Foreign exchange gains lift GTB’s profit

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Foreign exchange gains lift GTB’s profit



Guaranty Trust Bank’s full year result for 2016 shows the strongest growth in gross earnings in five years and the highest profit advance since 2013. Foreign exchange revaluation gain was the main driver for the bank’s big leap in earnings; having multiplied by nearly 1,600% in the year. The bank maintained stable growth in interest income and saved cost on interest expenses – which declined in the year.


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A massive growth in credit losses however claimed more than all the increase in interest income and the cost saved from interest expenses and left income net of impairment charges lower than in the preceding year. The strength to grow profit therefore came from non-interest income led by foreign exchange revaluation gain and a significant moderation in operating cost.

The renewed strength from the revenue side raised asset turnover to the highest mark in recent years but the impact of a 426% upshot in risk asset impairment charges trimmed profit margin – which declined for the fourth year running. Yet, the bank has maintained one of the highest net profit margins in the banking sector.

The bank posted gross income of N414.62 billion at the end 2016 operations, an accelerated growth of 37% and the highest revenue growth rate in five years. GTB had raised gross earnings by 8.4% to N302 billion in 2015, which was a slowdown from the preceding year’s record. Interest income contributed N262.49 billion of the gross income but its proportion of the total revenue declined. The contribution of non-interest income grew from 24% in the preceding year to 37% in 2016.

The bank saved cost from interest expenses, which declined by 3.2% to N67.09 billion against an increase of 14.5% in interest income and a major increase of over 23% in customer deposits. This is a reversal of the preceding year’s position when interest expenses grew ahead of interest income. In 2016, net interest income expanded by 22% to N195.40 billion against an increase of 12.3% in the preceding year.

Impairment charges soared by 426% to N65.29 billion, which claimed more than both the increase in interest income and the cost saving from intere