default Rating (IDR) at ‘B-‘ with a Stable Outlook and Viability Rating (VR) at ‘b-‘.

GTCO benefited from rising interest rate or upward movement in fixed income securities as net interest income was up 17.50 percent to N259.30 billion as at December 2o22 from N220.61 billion the previous year.

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