April 1, 2026/Cordros Report
Guaranty Trust Holding Company Plc (GTCO) released its audited 2025FY results yesterday, reporting a 28.2% y/y decline in earnings per share (EPS) to NGN25.43/s (2024FY: NGN35.44/s). The earnings decline reflects the normalization of fair value gains, compounded by share capital dilution from the issuance of 5.17 billion additional shares. The Board proposed a final dividend of NGN11.76/s per share (2024FY: NGN7.03/s), translating to a dividend yield of 10.4% based on the last closing price of NGN112.65/s.
The group’s interest income grew by 23.2% y/y to NGN1.65 trillion, supported by higher income from investment securities (+34.8% y/y), loans to customers (+9.8% y/y) and cash balances (+22.5% y/y). This was underpinned by a 21.7% y/y expansion in earning assets, driven primarily by growth in investment securities (+33.6% y/y) and customer loans (+12.4% y/y).
GTCO’s funding costs rose by 38.6% y/y to NGN392.58 billion, largely driven by higher costs on customer deposits (+50.2% y/y). Meanwhile, funding from financial institutions declined by 11.3% y/y as institutional deposits reduced (-15.8% y/y), with borrowing costs also moderating by 8.2% y/y. Furthermore, while customer deposits grew by 24.4% y/y to NGN12.46 trillion, the group’s funding mix shifted slightly, with the CASA ratio edging down to 82.6% from 83.6% in 2024FY. Despite this, net interest income rose by 19.1% y/y to NGN1.26 trillion, while net interest income ex-LLE expanded by 29.5% y/y, supported by a 51.4% y/y decline in provisioning costs.
Non interest income contracted by 31.5% y/y to NGN512.29 billion, acting as a major drag on overall profitability growth. While the group benefited from a 6.7x growth in loan recoveries to NGN77.81 billion and healthy growth in net fee and commission income (+28.8% y/y), these were undermined by an NGN81.79 billion fair value loss, contrasting sharply with the NGN517.50 billion gain recorded in 2024FY. Furthermore, FX revaluation gains, sourced mostly from foreign subsidiaries, were positive at NGN76.31 billion (vs NGN1.95 billion loss in 2024FY), but this was not enough to fully offset the massive fair value driven windfalls of the previous year. Consequently, operating income grew modestly by 2.2% y/y to NGN1.71 trillion.
OPEX increased by 17.9% y/y to NGN475.37 billion, with depreciation and amortisation (+54.3% y/y), AMCON levy (+38.7% y/y), and personnel expenses (+18.3% y/y) remaining the fastest growing cost lines. Consequently, the cost-to-income ratio deteriorated to 26.8% from 22.3% in 2024FY, though it remains the lowest in the tier 1 space.
While pre tax profit declined modestly by 2.8% y/y to NGN1.23 trillion, earnings were more materially impacted by a rise in effective taxation. The effective tax rate increased to 29.7% from 19.6% in 2024FY due to lower tax exempt income, which expanded the taxable base. This drove a 47.0% y/y increase in income tax expense to NGN365.34 billion, resulting in a 14.9% decline in profit after tax to NGN865.75 billion.
Comment: GTCO’s 2025FY performance highlights resilient core earnings, supported by strong asset yields and improved asset quality. Overall profitability reflects a roll-off in prior year windfall gains, alongside the impact of higher funding costs and tax charges in the current period. Looking ahead to 2026, we expect core earnings to benefit from increased investment in government securities and sustained credit creation, with lending growth supported by the group’s strong capital position and robust deposit franchise. We also expect an improvement in the non core income line following its normalization in 2025, alongside continued benefits from the group’s cost optimisation initiatives, which should support overall bottom line growth. Our estimates are under review.
