Rating Summary:
We maintain our “BUY” rating on GCB Bank PLC (“GCB”), reflecting sustained earnings strength, improved asset quality, and disciplined cost management. The 9M2025 results reaffirm the bank’s solid momentum, with revenue, costs, and profit all outperforming expectations. Total revenue beat our forecast by 9.0%, supported by robust balance sheet growth, higher asset yields, and a growing loan portfolio. Costs were 13.2% below forecast, as easing inflation helped contain pressures despite higher personnel and technology spending. Profit after tax more than doubled (+117.2% y/y) to GHS 1.3bn, exceeding our projection by 14.1% and surpassing the FY2024 outturn. Net interest income rose 44.4% y/y to GHS 3.1bn, while non-interest revenue climbed 60.6% y/y to GHS 1.2bn, driven by an 89.1% surge in trading income. A 17.0% drop in impairment charges lifted pre-impairment income by 48.5% y/y to GHS 4.3bn, highlighting the depth of GCB’s earnings recovery. On the balance sheet, loans and advances grew 34.8% y/y to GHS 13.8bn, raising the loan-to-deposit ratio to 36.7%, while deposits increased 22.4% y/y to GHS 37.4bn, reinforcing funding stability. The NPL ratio improved to 10.8%, reflecting stronger credit quality, while the capital adequacy ratio (with relief) held steady at 16.2%, providing sufficient headroom for further growth.
We revise our fair value estimate upward to GHS 19.76 per share, reflecting a lower risk-free rate of 15.60% (down from 17.74% at HY2025) in line with current yields on restructured domestic bonds, alongside refinements to our valuation framework. These include a peer mean beta adjustment based on stronger statistical validity and enhancements to our multi-factor linear regression P/B model. In our view, these valuation upgrades, coupled with stronger-than-expected earnings delivery, improving credit metrics, and sustained balance sheet growth, reinforce GCB’s favorable outlook. We believe the bank remains well-positioned to extend its outperformance into year-end, supported by rotation into higher-yielding risk assets and steady improvement in earnings resilience heading into FY2026.