…FX revaluation nets N87.28 billion
Guaranty Trust Bank Plc, Nigeria’s largest lender by market value, said full year profit rose 33.02 percent as foreign-currency gains in the wake of the naira’s devaluation compensated for a surge in bad-loan charges.
Net income climbed to N132.28 billion in December 2016 from N99.43 billion a year ago, the Lagos State based Guaranty said in a statement posted on website of the Nigerian Stock Exchange (NSE).
The lender made foreign-exchange revaluation gains of N87.28 billion, compared with N5.19 billion a year ago. Impairments rose to N65.30 billion from N12.40 billion a year earlier.
The naira lost 39 percent of its value to the U.S currency last year when the central bank adopted a flexible exchange rate system in order to ease the liquidity squeeze caused by severe dollar shortages.
While the apex bank has been intervening with millions of dollar injection, the naira has weakened further at the parallel market.
Analysts say a weak naira could jerk up the local currency value of foreign loans.
GTBank’s loans to customers increased by 15.36 percent to N1.58 trillion while deposits from customers moved by 22.98 percent to N1.98 trillion.
The banking industry has been plagued by declining asset quality in the wake of the decline in crude oil prices, with ratio of non-performing loans (NPLs) rising to 11.7 percent from 5.3 percent in Dec 2015. NPLs are far above the central bank’s 5 percent regulatory limits.
The economy officially plunged into recession after it contracted by 1.50 percent in the fourth quarter, from 2.10 percent in the third quarter of 2016.
Analysts say a lot banks could be exposed to the headwinds after they stopped enjoying the foreign exchange revaluation gains. Such gains are an exceptional item outside the ordinary activities of a firm and are not expected to recur in subsequent quarters.
The board of GTbank has proposed a final dividend of 175kobo, which implies a yield of 8.13 percent. This dividend is higher than the 152kobo paid for 2015.
GTBank’s is the only tier one lender trading at one time book value. Its Price to book ratio (PBR) stood at 1.23 times book value. Its shares closed at N24.62, valuing the bank at N724.30 billion.
Further analysis of the Nigerian lender shows operating expenses were up by 96.36 percent to N113.62 billion while income tax moved by 45.94 percent to N32.85 billion in the period under review.
The bank’s interest income increased by 14.50 percent to N262.49 billion, thanks to contributions from interest on loans and advances.
The recent decision by OPEC to cut output by 1.20 million barrels a day in order to fend off competition from the U.S shale producers has bolstered oil price.
This means oil and gas firms will have more money to settle loans owed to banks.
The recent decision by OPEC to cut output by 1.20 million barrels a day in order to fend off competition from the U.S shale producers has bolstered oil price.
This means oil and gas firms will have more money to settle loans owed to banks.
Also, a relative calm in the Niger Delta region will bolster oil production and help boost the cash flows of firms operating in the upstream oil and gas sector.
