GTCO Target Price Raised to N115 as Loan Growth Seen Boosting Interest Income

Guaranty Trust Holding Company’s (GTCO) target price has been raised to N115.93 per share with increased loan growth taking up the slack from a moderation in fixed income yields, which is set to boost net interest income (NII).

“We maintain a positive view on GTCO’s 5-year outlook, with the renewed loan growth momentum being a key catalyst for NII expansion,” Cardinal Stone Partner’s analysts led by Philip Anegbe, said in an Oc. 14 note to clients.

“We have also revised our risk-free rate valuation assumption down to 16.4%…to reflect sustained moderation in fixed income yields. This adjustment and the revised outlook for NII over our forecast horizon cascaded to a higher 12month Target Price of N115.93 (vs. N98.91 previously). Hence, we reiterate our BUY recommendation on the counter.”

Anegbe forecasts a 5.3% year-on-year growth in gross earnings to N2.2 trillion for GTCO in 2025, with the key driver of this growth tied to a 29.5% increase in Full Year 2025 Interest earning Assets (such as loans, investment securities, and cash) compared to the 16.5% YtD expansion in Half Year (H1) 2025.

GTCO loan growth is now forecast up 30% year-on-year in line with the management’s target disclosed during the Half–Year 2025 earnings call and overall improvement in the macroeconomic environment.

Management also signaled a strategic shift in response to the moderating interest rate environment, prioritising loan book expansion over incremental growth in fixed income securities.

Notably, within the loan portfolio, the Manufacturing, Oil & Gas, Retail, and SME segments are projected to see the strongest expansion.

Despite the increased loan growth by GTCO its loan portfolio continued to demonstrate strong asset quality, with the contribution of stage 2 loans further dropping to 1.8% in H1, 2025, from 2.6% in FY’24 and 16.3% in Full Year 2023.

There was however a marginal uptick in GTCO’s Non-Performing Loan (NPL) ratio to 4.5%, alongside higher impairment charges of N55.0 billion in the half-year 2025 period, driven by the write-off of a syndicated Oil & Gas exposure.

GTCO’s Half Year 2025 profit declined on a slump in unrealised gains on financial instruments and forward transactions.

For the first six months through June 2025, GTCO’s profit after tax (PAT) dipped by 50.41 percent to N449.01 billion from N905.56 billion as at June 2024.

“Our new target price implies a 23.3% upside from the current market price of N94.00 and an exit price to book (P/B) multiple of 1.1x, broadly in line with the stock’s 10-year historical mean of 1.1x,” the Cardinal Stone Partners analysts said.

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