… rising costs, loan defaults batter bottom line
For the three months ended December 31, 2024, GTCO Holdings Plc posted a dramatic decline in profitability, as ballooning impairment charges, surging tax expenses, and swelling operating costs eclipsed gains in interest income.
Total comprehensive income for the quarter nosedived to N97.13 billion, down sharply from N204.21 billion in the corresponding period of 2023—a staggering 52 per cent contraction while profit before tax collapsed to N46.78 billion, a steep fall from N176.11 billion just as profit after tax plummeted to N67.20 billion, down from N172.24 billion in corresponding period in the previous year.
The most jarring figure in the period was the income tax expense, which surged disproportionately to N113.98 billion, up from a modest N3.87 billion a year earlier—an over 2,800% increase, raising questions around deferred tax reversals or one-off liabilities.
This Q4’24 earnings plunge was drowned in the euphoria of the lender’s full year 2024 earnings report in which the board of directors recommended bogus dividend targeted to elevate the bank above peers with more solid fundamentals, Zenith Bank, for instance.
Despite a near-doubling in net interest income to N277.11 billion (from N139.16 billion in 2023) and an uptick in net fee and commission income to N31.16 billion, the bottom line remained under siege. Earnings per share crashed from N6.15 to N2.37, reflecting an eroded earnings outlook that may spook investors and cast shadows over shareholder returns.
Operating expenses ballooned by 60 per cent to N81.28 billion, from N50.81 billion, while net impairment losses on financial assets printed at N27.34 billion. Personnel costs nearly doubled to N13.87 billion, compared to N7.52 billion in the same period 2023—indicative of rising wage pressures, though the justification for the spike remains unclear.
Cumulatively, the bank spent N85.40 billion on staff-related expenses, up from N45.10 billion in 2023. The bank’s lending practices also appear increasingly conservative.
Despite modest loan growth, rising from N2.48 trillion in 2023 to N2.79 trillion in 2024, collateral demanded from customers soared to N114.57 billion, reflecting a growing risk aversion. Over five years, collateral requirements have risen by 84 per cent, far outpacing loan growth, which climbed only 67 per cent in the same period.
Of more serious concern is the fourfold surge in other borrowed funds printed at N310.02 billion, up from N72.12 billion in 2023—signaling liquidity pressures that forced the bank to tap costlier credit lines.
Financial liabilities at fair value through profit or loss escalated to N51.17 billion, from just N809 million, underscoring volatility in funding structures. Impairment charges reflect the biggest strain yet, with loan impairment charges hitting N136.66 billion, up from N102.95 billion last year.
Over five years, this metric has ballooned more than tenfold. More critically, total impairment charges for the year soared to N921.92 billion, nearly tripling from N333.74 billion in 2023—a sign of deteriorating asset quality and heightened credit risk exposure.
The bank’s financial trajectory in Q4’24 paints a cautionary picture: while topline growth remains resilient, it is increasingly eroded by spiraling costs, tax shocks, and rising loan defaults. Without swift structural adjustments, profitability may remain under pressure in the quarters ahead.
