GTCO parent company of the popular (or unpopular depending on what time of the month 737 or GT World app fails, which thankfully is a rarity these days) Guaranty Trust Bank yesterday held its H1 2025 earnings call.

If you want the low down on that, you can read that here. 

TDLR: Lending is going up. Dividend will be 60% of earnings. 

There were lots of questions around dividends. I’m not sure if that’s because of the London listing, or maybe because markets were expecting a much higher interim dividend than the N1 announced. 

Interestingly there was very little conversation around East Africa operations. No sweat. We can wait till year end for that. 

GTCO turns up lending 

Management finally seems to be turning on the taps of lending. One of the few peeves about the firm is its really tiny loan book.

Segun’s response is almost like night and day, compared to the last call. I think that’s also a testament to the much brighter macro picture for Nigeria and interest rates coming down. Plus when you have a huge CRR “cashback” if i can use that term, you are going to have to deploy that money. Either as fixed income. Or as loans. 

My view on the stock 

I’m of the opinion that the stock is a BUY. I think one can accumulate. Then ramp up accumulation if/when we have it in the sub 90 mark. 

At its current price,that would amount to a dividend yield of 10.6%. 

Using its H1 2025 balance sheet, the firm has a book value  per share of N87.7. Current price of N94 means the stock is trading at slightly above book value. 1.07 times book value to exact. That isnt pricey.

I dare say, one can easily argue that a 1.2 book value price target wouldn’t be out of place. That would be N105.24 target price. 

At this point, the stock is more of a dividend play than capital appreciation play. I don’t see more than a 15% to 20% upside, except there is a bumper dividend.

My FY 2025 dividend forecast for GTCO  

FY 2024 dividend was N9.03 (N1 interim and N8.03 final divdend).

Q1 2025 earnings per share came in at N7.84.

H1 2025 earnings per share came in at N13.59

By deduction one can assume Q2 earnings per share was N5.75. If that run rate continues for H2 2025, full year earnings should come in between N22 to N25.

A 60% payout would mean a total dividend of between N13 to N15. In my opinion, the final dividend should be at least N10.

At its current price, that would be a dividend yield of 11.7%.

GTCO after Segun: What will it be like?

The biggest unknown for this stock is what’s going to be after Segun Agbaje’s exit. I dont know when he will be leaving. Tenure date and all that is for the CBN. The apex bank did issue a circular some months essentially stating that banks need to give enough notice when the CEO is stepping aside. So there should be sufficient heads up for the investing public. 

For anyone who intends to hold this stock for the mid to long term, that’s a key factor to consider.

Segun has essentially run this bank for nearly15 years. He was appointed MD of Guaranty Trust Bank in 2011, becoming the third CEO since its founding. First was Fola Adeola. Second Tayo Aderinokun.

Segun then became CEO of GTCO (Guaranty Trust Holding Company) in August 2021. 

Yes. The orange umbrella is now a holdco. Mariam runs the bank.The bank (lets call that Orange Nigeria) is the engine at the moment, but if all works well (and i think it will) ex Nigeria and ex banking operations, should pull more weight. 

Will the board appoint an outsider? Or pick from the current management?  

His successor with age and hopefully stability may have a decade to steer this ship

Growth beyond GT Nigeria

Are asset management and PFA worth the hassle. What’s the growth strategy for both units? 

In the asset management space, Stanbic, Elephant (First has undergone so many name changes i dont know what to call them, lets just use elephant, ARM and United Capital are the major players. 

The pension fund space is a game of scale. To scale that arm, there has to be an acquisition. If/what would be acquired? Nothing decent is cheap.

I pause for now. Lets talk Orange when Q3 2025 earnings are out.