Founded three decades ago by a group of young, vibrant and dynamic professionals determined to transform traditional banking; Guaranty Trust has been on a mission to make financial services accessible to all Africans in ways that truly serve people’s needs and help businesses thrive.
Headquartered in Lagos, Guaranty Trust has banking subsidiaries in Nigeria, Cote D’Ivoire, Gambia, Ghana, Liberia, Kenya, Rwanda, Tanzania, Uganda, Sierra Leone and the United Kingdom. The Bank currently employs over 12,000 professionals and has Total assets and Shareholders’ Funds of N4.993 trillion and N837.2 billion respectively.
Since commencing operations in February 1991, Guaranty Trust has maintained an unbroken streak of year-on-year growth and a consistent lead in driving the digitization of financial services in Nigeria thanks to its strong service culture, efficient management, world-class corporate governance standards and bias for innovation.
At the end of 2020, alongside leading the industry in innovation and service delivery, Guaranty Trust was the most profitable banking group in Nigeria with best-in-class Return on Equity and other key financial metrics.
In April 2021, the reorganization of Guaranty Trust Bank Plc to a financial holding company, Guaranty Trust Group Holding Company Plc (GTCo Plc), was completed as part of the company’s strategy to position for future growth and deliver benefits beyond banking to the people, communities and businesses that depend on the value we create to thrive.
Guaranty Trust received approval for its banking license from the Federal Executive Council and is incorporated as a Limited Liability Company. Among its early founders are Fola Adeola and Tayo Aderinokun who went on to serve as the first Managing Director and Deputy Managing Director respectively. Within a month, the bank held its first board meeting and a few months after, skeletal banking operations began.
Key milestones
In 1992, the Bank opened branches in Ikeja, Broad Street (both in Lagos) and its first upcountry branch in Kano. At the end of the year, Guaranty Trust Bank reported a profit of N52 million while its balance sheet grew to N1.050 billion.
In 1993, its Port-Harcourt branch began operations in June. By November, the Bank’s balance sheet had grown substantially to over N2.3 billion.
The Bank held its first Board meeting at the new head office, the Plural house in 1995. At the meeting, Chief JK Agbaje, first Chairman of the Bank gave notice of his retirement from the board.
“Looking ahead, we will continue to focus on strengthening our relationships with our loyal customers, supporting not just individuals and businesses but also our communities through our well-attested free business platforms as well as innovative products and services”
In 1996, the bank recorded a profit before tax of N1.01 billion, becoming the first financial institution wholly owned by Nigerians to attain a N1 billion profit figure.
Board/management
GTCO runs a lean Board and Management team of 11 persons. Mr. Hezekiah Sola Oyinlola is the Chairman of GTCO Plc.
Leading the management team is Segun Agbaje, Group Chief Executive. Regarded as one of Africa’s leading CEOs with an in-depth understanding of complex businesses and fast-growing markets and a passion for innovation and embracing disruptive technologies, Agbaje has over 30 years of experience in investment, commercial and international banking. He holds a Bachelor of Science in Accounting and a master’s degree in Business Administration, both from the University of San Francisco, USA. He is also an alumnus of the Harvard Business School.
Q1, 2024 financial review
Guaranty Trust Holding Company Plc (GTCO) released its Q1-24 unaudited financial statements this afternoon, reporting a whopping 696.1 percent y/y rise in EPS to N16.24 for the period under review (vs Q1-23: N2.04). The impressive growth in Holdco’s earnings was driven primarily by the fair value gain on the group’s financial instruments (N331.55 billion | Q1-23: loss of N99.00 million) coupled with expansion in its funded income line (+170.6% y/y).
Interest income advanced by 170.6 percent y/y to N281.65 billion, boosted by higher income from loans and advances to customers (+91.0% y/y), investment securities (+307.5% y/y) and cash and balances with banks (+265.9% y/y). We note that the Holdco’s earning asset increased by 104.3 percent YTD to N10.18 trillion as the high-yielding environment also supported growth in core income.
Sequentially, interest expense rose by 147.9 percent y/y to N54.35 billion, primarily driven by the higher interest paid on customer deposits (+141.0% y/y) as the group’s deposits surged to N9.20 trillion (YTD: +87.3%). We however note that the Holdco recorded a slight deterioration of its funding mix (CASA as at Q1-24: 88.3% vs FY-23: 88.6%).
Accordingly, the Holdco recorded a 176.7 percent y/y increase in net interest income. Following higher charges for loan impairments (+291.8% y/y), the net Interest income (ex-LLE) settled at N213.81 billion, translating to a 171.7 percent y/y growth.
GTCO witnessed a remarkable 666.4 percent y/y increase in its non-interest income to N394.86 billion, majorly driven by the N331.55 billion fair value gain recorded for the Holdco’s financial instruments (Q1-23: loss of N99.00 million) as income from net fees and commission (+74.5% y/y) and FX trading (+48.9% y/y) also increased. Elsewhere, we highlight that the group recorded a higher FX revaluation loss of N12.67 billion (+145.1x y/y) in Q1-24.
Operating expenses (OPEX) grew by 76.9 percent y/y to N99.33 billion following the higher personnel expenses (+114.4% y/y) and regulatory fees – AMCON levy (+33.7% y/y) and deposit insurance premium (+48.5% y/y). Given that operating income (367.4% y/y) grew faster than OPEX, the group’s operational efficiency improved significantly as its cost-to-income ratio (ex-LLE) settled at 16.3% (Q1-23: 43.1%).
As expected, GTCO’s profitability was stronger, with profit-before-tax settling 587.5 percent higher year-on-year to N509.35 billion. After accounting for a higher income tax charge of N52.21 billion (+227.9% y/y), PAT settled at N457.13 billion (+685.9% y/y).
Management’s comment
Commenting on the results, the Group Chief Executive Officer of Guaranty Trust Holding Company Plc, Segun Agbaje, said: “Our first quarter results reflect the unfolding value of what we have created in all our business verticals through the Holding Company Structure – from Banking and Payments to Funds Management and Pension, we are positioned to compete effectively on all fronts and fulfill all our customers’ needs under a unified, thriving financial ecosystem. Despite the challenging operating environment, we delivered a solid performance, recording significant growth across all financial and non-financial metrics, and we remain on track to meeting our full year guidance.”
Agbaje further said, “Looking ahead, we will continue to focus on strengthening our relationships with our loyal customers, supporting not just individuals and businesses but also our communities through our well-attested free business platforms as well as innovative products and services. We are confident in our credentials to lead the future of financial services in Africa and will not relent in our commitment to excellence whilst delivering long-term value to all stakeholders.”
Analyst’s comment
“We like the stellar earnings performance put out by GTCO in Q1-24 as the income from its funded and non-funded lines were robust. Going into 2024E, we are positive that the Holdco’s interest income will remain buoyant given the high-yielding environment,” Cordros Research said in a report.
Green flags
1. Holdco structure yielding benefits
2. Bullish Non-interest income
3. Competitive profitability
4. Cost-effective board/management structure
Red flags
1. Increasing Non- performing portfolio
2. Rising operating expenses.
