A significant drop in net gains on financial instruments classified as held for trading has dampened first quarter profit of Guaranty Trust Bank Plc as Nigeria’s largest lender by market value struggles with a slow growing economy.

The lender’s net income fell by 3.57 percent to N25.61 billion in March 2016, from N26.56 billion as at March 2015.Pre-tax profits were down by 6.06 percent to N30.67 billion in the period under review.

Analysis by Nairametrics show the lender’s profit went down due to a 79.93 percent reduction in net gains on financial instruments to N1.17 billion.

Banks in Africa’s largest economy have been grappling with the plummeting price of crude and a pegged naira that has hurt profitability.

They are also exposed to oil and gas sector risks as collateralized assets have lost value since loans were granted to oil companies when prices were high leading to increased non performing loans.

“The asset quality impact is difficult to estimate, but we expect an increase in cost of risk (CoR) to 2.4 percent on average in FY16, vs. 1.7 percent in 9M15,” said Adesoji Solanke, head of research renaissance capital in a recent note.

“The outlook appears grim and management teams allude to this but in our view, the banks are not reflecting this sufficiently in their guidance,” said Solanke.

Growth in Nigeria slowed to 2.8 percent last year, the weakest level since 1999, down from 6.2 percent recorded in 2014.

The slow economy showed face in GTBank’s numbers as loans and advances to customers were down by 1 percent to N1.36 trillion.

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