Guaranty Trust Holding Co. Reports Record Profit in the First Half of the Year

Guaranty Trust Holding Co., Nigeria's largest bank by market value, based in Lagos, has achieved its highest half-year profit to date. This impressive performance is attributed to a sharp increase in income from loans, spurred by record-high interest rates. Net profit rose to 899.9 billion Naira ($543.7 million) in the first six months to June, compared with 278.5 billion Naira in the previous year, according to a report released to the Nigerian stock exchange. Notably, net interest income more than doubled, reaching 491.5 billion Naira, while the provision for non-performing loans was nearly halved to 47.4 billion Naira. Nigerian banks are benefiting from an 800 basis points hike in official borrowing costs since September 2023, when Olayemi Cardoso took office as the central bank governor. Cardoso raised the benchmark interest rate to 26.75% to curb inflation, which is over 30%, and to support the Naira following the liberalization of the foreign exchange market. This tighter monetary policy caused banks to reprice loans at an annual rate of up to 29%. Additionally, a significant depreciation of the Naira last year proved profitable as banks converted their dollar assets into the weaker local currency, prompting the government in July to introduce a 70% tax on foreign exchange gains. Guaranty plans to utilize its diversification into general financial services as well as its operations in West and East Africa and Europe to address challenges in the domestic market and further boost income, according to CEO Segun Agbaje.