GTB CRUISES WELL ON PAPER PROFIT

Guaranty Trust Bank PLC hung on to paper profit substantially to cruise through its first half to June with 35.9% rise in profit before tax to N91381.8m.

According to the unaudited figures released this week, GTB did make good and effective efforts to stay in control in spite of the times but the real hope raiser was great leap in group foreign exchange asset value in Naira terms given the depreciation of the Naira.

Within the half year, GTB provided for N61253.1m as legitimate accounting gain from foreign exchange revaluation as against far less N6558.1m in 2015 first half when the Naira was far more stable than now.

In other words GTB's significant 44.8% increase in profit within the period was 67% dependent on the fate of the Naira and little to do with rewards for the banks operations within the period.

Aside from this, the only other aspect of operations that showed strength that could be built upon to ride the times better is e-business from which GTB reaped N17263.6m compared to only N5399m previously.

However, the management seems to be responding well to punches from different quarters.

Core business income (interest income) had dropped by 3.61% to N109777.8m but this was accompanied by higher 9.19% drop in interest expense to N30662.7m.

Much the same way Fee and commission rise to N36077.5m (mainly driven by e-business) was propelled by only 16.3% increase in related expense to N1268.3m.

Showcasing management grip more effectively was the 3.94% decrease in personnel cost to N14514.1m and marginal 1.56% decrease in other operating costs to N26885.8m.

Come to think of it, but for the revaluation gain attendant on group investments outside the country, the fate of the Naira was not yet good news for GTB.

For example its gain on forex dropped by 84.6% to N183.6m and commission on forex deals decreased by 5.36% to N1531.4m.

It was hard to tell how much its N113413.7m exposure in Eurobond cost it to service, for example but one noticed that GTB's impairment provision also jumped to N37546.5m mainly based on perceived health of existing group portfolio.

All said, GTB ended June with 43.5 % profit margin compared to 41.2% previously mainly because profit growth at 44.8% was well ahead of about 35.9% increase in gross earnings of N209872.7m.

What will be worth looking out for is if GTB makes it to December this way, whether it will opt to pay increased  dividend from profit that is mainly paper profit.

GTB PLC: Nbn half year
                      2016.     2015
G.Earnings  209.9.    153.0
Int. Income 109.8.    113.9
Int. Expense 30.7.      33.8
Commission 36.1.     24.6
Comm. Cost  1.27     1.09
Net trading   2.35.     7.60
Other income 61.7.   6.91
Personnel.     14.5.  15.1
Lease exp.     0.60.  0.54
Other op. Exp 26.9    27.3
Profit b4 tax   91.4.   63.1
Margin %        43.5    41.2

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