April 29, 2026/CSL Update
Guaranty Trust Holding Company Plc’s unaudited Q1 2026 results reflect resilient earnings performance. Interest Income grew by 17.5% y/y to ₦467.0 billion (bn). However, Interest Expense increased more sharply by 39.7% y/y to ₦110.7bn, reflecting higher funding costs compared to Q1 2025. Consequently, Net Interest Income rose by 12.0% y/y to ₦356.3bn (Q1 2025: ₦318.2bn).
On the balance sheet, total assets expanded by 5.5% y/y from the December level to ₦18.7 trillion (FY 2025: ₦17.8 trillion). Net loans and advances to customers increased modestly by 1.3% to ₦3.2 trillion (FY 2025: ₦3.1 trillion), while Customer Deposits recorded mildly stronger growth of 5.3% over the same period.
Non-interest income performance was mixed. Net Fee and Commission Income rose marginally by 4.0% y/y to ₦69.8bn, with growth in credit-related fees, account maintenance charges, and e-business income partly offset by declines in income from financial guarantee contracts and certain account service charges.
Meanwhile, Other Income (comprising Net Trading Gains on financial instruments held at fair value through profit or loss and Other Income) declined sharply by 52.6% y/y to ₦24.1bn. This was primarily driven by an unrealised fair value loss of ₦40.4bn in Q1 2026, compared to a gain of ₦1.5bn in Q1 2025.
Operating expenses (OPEX) increased moderately by 13.7% y/y to ₦139.2bn. However, with Total Operating Income rising by only 3.2%, cost efficiency weakened slightly. The Cost-to-Income Ratio excluding provisions (CIR ex-provisions) deteriorated to 30.9% in Q1 2026, up from 28.1% in Q1 2025.
Cost of Risk improved during the period, with Loan Impairment Charge declining significantly by 41.0% y/y to ₦7.9bn (Q1 2025: ₦13.5bn). This translated to an annualised cost of risk (COR) of 1.0%, indicating relatively stable credit conditions. Overall, Profit Before Tax (PBT) increased marginally by 0.9% y/y to ₦302.9bn.
However, profitability at the net level was impacted by a sharp rise in the effective tax rate to 28.0% in Q1 2026, compared to 14.1% in Q1 2025. Management attributed this increase to recent fiscal policy changes affecting the taxation of investment securities, particularly the introduction of withholding tax on short-term instruments and guides to tax rate at this level for the rest of the year. As a result, Net Profit declined by 15.4% y/y to ₦218.1bn, with annualised Post-tax Return on Average Equity (ROAE) moderating to 24.8% (FY 2025: 28.3%).
Earnings per share (EPS) declined to N5.89/s in Q1 2026, compared to N7.83/s in Q1 2025.
We have a Buy recommendation on the stock and a target price of N131.83/s. Current Price N129.85/s. Our estimates are being reviewed
