Riding on Interest Income and Unrealized Gains

In its recently released audited H1:2024 results, GTCO’s Gross Earnings jumped by 107.04% YoY to NGN1.39trn mainly due to the spike in interest income (+173.47% YoY to NGN617.89bn) and   non-interest income (+111.94% YoY to NGN774.30bn), an offshoot of the unrealized fair value gain on financial instruments on its FCY balance sheet. Elsewhere, Operating Expenses increased by 60.70% YoY to NGN201.80bn, following higher personnel expenses and technology-related expenses in the period. Profit Before Tax (PBT) and Profit After Tax (PAT) grew massively by 206.59% YoY and 222.86% YoY each to NGN1.00trn and NGN905.57bn respectively. Overall, Net Profit Margin improved to 65.03% in the period (vs. 41.70% in H1:2023).

We expect to see improvement in the Group’s interest income and non-interest income for the rest of the year riding on an elevated interest rate environment, consequently leading to robust profitability.

We have revised our target price for GTCo to NGN59.44 for 2024FY. At its current price of NGN46 as of 13th September 2024, this translates to an upside prospect of 29%. Thus, we put a “STRONG BUY” rating on the stock.

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