Guaranty Trust Holding Company Plc (GTCO) has raised hopes to recover from two successive years of profit decline with an optimistic profit improvement of 35 per cent to N58 billion in the first quarter (Q1). However, the challenges of rising cost pressure that dropped profit numbers in the past two years are not yet giving way for a smooth rebound.
Cost of funds is on another high-speed growth this year at over 63 per cent in the first quarter to almost N22 billion, accelerating from about 43 per cent rise to N66 billion at the end of 2022.
That beats the increase of 47.3 per cent in interest earnings to N104 billion over the period, pointing to the challenge of using a higher cost of funds to generate the naira of interest income.
With a further upward review of the benchmark interest rate by the Central Bank, the pressure from interest expenses on earnings could intensify for the bank in the year.
Slowed by the increase in the cost of funds, net interest income grew by 43.6 per cent to N82billion at the end of the first quarter.
Interest earnings are nevertheless making the biggest advance that the bank has seen in many years – which is its major operating advantage in the current financial year. The first quarter growth rate is a major acceleration from an increase of 22 per cent to N325 billion at the end of last year.
The bank had lost interest earnings most of the years since 2018 and the closing figure for 2022 remains slightly down from the 2017 mark of over N327billion. GTCO, therefore, looks quite good to register a new peak in interest income based on the first quarter growth rate.
The high performance on the side of interest earnings is however significantly diluted by slow growth in non-interest income at 10 per cent to N54 billion in the first quarter.
Net trading income, which led the growth in non-interest income last year, is equally leading the drag this year with a drop of 30.5 per cent in the first quarter.
The second hurdle for the bank on the path of recovery is that credit losses are racing upward for the second year. Loan impairment charges jumped ahead a clear 185 per cent in the first quarter to stand at N3.4 billion at the end of the period.
This is further to a rapid growth of 40.5 per cent in loan loss expenses to roughly N12billion at the end of the 2022 financial year.
The rapid growth in credit loss expenses again slowed down the growth of net interest income after net loan impairment charges – which still grew impressively at 40.6 per cent to N78.7 billion at the end of the first quarter.
Hopes for recovery are boosted by cost savings obtained from operating expenses in the first quarter, which grew by one-half as fast as gross earnings. While gross earnings rose by over 32 per cent to N158 billion, total operating costs grew by 16.7 per cent to N48 billion.
Operating cost margin went down from 40.2 per cent to 35.5 per cent over the review period, indicating a major reduction in operating cost per naira of gross earnings over the period.
The bank’s operating results in the first quarter were therefore extracted from hope-raising functions of growing revenue and moderated operating costs and also, the opposing forces of rising interest expenses and credit losses.
A slight upper strength of the favourable functions enabled a marginal improvement in net profit margin from 36.1 per cent in the same quarter last year to 36.8 per cent this year. How the forces would play out in the coming quarters will shape the recovery prospects of GTCO in 2023.
The bank earned N2.04 per share at the end of March 2023, rising from N1.51 per share in the same period last year.
IATF2023 records $43.8bn closed deals
The African Export-Import Bank has disclosed that the third Intra-African Trade Fair (IATF2023) held in Cairo from 9 to 15 November witnessed the conclusion of business deals and transactions valued at US$43.8 billion.
In the final tallies released in Cairo, the organisers of the continental event said that the amount represented the value of 426 deals concluded in 21 sectors covering 52 countries. At a press conference to announce the results, Executive Vice President (Intra-African Trade Bank) at Afreximbank, Mrs Kanayo Awani, also announced that 130 countries participated in the trade fair, which attracted 1,939 exhibitors and 28,282 participants who attended physically and through the IATF virtual platform.
One of the notable transactions included the Export Agriculture for Food Security Framework executed by several African countries (as Origin Countries) and ARISE Integrated Industrial Platforms, Arise IIP (as Anchor Investor) to which Afreximbank committed US$2 billion to boost production, processing, and intra-African trade in agricultural products and to provide African farmers and agribusinesses with opportunities to access larger markets across the continent.
Mrs Awani also said that the IATF had successfully established itself as the premier trade and investment event in Africa, with the unique capacity to increase intra-African trade and investment, especially in the context of implementing the African Continental Free Trade Area (AfCFTA) Agreement.
“Building on the successes of IATF2018 and IATF2021, I am proud to say that the buzz and energy generated by IATF2023 will be felt across Africa and beyond for many years to come. Together, we have explored new possibilities and opened new doors for a brighter future for our continent,” she added.
IATF2023 kicked off on 9 November and included an official opening ceremony, a Presidential Summit which was addressed by President Abdel Fattah Al Sisi of the Arab Republic of Egypt, a Trade and Investment Forum, the Creative Africa Nexus (CANEX), an African Auto Forum, AU Youth Entrepreneurship Programme, a Sub-Sovereigns Conference, a Diaspora Summit, an African Industrialization Week and an African Tourism Sustainability and Investment Forum. A series of side events were also held as part of the trade fair.
The next edition of the IATF will be hosted in 2025 by Algeria.
Investors record positive gains, as NGXASI advance by 0.43%
Investors yesterday recorded positive gains on the Nigerian equities market following Monday’s losses.
According to data obtained from the Nigerian Exchange Limited (NGX) website, the NGX Market CAP recorded a gain of N165.99 billion in Naira terms.
The NGX All-Share Index (NGXASI) also advanced by 0.43 percent, closing at 71,250.17 basis points, compared to the previous day’s loss of 0.66 percent, which closed at 70,946.83 basis points. With the growth, the NGXASI now stands at 39.02 percent.
The total volume traded also advanced by 20.93 percent to close at N433.57 million, valued at N11.11 billion and traded in 7,016 deals.
The Gate Index closed flat at 183.36, while the Toni index advanced by 0.27 percent to close at 375.28 basis points.
At the close of trading, the market recorded 40 gainers, 15 losers, and 64 unchanged. NSLTECH topped the gainers list, while ABBEYBDS topped the list of losers.
UACN was the most traded stock by volume with N61.71 million, while NIDF was the most traded stock by value with N2.22 billion units traded.
UACN also had the highest volume contribution with 14.23 percent, while UBA and GTCO followed closely.
According to the value chart, NIDF is at the top with a 20.0 percent contribution. AIRTELAFRI and MTNN followed closely behind.
SEC DG calls for multifaceted approach to enhance capital market growth
The Director-General, Securities and Exchange Commission (SEC), Mr. Lamido Yuguda has called for a multi-faceted approach to enhance the growth of Nigeria’s capital market.
The SEC DG made this known while addressing journalists at the 2023 conference of the Capital Market Correspondents Association of Nigeria (CAMCAN) held in Lagos at the weekend.
According to Yuguda who was represented by the Executive Commissioner Operations, SEC, Mr Dayo Obisan, “Effectively harnessing the capital market for national development entails a multi-faceted approach, these include deploying more infrastructure, fostering more public-private partnerships, establishing specialised entities like special purpose vehicles (SPVs), listing state-owned enterprises, issuing green bonds to support sustainable projects, and bolstering small and medium enterprises among others.”
According to him, the revised capital market master plan underscored SEC’s commitment to deepening and. repositioning the financial market as a key driver of sustainable economic growth.
“The master plan which represents collective aspirations of the capital market community is focused on driving initiatives geared towards growing and deepening the market with the ultimate goal of accelerating the emergence of our dear country in the top 20 economies by the year 2025,” Yuguda said.
The SEC DG added that synergy holds the potential of unleashing capital market prowess and paving the way for a prosperous future.
According to him, achieving the objective necessitates an increased utilisation of market mechanisms and instruments to raise funds and stimulate economic advancement.
He pointed out that the commission would continue to introduce new ideas and policies that would support the development and regulation of a capital market that is dynamic, fair, transparent, and efficient to contribute to the nation’s economic development, noting that investors protection plays a crucial role in the development and integrity of the capital market.
Also speaking at the event, the Deputy Director, SEC Lagos Zonal office, Mr John Briggs, urged the government to create infrastructure financing instruments that would facilitate easy servicing of obligations.
“We have encouraged a lot of infrastructure funds like sukuk, and green bonds and we are even talking about blue bonds to develop the market.”
“The capital market has created the conducive environment to ensure a transparent and dynamic market which would continue to attract investment,” he said.
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