Cordros Research has revised its outlook on Guaranty Trust Holding Company Plc (GTCO), lowering its year-end target price to NGN86.39 per share from NGN87.14 and downgrading the stock to a “HOLD” rating. The adjustment follows weaker non-interest income and a significant drop in fair value gains, prompting a downward revision of the bank’s 2025 EPS estimate to NGN26.21, down from NGN28.48 previously.
GTCO’s 9-month 2025 results showed a 35.5% year-on-year decline in post-tax earnings to NGN699.64 billion, as a 44.4% contraction in non-interest income offset resilient core earnings growth of 16.8%. Consequently, Cordros now projects a gross earnings decline of -5.2% y/y (previously +3.3%) and has reduced the gross dividend per share (DPS) forecast to NGN8.50, implying a 10.1% yield at the last closing price of NGN84.00.
Weak Non-Interest Income Pressures Earnings
The revision reflects slower asset growth, lower yields, and rising funding costs. Interest income is now expected to grow 16.8% y/y (previously 26.6%), while funding costs are projected to rise 26.3% y/y. Net interest income is expected to grow 14.3% y/y, but non-interest income is forecast to contract sharply 44.4% y/y, despite strong fee and commission growth of 30.8% y/y. Operating income is projected to decline 8.6% y/y, with the cost-to-income ratio rising to 28.6% (previously 26.9%).
Capital Injection Strengthens Growth Capacity
GTCO strengthened its banking subsidiary with a NGN365.85 billion capital injection, achieving a H1-2025 capital adequacy ratio of 36.2%. The bank is positioned to expand loans by 23.2% y/y, resume physical branch expansion (NGN138.5 billion earmarked), and enhance digital and payment infrastructure (NGN98.5 billion planned). Cordros notes the stronger capital base enables GTCO to pursue higher-yielding assets, accelerate ecosystem monetisation, and support medium-term earnings potential, with 5-year CAGRs of 5.8% for core income and 19.8% for non-interest revenue.
Expert Reactions
Economist Celestine Ukpong observed that “the contraction in non-interest income highlights the bank’s exposure to market volatility, particularly in fair value gains. While GTCO’s core operations remain strong, investors should temper expectations for short-term returns.”
Meanwhile, chartered accountant Peter Adebayo noted, “The capital injection is a positive signal, strengthening the balance sheet and enabling strategic growth. However, near-term EPS dilution and rising funding costs may weigh on immediate profitability, which investors need to factor into their valuation models.”
Valuation and Outlook
Cordros’ blended valuation approach—incorporating DDM, Gordon Growth Model, and relative P/E & P/B multiples—supports the revised target price. GTCO currently trades at 3.2x 2025E P/E and 0.8x P/B, suggesting moderate near-term upside. While non-interest income trends remain a key risk, the strengthened capital position provides a buffer to sustain growth and navigate macroeconomic and regulatory challenges.
Cordros Research downgrades GTCO to “HOLD” as non-interest income weakness drives 2025 EPS down to NGN26.21. Economist Celestine Ukpong and chartered accountant Peter Adebayo weigh in on earnings outlook and capital injection benefits.
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