Guaranty Trust Holding Company Plc (GTCO), Nigeria’s most valuable bank by market value, saw declining revenue and profit levels for the first nine month of 2021. This shows it has been struggling to arrest a trend of waning interest income over recent years.
According to the document published by the Nigerian Exchange Limited, GTCO reported gross earnings of N318.5 billion in the first nine months, down 3.5% from the amount at N330 billion in the same corresponding period of last year
If the trend is not halted before year’s end, Holdco will report its first annual profit and revenue drop in at least half a decade.
The most important source of income for the group after interest was fees and commissions. E-business revenue contributed 28% to that earnings category, up more than half to N56.6 billion.
Banks in Nigeria are relying on e-business services such as mobile, internet, and agency banking to meet the yearnings of an increasingly youthful, vibrant, and digital-savvy population that prefers to conduct transactions outside the banking hall.
This is also helping lenders to cushion the effects of the pandemic outbreak on earnings due to an accumulation of impaired credit.
As the global economy sags and banks remain cautious in lending to the oil sector in the first half of 2021, analysts believe the market crash underscored the impact of the COVID-19 outbreak on oil demand.
However, there are reports that show other banks reported significant increases in Oil & gas exposure in the period under review, aside from GTCO and Zenith Bank.
As of June 30, 2021, 28% of GTCO’s gross loans were classified as upstream oil & gas, a slight decrease from 29% in 2020, and exposure was flat at 14% for midstream oil & gas.
GTCO presentation to investors & analysts indicates that the downstream sector benefited from N7.2 billion write-off in H1 2021 as NPLs (non-performing loans) decreased from 10.9 percent to 8.7% in 2021.