Coy: Guaranty Trust Bank Plc
Rating: Hold
Current Market Price: N37.00
NPL RATIIO: 6.10%
Year High: N57.00
Year Low: N 31.95
Fair Value: N40.50
By: Jeariogbe Tunde Segun (Equity Analyst)
Key Financial Ratios
- This report observed the nine months financial performance of Guaranty Trust Bank Plc for the period ended 30th September, 2018, and compare same with figures in similar quarter of 2017
- As noted above the Non performing load ratio of Guaranty Trust Bank Plc as at the close of third quarter business activities is 6.10%
- Comparing the released statistics with the corresponding quarter of 2017, it was established that key performance ratios marginally improved over 2017 performance indices.
Company Figures
- Gross earnings for the period only improved by 8.83% above what was reported in 2017 Q3. A total of N337.26 billion was reported for the nine months as against N309.91 billion
- Interest Income stood at 4.32% below 2017 figure. Current Interest Income is N237.54 billion lower than the N248.27 billion posted in 2017 nine months result
- Meanwhile, Interest Expenses grew by 13.97%, having moved from the previous N309.91 billion to N337.26 billion
- Profit before Tax currently reported is N164.24 billion, this is 9.47% above the N150.03 of 2017
- Having considered other costs including tax expense, N14.22billion was reported as the Profit for the period. The said figure is 13.26% above what was reported in corresponding quarter in 2017
- Total comprehensive income improved by 9.47% to N140.20 billion as against N128.21 billion in previous third quarter
- Total Assets was currently estimated at N3.433 trillion, same as 6.86% above the N3.212 trillion estimate of the previous quarter
- Total Liabilities is currently N2.898 trillion, that is 10.18% above the N2.631 trillion reported in corresponding quarter of 2017
- Total Deposit through the nine months currently reported is estimated at N2.335 trillion, this is 18.49% above the N1.970 trillion achieved in the first nine months of 2017
- Meanwhile, Loans and Advances were curtailed by 11.06%. According to the report a total of N1.270 trillion was given out as loans and advances through the period this is below the N1.428 trillion of 2017
- Nevertheless, Net Assets dropped by 8.18% when compared to the reported figure in similar period of 2017.
- Kindly see the table below for details.
Volatility Ratios
- Although the estimated beta value for Guaranty Trust Bank shares stood below the industrial average, it is well above the market beta. This signifies its liquidity and patronage by the investing public
Although almost irrelevant since we analyze a financial institution whose major business is to collect deposit (mostly reported under liability) we estimated Debt to Equity ratio as 64.26% well above the industrial average of 64.44%
Profitability Ratios
- Interest Expense to Gross Earnings is presently estimated at 19.84% this is 4.72% higher than the 18.94% estimated in 2017 half year result
- PBT margin stood at 48.70% as against 48.41% last year, this is 0.59% improvement
- Similarly, Profit margin looks fairly up against last year. We have estimated 42.17% margin from Gross Earnings as against the previous estimate of 40.52%
- Return on Average Equity is now 26.62% compared to the 21.58% returns achieved in the first nine months of 2017
- Return on Average Assets only differs marginally by 5.99%, moving from 3.91% to 4.14%
Efficiency Ratio
- Gross Earnings to Total Assets is estimated at 9.82% this is only 1.85% above the estimate in 2017
- Similarly, Gross Earnings to Equity is now 63.12% as against the 53.26% estimated from 2017 nine months financial statistics
- Financial Leverage is 6.34x as against 5.52x, this is an estimate of the number of times the total assets replicates the equity, in other words the ratio gets better
- It was also established that 54.39% of the Total Deposit was given out as Loan and Advances during the period under estimate this is 24.94% lower than the 72.47% given out during the first nine months of 2017
- Meanwhile, Loan and Advances is same as 37.00% of the Total Assets, this is 16.76% lower than the 44.45% of last half year. This shows a controlled/reduced risk compared to 2017
Investment Ratios
- Just as in the company report above, since shares outstanding remained constant during the two periods under consideration, the estimated amount earned per units of Guaranty Trust Bank shares is N4.83, this is 13.26% above the N4.27 earned last year
- The Total Comprehensive Income per share for the period is N4.76 as against N4.36 nine months financial activities, this is 17.74% difference
- The said earnings per share yielded 13.19% of the current market price on the day the result was made available to the investing public. This is a better yield when compared to the 10.23% achieved last Q3
- PE/Ratio for the period is 2.53x as against 3.26x estimated last year.
- As we speak the Book Value of Guaranty Trust Bank is N18.15 fairly same as N19.77 last year. Should we choose to value this equity with this indices, we shall conclude an overpriced position of each units of its shares on the floor of the exchange
- Opex Margin was grew by marginal 3.80% having moved to 26.49% from 25.52%
Valuation
After carefully exploring our blend of valuation models, we have valued each units of Guaranty Trust Bank Plc at N40.50. Thus, considering the current market price of N37.00 (as at the time this report was concluded), we Rate Guaranty Trust Bank shares a Hold.
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