In brief
- Strong Earnings Momentum and Expanding Margins: GCB delivered robust topline growth in 1H2025, with net interest income rising 39.9% year-on-year, supported by a 46.3% increase in interest income and asset expansion. Non-interest income grew by 62.3%, led by strong net trading gains and digital fee growth. Operating efficiency improved meaningfully, with the cost-to-income ratio dropping to 49.8% despite inflationary pressures, resulting in a 101.1% year-on-year surge in after-tax profit.
- Strengthened Balance Sheet and Asset Quality: Total assets rose 36.8% to GHS 47.8bn, with loan and investment portfolios expanding by 37.1% and 47.3% respectively. Deposit growth of 31.4% and a low loan-to-deposit ratio of 30.4% reflect funding headroom. Asset quality improved significantly, as the NPL ratio declined by 6.4 percentage points to 13.8%, and capital adequacy rose to 20.0% (with relief), highlighting resilience.
- Digitalisation and Cost Discipline as Structural Levers: GCB’s strategic focus on digital transformation is enhancing scalability and non-funded income. Platforms like G-Money and the mobile app are improving customer engagement while reducing cost intensity. The appointment of a Chief Digital Officer underscores management’s commitment to embedding technology in both operations and revenue generation. Combined with easing inflation, these efforts are expected to reinforce cost control and support margin preservation.
- Well-Positioned for Sustainable Growth and Dividends: With restored capital buffers, resumed dividends, and a cautious but deliberate approach to lending, GCB is positioned to scale profitably. The bank’s conservative loan deployment, strong provisioning, and robust earnings outlook (CAGR of 29.7%) underpin a credible investment case. Continued digital monetisation, selective credit growth, and disciplined execution support long-term value creation and income visibility.
1H2025 Earnings Update
GCB Plc has extended its strong start to the year, according to its unaudited 1H2025 results published on 29 July 2025. Net interest income rose by 39.9% y/y to GHS 2.0bn, underpinned by a 46.3% y/y surge in interest income on the back of a 36.8% y/y expansion in total assets which led to a 0.6pp y/y rise in net interest margin (NIM) to 8.2%. This was despite a 65.4% y/y increase in interest expense to GHS 794.1mn, as the bank drew on borrowed funds to comply with CRR directives. Non-interest income jumped by 62.3% y/y to GHS 759.4mn, driven by robust growth in net trading income, which rose by 87.5% y/y to GHS 397.0mn, amid elevated trading activity. Net fees and commission also surged by 35.3% y/y to GHS 337.3mn, driven by increased adoption of the bank’s digital solutions by customers, including the mobile banking app and G-Money, its fintech subsidiary. Consequently, pre-impairment income grew by 45.4% y/y to GHS 2.8bn. Impairment charges declined by 21.3% y/y to GHS 82.5mn. Despite operating expenses rising by 25.0% y/y to GHS 1.4bn, we note that the cost-to-income ratio improved by 8.1 pp year-on-year to 49.8% due to the strong growth recorded in revenue lines. Profit before tax stood at GHS 1.3bn, with after-tax profit increasing to GHS 838.7mn (+ 101.1 % y/y). On the balance sheet, Loans and advances rose by 37.1% y/y to GHS 10.5bn yielding a loan-to-deposit ratio of 30.4%, while investment securities grew by 47.3% y/y to GHS 17.5bn, reflecting management’s increased allocation to high-yield OMO instruments amidst elevated rates. Customer deposits increased by 31.4% y/y to GHS 34.4bn, driven by a realignment of retail banking to focus on sales and grow deposits. The capital adequacy ratio strengthened by 1.5pp y/y to 20.0% (with relief), while the NPL ratio improved by 6.4pp y/y to 13.8%. In the near term, GCB’s outlook remains positive although the sharp decline in domestic yields across Treasury securities and Bank of Ghana OMO bills presents a downside risk to topline, which will be a catalyst for the bank to stretch its loan book for top-line growth. Overall, we view GCB’s performance as solid, with strong earnings delivery and improved asset quality, positioning the bank to sustain momentum through the rest of 2025.
Near-term Outlook: GCB Positioned to Ride Economic Tailwinds into 2H2025
- We expect GCB to sustain its strong earnings momentum in the second half of 2025, supported by an expanding loan portfolio and renewed growth in non-funded income. As inflation continues to trend downward and macroeconomic conditions improve, we anticipate a further pick-up in loan demand, which should support topline expansion. GCB is well-positioned to meet this demand, given its healthy liquidity position further enhanced by the Bank of Ghana’s revised CRR directive that aligns reserve requirements with the currency of mobilized deposits.
- On the funding side, we believe GCB will continue to scale up low-cost deposits through its extensive retail presence, helping reduce reliance on expensive funding sources. This should enhance net interest margins while creating headroom for further loan book expansion.
- We anticipate stronger non-interest revenue in 2H2025 as economic activity rebounds. GCB’s digital ecosystem, anchored by its mobile banking app and G-Money platform is beginning to show results. These platforms not only strengthen customer engagement but also provide scalable transaction-based income streams.
- In our view, GCB is well-positioned to sustain its net trading income momentum, particularly with the potential return of the Ghanaian sovereign to the domestic debt market in the latter half of the year. We also expect GCB’s strategic partnerships such as those with the Electricity Company of Ghana (ECG) and TextGenesys Ltd to enhance fee-based income over time.
Disciplined Growth Strategy Anchored in Selective Lending
- We believe GCB will maintain a cautious yet strategic approach to loan book expansion. In our engagement with management, we observed that the bank remains focused on selective consumer lending and targeted exposures in priority sectors with strong GDP linkages and high return potential. Despite the liquidity constraints posed by the 25% CRR, the bank is not aggressively pursuing a 40% loan-to-deposit ratio. Instead, we expect management to prioritise asset quality, which aligns with its broader risk management posture.
- Regarding asset quality, we do not expect the Bank of Ghana’s directive to reduce NPLs to 10.0% by FY2026 to materially affect GCB in the near term. As of 1H2025, total NPLs stood at GHS 1.7bn, of which GHS 1.3bn has been fully provisioned. Only GHS 157.7mn falls under the “less loss” category, and the bank awaits regulatory clearance to write off the already-provided portion
Cost Efficiency to Improve as Digitisation Deepens
- We expect cost containment to remain a key focus for management. We anticipate GCB will intensify the digitisation of internal processes, replacing manual and branch-based functions with more cost-efficient digital alternatives. The bank’s strategy is to shift away from physical expansion and instead grow market share via digital platforms..
- Falling inflation will also provide tailwinds in managing operating expenses more tightly. As inflation eases, potentially to single digits in the near-term, we foresee moderation in cost escalation, supporting margin preservation.
Key Risks
- Macroeconomic volatility, asset quality deterioration, execution risk on digital strategy, regulatory and policy shift, sovereign risk and market fragility.
Valuation: BUY
- Our BUY rating is based on our weighted average fair value of GHS 13.16 per share, representing a upside of 38.3%, using the weighted average prices from our dividend discount (DDM), residual income (RI) and relative valuation models. We see strong near-term upside for GCB given its robust fundamentals and promising outlook, and therefore recommend a BUY rating.
- GCB is trading at a TTM P/E of 1.6x and P/B of 0.49x.