GT Bank Plc released its 2016 half year results revealing it a blistering pre-tax profits of N91.3 billion a 45% increase from the same period a year earlier.

Highlights of the results

  • Guaranty Trust Bank Plc. (GTB) released audited H1 2016 results wherein gross earnings jumped 37% YoY to N209 billion with both PBT and PAT rising 45% YoY to N91 billion and N77 billion respectively. Relative to our estimates, earnings are tracking well ahead onsizable FX revaluation gains booked in Q2 16.
  • In line with its practice, GTB declared an interim dividend of N0.25 per share, which translates to a 1% dividend yield.
  • The strong H1 earnings largely stem from N61billion FX translation gains booked during the quarter. In our report—attached, (A new dawn for the naira: Bullish or Bearish for coverage sectors), we identified GTB’s sizable net long FCY position (51% of FY 15 net assets) as positioning the bank for sizable FX translation gains following the 43% NGN depreciation in June.
  • Beneath the FX induced earnings gain, GTB, as with the rest of our coverage, recorded a marked upswing in loan loss charges which rose nearly ten-fold QoQ to N34billion with annualized cost of risk for the quarter at a multi-year high of 8.8%(H1 16: 4.8% FY 16E: 1%).
  • Despite these pressures, we think continued NGN depreciation leaves sizable scope for FX gains to more than offset pain from worsening asset quality.
  • GTB currently trades at P/E and P/B of 6.lx and 1.7x which are at premia to peer averages of 4.9x and 0.8x respectively. Following the results release on Thursday, the stock price rose 5.7% to N26 relative to our FVE at N23.24. Our estimates are under review.

See snapshot of results below;

GTB 2016 H1 Results Source: ARM Research
GTB 2016 H1 Results
Source: ARM Research


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