GUARANTY Trust Holding Company Plc (GTCO) faced mounting cost pressures in the nine months to September 2026, as rising operating expenses, higher interest costs and a sharp increase in tax charges combined to weaken its earnings.
The group’s profit after tax fell by 12.2 percent to N614.57 billion from N699.64 billion reported in the corresponding period of 2025, despite recording lower loan impairment charges.
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Its financial statements showed that interest expenses increased by 27.7 percent to N356 billion, significantly outpacing the 3.5 percent growth in interest income calculated using the effective interest method, which rose to N1.25 trillion.
The mismatch pushed net interest income down by 1.7 percent to N935.88 billion from N952.14 billion, exposing the pressure higher funding costs placed on the group’s core banking earnings.
The cost pressure extended beyond interest payments. GTCO’s other operating expenses increased by 6.5 per cent to N228.83 billion, while depreciation and amortisation surged by 41 percent to N82.46 billion.
Combined personnel, depreciation and other operating expenses rose by approximately 9.5 percent to N399.81 billion, compared with N364.98 billion a year earlier.
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The increase came at a time when the group’s net interest income and net fee and commission income both declined, leaving it with a weaker income base to absorb higher operating costs.
Net fee and commission income dropped slightly to N182.42 billion from N183.22 billion, while other income declined to N74.78 billion from N85.85 billion.
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Although trading gains increased to N79.63 billion from N77.21 billion, the improvement was insufficient to offset the weakness in other income streams.
The pressure was also evident in the group’s tax bill. Income tax expense climbed by 31.9 percent to N265.32 billion from N201.16 billion, even as profit before tax declined by 2.3 percent to N879.90 billion.
This raised the effective tax rate to approximately 30.2 percent from 22.3 percent in the corresponding period of 2025, further reducing the amount of earnings available to shareholders.
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Consequently, earnings per share fell to N16.58 from N20.71, a decline of about 20 percent.
The decline in profit came despite a reduction in loan impairment charges, which fell to N29.02bn from N69.79bn. This suggests that lower credit-loss charges provided some support but were not enough to prevent the deterioration in earnings.
For shareholders, the results raise questions about GTCO’s ability to control its expanding cost base and protect margins as funding costs rise and income growth weakens.
The group’s financial statements were approved by its board on October 27, 2026.
