Guaranty Trust Holding Company (GTCO) and Zenith Bank closed the primary 9 months of 2026 with nearly related pre-tax income, however the numbers reveal two very completely different approaches to earning profits.
GTCO seems to be defending its steadiness sheet, lowering lending publicity and maintaining dangerous 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 payment revenue.
But this development is coming with a rise in loans already displaying 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 development at a less expensive valuation however with higher credit score danger.
GTCO trades credit score danger for funding stress
GTCO reported a pre-tax revenue of N879.90 billion, down 2.3% from N900.80 billion a yr 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 downside 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 had been the largest 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 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 straight from buyer loans. A a lot bigger proportion was generated from money placements and funding securities.
Management seems snug with that place.
Commenting on the outcomes, Group CEO Segun Agbaje stated the group remained targeted on sustaining a “strong, liquid and well capitalised” steadiness sheet.
More importantly for buyers, he stated GTCO would proceed to optimise risk-free returns and reap the benefits of market alternatives with out compromising the standard of its danger property.
That remark helps what the steadiness sheet already reveals: GTCO is just not chasing mortgage development 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 expenses additionally fell 58.4% to N29.02 billion.
Overall, that technique helps scale back credit score publicity, but it surely introduces one other danger. If rates of interest decline additional, returns from securities can fall whereas deposit prices could take longer to regulate.
Zenith pushes more durable 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 whole curiosity revenue.
Management describes this growth as deliberate.
Group Managing Director Adaora Umeoji stated the nine-month efficiency mirrored rising contributions from “customer-driven business activities”, highlighting development in lending, transaction volumes and buyer deposits.
She additionally stated decrease funding and credit score prices supported profitability and improved earnings high quality.
The funding numbers assist 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 offered one other shiny spot. Net payment 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 expenses collapsed 70.5% to N230.77 billion. Read Zenith Bank’s 9M 2026 outcomes
Loan development brings one other danger
The concern is that Zenith’s rising mortgage guide can 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 danger however aren’t 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 targeted on sustaining monetary power whereas pursuing development.
Still, buyers will need to see whether or not the rise in Stage 3 loans stabilises earlier than concluding that the sharp discount in impairment expenses 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 wrong 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 needs to be cautious about treating the 70% decline in impairment expenses as proof that credit score danger has absolutely normalised.
Which inventory looks cheaper?
Both shares have delivered good points to date 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% throughout 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 yr, but it nonetheless looks cheaper on present valuation measures.
- At its October closing value of N120, Zenith traded at about 4.67 occasions September 2026 trailing earnings and round 0.97 occasions guide worth.
- GTCO, at N120.90, traded at about 5.52 occasions trailing earnings and 1.27 occasions guide worth.
Put merely, buyers had been paying extra for every naira of GTCO’s earnings and shareholders’ funds than they had been for Zenith’s, though Zenith had already recorded the a lot stronger share-price achieve.
- GTCO’s greater valuation can partly be linked to its cleaner mortgage guide and extra cautious strategy to lending.
- Zenith gives stronger mortgage and payment development at a decrease valuation, however buyers even have to think about the rise in credit-impaired loans.
For buyers, the selection is subsequently not merely about which inventory is cheaper.
GTCO gives 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 convey down the price of deposits, whereas Zenith wants to point out that its increasing mortgage guide can proceed producing earnings with out creating extra dangerous loans.
