Zenith Bank records N160.6bn in 9 months as operating cost rises

Zenith International Bank Plc, Nigeria’s most-capitalised and most-profitable lender, has said its nine-month profit after tax remained flat with net profit at N160.6 billion as of December. This is N1.3bn higher than N159.3bn it recorded in the same period of 2020, Zenith said in a statement to the Nigerian Exchange. Despite this, Zenith Bank remains […]

Zenith International Bank Plc, Nigeria’s most-capitalised and most-profitable lender, has said its nine-month profit after tax remained flat with net profit at N160.6 billion as of December.

This is N1.3bn higher than N159.3bn it recorded in the same period of 2020, Zenith said in a statement to the Nigerian Exchange.

Despite this, Zenith Bank remains the most profitable lender in the country, while its relatively flat profitability over the past two years may suggest earnings maturity, as some analysts have noted.

Annualising the nine-month profit translates to 18.6 percent return on average equity (RoAE), broadly competitive to the peer average RoAE of 14.5% and still ahead of analysts’ average cost of equity of 18% on Zenith Bank.

While interest income was 3.1% lower year-on-year at N308.8bn due mainly to the lower interest earned on treasury bills and placements with banks, the bank leveraged its rich pool of current and savings accounts to lower its interest expense, which was 20.9% lower year-on-year; N74.1bn in the nine-months period ending September 2021, compared to N93.6bn in the same period of 2020.

Notably, current and savings accounts now represent some 92.3% of Zenith Bank’s deposit base, low-cost funds, costing just about 0.5% per annum.

Just like peers UBA and Access Bank, Zenith Bank is rapidly ramping up earnings from the Rest of Africa, with contributions from its African subsidiaries representing 11.2% of gross earnings and 10.1% of profit after tax respectively.

The shares of Zenith Bank gained 0.8% to close at N25.25 at the close of trading on NGX on Friday, 29 October 2021. With a market capitalization of N792.8bn, Zenith Bank is priced at 3.7x Price-to-Earnings (P/E) and 33% to its book value of N1.2 trillion.

Based on its total dividend per share of N3.00, the stock trades at an 11.9% dividend yield. The stock has gained by 1.5% year-to-date, underperforming the NGX All-Share Index, which has rallied 4.4% thus far in the year.