Fitch Affirms Guaranty Trust Holding Company at ‘B’; Outlook Stable
Fitch Ratings has affirmed Guaranty Trust Holding Company Plc’s (GTCO) and Guaranty Trust Bank Limited’s (GTB) – its main operating subsidiary – Long-Term Issuer Default Ratings (IDRs) at ‘B’. Fitch has also affirmed their National Long-Term Ratings at ‘AA+(nga)’.
In its rating action, Fitch said GTCO’s and GTB’s issuer default ratings are driven by their standalone creditworthiness, as expressed by their ‘b’ Viability Ratings (VRs).
The VRs capture the group’s strong franchise and financial profile metrics, but are constrained by the concentration of its operations in Nigeria’s challenging operating environment.
The ‘b’ VRs are one notch below the ‘b+’ implied VRs, reflecting the operating environment and sovereign rating constraints.
The issuers’ National Long-Term Ratings are higher than those of other Nigerian domestic systemically important banks (D-SIBs) due to stronger profitability and capitalisation.
GTCO, a non-operating bank holding company, with GTB accounting for 95% of group assets at the end of 2025, and therefore, its VR is also aligned with the group VR.
The Nigerian naira has stabilised, the banking sector’s underlying profitability and foreign-currency (FC) liquidity have improved, and capital raisings have boosted banks’ capitalisation.
However, inflation remains high, regulatory intervention is burdensome, and the expiry of forbearance has increased the impaired loan (Stage 3 loans under IFRS 9) ratio and prudential provisions.
GTCO is Nigeria’s fifth-largest banking group, representing 6% of domestic banking system assets but only 4% of domestic banking loans in 2025, and has the lowest cost of funding of all domestic banks.
Fitch noted that the group’s revenue diversification is reasonable, with non-interest income representing 23% of operating income in 2025.
It added that Nigerian sovereign exposure through securities and cash reserves at the Central Bank of Nigeria (CBN) is material relative to the group’s Fitch Core Capital at 1.6x in 2025.
Single-obligor credit concentration is moderate relative to peers’, but exposure to the oil and gas sector is high at 34% of gross loans and 34% of FCC.
GTCO’s impaired loans (Stage 3 under IFRS 9) ratio has been 4%-6% since 2019, settling at 4.96% despite ongoing unfavourable FX translation effects and a challenging operating environment.
Specific loan loss allowance coverage for impaired loans was only 46% at the end of 2025, despite strong collateral. Fitch forecasts the impaired loans ratio to remain stable in the near term.
Non-loan assets include investments in sovereign debt securities in countries where GTCO has a presence and large interbank placements, which we consider lower risk in Nigeria.
GTCO is the most profitable of all Nigerian banks, with operating profits averaging 15% of risk-weighted assets (RWAs) over the past four years.
Nevertheless, revenue diversification is lower than peers’ and earnings are highly correlated with interest rates, loan impairment charges (LICs), and are constrained by regulatory intervention in Nigeria.
The FCC ratio of 48.7% in 2025 is supported by fairly low balance-sheet leverage, strong internal capital generation, recent core capital raising, and low RWAs density. Its current capital buffer suggests that GTCO would likely remain solvent in a Nigerian sovereign default.
Fitch expects the capital buffer to decline slightly as the group deploys its excess capital but to remain large, supported by high profitability.
Funding is mainly sourced from a stable, inexpensive customer deposit base, comprising 83% of current and savings accounts in 2025. Depositor concentration is low. Liquidity coverage is comfortable in local and foreign currencies.
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