April 15, 2026/Cordros Report
In this update, we revise our 2026E outlook for Guaranty Trust Holding Company Plc (GTCO) following the release of its 2025FY results. Post review, we derive a target price of NGN155.97/s (Prev: NGN115.50/s), representing a 23.8% upside and a “BUY” rating. Our valuation is underpinned by our 2026E estimates, including: (1) a projected 25.0% y/y expansion in loans to NGN4.04 trillion as management deploys excess capital; (2) an expected 30.7% y/y growth in net fees and commission income, which we see stemming from higher card fees, trade related commissions, and continued scaling of the Habari Pay ecosystem; and (3) sustained funding and cost efficiency, with CASA and CIR forecast at 87.5% and 25.0%, respectively. Based on these assumptions, we forecast 2026E EPS of NGN31.90/s (+23.7% y/y). Accordingly, we project a 2026E DPS of NGN15.95/s (interim: NGN1.74/s; final: NGN14.21/s), implying a payout ratio of 50.0% and a dividend yield of 12.7% at the last close of NGN126.00/s. On our revised estimates, GTCO is trading at 2026E P/B and P/E multiples of 1.1x and 3.9x, respectively.
Scale Driven Earnings Expansion: We see GTCO’s gross earnings growing by 15.1% y/y to NGN2.48 trillion in 2026E, supported by a projected expansion in interest earning assets and the continued scaling of its digital ecosystem. Interest income is estimated to remain the primary driver of gross earnings (76.2%), with an anticipated 14.1% y/y expansion to NGN 1.89 trillion. While we expect asset yields to moderate to 13.9% (2025FY: 14.6%), this is likely to be offset by a projected 20.0% y/y increase in earning assets to NGN13.56 trillion. Regarding funding, GTCO’s strong CASA base is anticipated to continue anchoring funding efficiency, with the cost of funds estimated to decline to 1.8% (2025FY: 2.1%), implying a NIM of 10.8% (2025FY: 12.3%). Furthermore, we expect asset quality to remain robust, with impairment charges projected to decline by 39.2% to NGN40.36 billion, translating to a cost of risk of 1.1% (2025FY: 2.2%). Non-interest income is forecasted at NGN588.85 billion (+18.4% y/y), supported by an anticipated 30.7% y/y growth in net fees and commission. Combined with cost discipline, these assumptions are expected to support an industry-leading CIR of 25.0% (2025FY: 27.6%) and a forecasted PAT growth of 23.7% y/y to NGN1.07 trillion.
Positioned to Deploy and Distribute: GTCO closed 2025FY with a CAR of 43.8%, the highest in the Nigerian banking sector and well above regulatory minimum of 15.0% for international banks and 16.0% for SIBs, supported by the recent recapitalisation. Management has guided to a c.35.0% CAR in 2026E, implying significant headroom to support the projections of a 25.0% y/y expansion in loans and broader RWA growth. Crucially, balance sheet quality remains a key strength. Despite loan growth in 2025FY, credit risk RWAs declined by 4.1% y/y to NGN4.57 trillion, reflecting improved asset quality, proactive provisioning, and the clean up of legacy exposures. This has reduced capital retention needs and preserved flexibility for shareholder distributions. We expect this dynamic to remain broadly sustained, projecting a 2026E DPS of NGN15.95/s (Payout: 50.0% | 2025FY: 49.5%).
Valuation: Our target price of NGN155.97/s is derived from an equal weighted blend of a Dividend Discount Model and a Gordon Growth framework. Under the DDM, applying a 23.6% COE and an average payout ratio of 50.0% across the forecast horizon, we arrive at a valuation of NGN158.58/s. Similarly, the GGM, anchored on a 23.6% COE and a 5-year average RoE of 26.7%, yields a valuation of NGN153.36/share.
