Onome Amuge

Guaranty Trust Holding Company (GTCO) Plc, Nigeria’s largest lender by market capitalisation, has reported a decline in its half-year profit after tax, exposing the fragility of the foreign exchange-driven gains that had previously powered banks’ earnings.

For the six months ended June 2025, GTCO’s profit after tax fell by 50.41 per cent to N449.01 billion, compared with N905.56 billion in the same period of 2024. The slump was largely driven by the evaporation of exceptional gains, particularly fair value and forward transaction revaluations, which had provided a one-off boost last year.

The group recorded an unrealised fair value loss of N4.35 billion on financial instruments in the period under review, compared with a sizeable gain of N493.02 billion the previous year. Similarly, unrealised gains on forward transactions plunged by 91.62 per cent to N10.90 billion, down from N130.20 billion in June 2024.

The sharp correction reflects a broader trend across the Nigerian banking industry. This is as foreign exchange markets stabilise following last year’s naira volatility. Banks that previously booked record revaluation gains now face a more subdued earnings environment.

Analysts observed that Nigerian banks, including GTCO, were among the biggest beneficiaries of last year’s rapid depreciation of the naira, but with that cycle tapering, the spotlight is shifting back to core banking activities.

Despite the profit drop, GTCO’s core businesses delivered strong growth. Interest income from loans and advances rose 31.86 per cent year-on-year to N798.84 billion, up from N607.69 billion in H1 2024. Fee and commission income also grew by 33 per cent, helping to partially offset the absence of last year’s outsized FX gains.

The bank declared an interim dividend of N1.00 per share, signalling confidence in its cash flow and balance sheet despite the earnings volatility.

Profit before tax for the period came in at N600.9 billion, down 40 per cent year-on-year. The decline was narrower than at the net level, reflecting the relative strength of recurring income lines. Management emphasised that the results underscore GTCO’s transition towards more sustainable growth.

“Our half-year performance reflects the strength of our core business and the progress we are making in building a truly diversified financial services ecosystem. Beyond the extraordinary one-off gains of last year, we are now driving sustainable growth with recurring earnings that highlight the resilience and scalability of our model,” said Segun Agbaje, GTCO’s chief executive. 

GTCO continued to expand its balance sheet during the period in review. Total assets grew to N16.7 trillion, while shareholders’ funds closed at N3.0 trillion. The group’s capital adequacy ratio stood at 36.2 per cent, far above regulatory requirements and one of the highest in the industry.

Its loan book expanded by 20.5 per cent to N3.36 trillion in June 2025, from N2.79 trillion at the end of December 2024. Deposit liabilities also grew strongly, rising 16.6 per cent to N12.13 trillion.

Asset quality improved, with IFRS 9 Stage 3 loans declining to 3.2 per cent at the bank level and 4.5 per cent at the group level, compared with 3.5 per cent and 5.2 per cent, respectively, in December 2024. Cost of risk dropped to 1.7 per cent from 4.9 per cent in December.

The lender maintained robust profitability ratios, with pre-tax return on equity at 60.4 per cent, pre-tax return on assets at 10.6 per cent, and a cost-to-income ratio of 30.1 per cent.

While the core banking business remains central, GTCO stated that it has been pursuing a diversification strategy across pensions, payments, and fund management. Management sees these non-banking verticals as essential to building recurring revenue streams less exposed to FX volatility.

Agbaje highlighted ongoing investments in technology as another key driver of long-term performance. The group recently completed a comprehensive upgrade of its core banking systems, which he said is already delivering stronger uptime, greater efficiency, and scalability to serve a growing customer base.

“Across banking, funds management, pension, and payments, we are leveraging a fully de-risked balance sheet to reinforce our market position while maintaining strategic flexibility for growth. This foundation positions us to take advantage of emerging opportunities and deliver lasting value for all stakeholders,” Agbaje said.