If GTCO were an animal, it would be an orca—sleek, intelligent, and ruthlessly efficient in its habitat.
Not the largest in the ocean, but undoubtedly one of the most effective.
In a banking sector crowded with noisy giants and bloated cost structures, GTCO glides through the current with discipline and precision, delivering high-margin returns on a relatively lean frame.
The group closed 2024 with N1.27 trillion in pre-tax profit, a 108% jump from the prior year. This is no fluke. We saw it coming when it released its half-year numbers last year.
GTCO has a history of turning lean operations into shareholder gold. With a cost-to-income ratio of just 24.1%, it remains the industry’s benchmark for operational efficiency. While other banks pile on expenses like a rainy season budget, GTCO remains disciplined.
But even the strongest Orcas stumble. The fourth quarter threw a small wrench into an otherwise perfect machine. The group posted a surprise loss in Q4, dragging down what could have been an even more impressive net number.
The culprit? Loan provisions. GTCO appears to have front-loaded some of its losses, perhaps taking advantage of a bumper year to clean house. Smart move, if that’s the case.
Despite the hiccup, GTCO rewarded its shareholders handsomely. It declared a record N7 dividend for 2024, adding N5 as a final payout to the N2 interim declared earlier. At a current share price of N68.80, that’s a dividend yield north of 10%—the kind of yield that would make even bondholders jealous.
Still, the market yawns.
GTCO trades at a P/E ratio of just 2x. For a company with this kind of earnings consistency and cost discipline, that’s deeply undervalued. Assigning it a modest 3x multiple gets you a share price of N100—a 45% gain from current levels. And yes, that would require a rally, but it’s not a fantasy.
What could ignite such a move? Three letters: FPI.
Foreign Portfolio Investors have largely sat out the Nigerian equity market over the past few years. But with macro reforms underway and the naira showing signs of bottoming, they may finally be coaxed back in. GTCO, with its London listing and familiar governance reputation, is likely to be top of their shopping list.
And the fundamentals are lining up. Beyond its core banking operations, GTCO’s non-banking subsidiaries are beginning to shine. Profits from those units rose from N4.7 billion to N14 billion, a nearly threefold increase.
Its international operations also doubled profit contributions, from N97.4 billion to N194 billion, suggesting the group’s expansion outside Nigeria is finally gaining steam.
Still, GTBank Nigeria remains the crown jewel, generating the lion’s share of earnings. The competition is fierce, and as the recapitalization wave forces new capital into the system, the big question is: Where does growth come from next?
Organic growth may prove tougher in a saturated retail banking market. Fee innovation, digital scale, and M&A might be needed to stay ahead.
There’s also the dilution dilemma. GTCO, like its peers, will need to raise capital to meet the CBN’s N500 billion recap requirement. New shares on the market could dampen EPS and slow down the march to N100. However, with a strong balance sheet and a capital adequacy ratio of 39.3%, the bank starts from a place of strength.
So, what needs to happen for GTCO to hit N100 per share? A re-rating catalyzed by returning foreign capital. If foreign investors return in force—and the macro narrative continues to stabilize—a 3x P/E valuation is not just possible; it’s rational.
Until then, shareholders can take comfort in their cash flows.N7 per share in dividends, a 10%+ yield, a cost structure envied by peers, and profits now comfortably above the N1 trillion mark—GTCO may not be flashy, but it’s dependable.
Sometimes, the quietest stocks carry the heaviest returns.
