Guaranty Trust Holding Company (GTCO) and Zenith Bank closed the primary 9 months of 2026 with virtually comparable pre-tax income, however the numbers reveal two very totally different approaches to creating wealth.
GTCO seems to be defending its steadiness sheet, lowering lending publicity and maintaining unhealthy loans below management.
The trade-off is that rising funding prices are squeezing its core curiosity earnings.
Zenith, in the meantime, is increasing lending extra aggressively and producing stronger price revenue.
But this progress is coming with a rise in loans already exhibiting indicators of credit score deterioration.
For buyers, that creates a alternative between GTCO’s extra conservative steadiness sheet at the next valuation and Zenith’s stronger mortgage progress at a less expensive valuation however with better credit score threat.
GTCO trades credit score threat for funding stress
GTCO reported a pre-tax revenue of N879.90 billion, down 2.3% from N900.80 billion a 12 months earlier, whereas revenue after tax declined 12.2% to N614.57 billion.
The weak spot was not as a result of GTCO was incomes much less curiosity.
- Total curiosity revenue elevated about 5% to N1.29 trillion. The drawback was the price of producing that revenue.
- Interest expense jumped 27.7% to N356 billion, inflicting web curiosity revenue to fall 1.7% to N935.88 billion.
- Customer deposits have been the most important supply of stress, with curiosity paid on them rising to N325.25 billion from N228.18 billion, a rise of about 43%.
In easy phrases, GTCO has extra deposits, however these deposits are costing considerably extra.
The group can also be lending much less. Net buyer loans declined 4.1% from December to N3.00 trillion, whereas its funding securities stood at about N5.94 trillion.
- Only about N434.51 billion, or roughly one-third of GTCO’s N1.29 trillion curiosity revenue, got here instantly from buyer loans. A a lot bigger proportion was generated from money placements and funding securities.
Management seems comfy with that place.
Commenting on the outcomes, Group CEO Segun Agbaje mentioned the group remained centered on sustaining a “strong, liquid and well capitalised” steadiness sheet.
More importantly for buyers, he mentioned GTCO would proceed to optimise risk-free returns and reap the benefits of market alternatives with out compromising the standard of its threat belongings.
That remark helps what the steadiness sheet already exhibits: GTCO just isn’t chasing mortgage progress on the expense of credit score high quality.
- Non-performing loans declined to N123.16 billion from N160.30 billion, lowering the NPL ratio to roughly 4% from about 5% in December.
- Loan impairment prices additionally fell 58.4% to N29.02 billion.
Overall, that technique helps cut back credit score publicity, nevertheless it introduces one other threat. If rates of interest decline additional, returns from securities can fall whereas deposit prices might take longer to regulate.
Zenith pushes tougher into loans
Gross buyer loans elevated about 10.8% from December to N12.26 trillion, whereas buyer deposits rose 11.4% to N27.11 trillion.
Customer lending stays central to its earnings. Interest earned from buyer loans elevated to N1.44 trillion, accounting for greater than half of Zenith’s complete curiosity revenue.
Management describes this growth as deliberate.
Group Managing Director Adaora Umeoji mentioned the nine-month efficiency mirrored growing contributions from “customer-driven business activities”, highlighting progress in lending, transaction volumes and buyer deposits.
She additionally mentioned decrease funding and credit score prices supported profitability and improved earnings high quality.
The funding numbers help that time.
Although Zenith’s curiosity revenue fell 4.5% to N2.62 trillion, curiosity expense declined 15.4% to N688.73 billion.
- Its value of funds fell to three.5% from 4.5%, serving to web curiosity revenue stay broadly flat at N1.93 trillion.
- Fee revenue supplied one other shiny spot. Net price and fee revenue elevated 26.6% to N256.85 billion, supported by digital banking, account upkeep, ensures and letters of credit score.
But there have been weaknesses; buying and selling revenue swung from a N277.65 billion achieve to a N229.19 billion loss, whereas working prices elevated.
Zenith nonetheless managed to develop pre-tax revenue 1.2% to N928.80 billion largely as a result of impairment prices collapsed 70.5% to N230.77 billion. Read Zenith Bank’s 9M 2026 outcomes
Loan progress brings one other threat
The concern is that Zenith’s rising mortgage e book can also be carrying extra credit-impaired loans.
- Stage 3 loans elevated to roughly N600.56 billion from N422.41 billion in December, pushing their share of gross loans from round 3.8% to 4.9%.
There is a few steadiness in that image. Stage 2 loans, which have skilled elevated credit score threat however will not be but credit-impaired, fell considerably to N465.74 billion from N845.76 billion.
- Zenith additionally elevated its allowance in opposition to Stage 3 loans to N450.42 billion, whereas its general protection ratio stood at 123.2% and capital adequacy at 24.5%.
Management says it stays centered on sustaining monetary power whereas pursuing progress.
Still, buyers will wish to see whether or not the rise in Stage 3 loans stabilises earlier than concluding that the sharp discount in impairment prices is sustainable.
Credit high quality separates the 2
This is the place the distinction turns into sharper. GTCO’s non-performing loans fell to N123.16 billion from N160.30 billion, lowering the NPL ratio to about 4% from 5%.
Zenith moved in the other way. Stage 3 loans elevated to about N600.56 billion from N422.41 billion, pushing their share of gross loans to roughly 4.9% from 3.8%.
- There was some enchancment additional up the credit-risk ladder, with Zenith’s Stage 2 loans falling to N465.74 billion from N845.76 billion.
Still, the rise in Stage 3 loans means buyers ought to be cautious about treating the 70% decline in impairment prices as proof that credit score threat has absolutely normalised.
Which inventory looks cheaper?
Both shares have delivered beneficial properties to this point in 2026, though Zenith has clearly outperformed GTCO.
- Zenith was up 94.17% year-to-date on the finish of October, regardless of falling 10.45% in the course of the month.
- GTCO was up 33.30% year-to-date, after declining 8.41% in October.
That means Zenith has already delivered the stronger capital achieve this 12 months, but it nonetheless looks cheaper on present valuation measures.
- At its October closing worth of N120, Zenith traded at about 4.67 occasions September 2026 trailing earnings and round 0.97 occasions e book worth.
- GTCO, at N120.90, traded at about 5.52 occasions trailing earnings and 1.27 occasions e book worth.
Put merely, buyers have been paying extra for every naira of GTCO’s earnings and shareholders’ funds than they have been for Zenith’s, although Zenith had already recorded the a lot stronger share-price achieve.
- GTCO’s increased valuation can partly be linked to its cleaner mortgage e book and extra cautious strategy to lending.
- Zenith affords stronger mortgage and price progress at a decrease valuation, however buyers even have to contemplate the rise in credit-impaired loans.
For buyers, the selection is due to this fact not merely about which inventory is cheaper.
GTCO affords a extra conservative steadiness sheet however at the next valuation, whereas Zenith has delivered the stronger capital achieve and nonetheless trades at a decrease valuation.
Going into 2027, GTCO must deliver down the price of deposits, whereas Zenith wants to point out that its increasing mortgage e book can proceed producing earnings with out creating extra unhealthy loans.
