September 29, 2026/Cordros Report
Guaranty Trust Holding Company Plc (GTCO) published its audited H1-26 financials yesterday, reporting a 7.8% y/y decline in profit after tax (PAT) to NGN414.19 billion (H1-25: NGN449.01 billion). The decline reflected higher interest, operating and tax expenses, which outweighed growth in interest income, investment gains and non-interest income. The Board proposed an interim dividend of NGN1.00/s (H1-25: NGN1.00/s), translating to a dividend yield of 0.7% based on the last closing price of NGN137.00/s.
Interest income increased by 7.5% y/y to NGN873.39 billion (H1-25: NGN812.36 billion), buoyed by higher income from cash and balances with banks (+57.6% y/y) and a marginal 0.1% y/y increase in interest income from loans and advances to customers. However, interest income from investment securities moderated by 3.1% y/y to NGN370.91 billion as lower income from securities held at amortised cost (-22.2% y/y) undermined gains from securities held at FVOCI (+4.5% y/y) and FVTPL (+35.8% y/y).
Meanwhile, interest expense increased by 24.2% y/y to NGN223.79 billion (H1-25: NGN180.12 billion), driven primarily by a 39.8% y/y surge in interest expense on customer deposits to NGN205.77 billion. This more than offset the moderation in costs on interest-bearing borrowings (-76.3% y/y) and deposits from financial institutions (-6.6% y/y). Consequently, net interest income advanced modestly by 2.7% y/y to NGN649.60 billion. Following an 11.0% y/y increase in loan impairment charges to NGN18.72 billion, net interest income (excluding LLE) grew by 2.5% to NGN630.88 billion.
Further down, non-interest income increased marginally by 2.3% y/y to NGN249.54 billion, supported by a 234.6% y/y jump in net gains on investment securities to NGN34.86 billion (H1-25: NGN10.42 billion) and a 72.0% y/y increase in net foreign exchange trading gains to NGN47.31 billion. These gains partly offset a 9.0% y/y decline in net fees and commissions income to NGN123.03 billion, alongside lower foreign exchange revaluation gains (-53.8% y/y) and other operating income (-31.3% y/y). Consequently, operating income grew by 2.4% y/y to NGN880.42 billion.
Meanwhile, operating expenses expanded by 7.3% y/y to NGN277.39 billion, reflecting higher AMCON levies (+9.8% y/y), deposit insurance premiums (+15.0% y/y), depreciation and amortisation (+41.8% y/y), and personnel expenses (+4.7% y/y). The increase in operating expenses outpaced operating income growth, resulting in a deterioration in the cost-to-income ratio to 31.5% (H1-25: 30.1%).
Overall, profit before tax increased marginally by 0.4% y/y to NGN603.03 billion, while PAT declined by 7.8% y/y to NGN414.19 billion (H1-25: NGN449.01 billion), reflecting the impact of higher income tax expense, which increased by 24.3% y/y to NGN188.85 billion.
Comment: GTCO’s H1-26 performance reflected resilient core earnings, with net interest income rising 2.7% y/y despite marginal loan growth and higher interest expenses. However, slower growth in operating income relative to operating expenses weighed on cost efficiency, while higher tax expenses pressured profitability. Looking ahead, we expect elevated funding costs to weigh on core earnings, particularly as the HoldCo maintains a conservative lending stance that limits loan book expansion. Our estimates are under review.
