Tuesday, January 23, 2018 7:14:05 AM- Nigerian Stock Exchange.

  GTB third quarter results could spark rally in stock

      First reaction to GTB third quarter results

Oct 19 (Lagos) - GT Bank’s Q3 2016 results which were published today showed a very strong PAT result of N46bn, up 97% y/y, off the back of a PBT result of N49bn, up 71% y/y. PAT growth was stronger y/y due to other comprehensive income of N4.3bn, which was up 172% y/y. OCI was boosted by fx translation gains. The market had been expecting tangible fx gains in GT Bank’s results in recent weeks. 

Similar to Q2, although the fx revaluation gain will be welcomed by the market, the scale of the provisions, though down q/q, will likely concern investors. Nonetheless, the underlying numbers were quite strong enough to provide an offset, with both funding income and non-interest income up, by 34% y/y and 184% y/y to N53.6bn and N46.3bn respectively. The strong income lines offset negatives for both opex and provisions. 

While opex was up 25% y/y to N31bn, provisions grew by 662% y/y to N19.5bn. Sequentially, a -42% q/q decline in non-interest income and a 33% q/q rise in opex more than offset any benefits coming through from a 40% q/q growth in funding income and a -43% q/q decline in provisions. As such, PBT declined by -19% q/q.

Compared with estimates, Q3 PBT beat by 18% on the back of positive surprises on both income lines while PAT was ahead by 22%. Funding income and non-interest income were both ahead by 29% and 53% respectively to more than offset negatives on both the opex and provision lines. Provisions negatively surprised by around 230%. 

On an annualised basis, GT Bank’s 9M 2016 PBT tracks ahead of both full year consensus estimate of N151bn and management guidance of N125bn. Additionally, 9M 2016 PAT of N129bn is in line with management’s ROE guidance of “above 25%”.

Analyst takeaway is that the market is likely to have a positive reaction to these numbers. Analysts at FBN Quest in Ikoyi rate GT Bank shares Neutral.  

reporting for easykobo.com on Thursday, Oct 19 2016 from Lagos, Nigeria

Source - analysts at FBN Quest in Ikoyi

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