Event

Zenith Bank Plc (“The Group”) recorded a significant growth in gross earnings in Q3 2023 on the back of elevated yields on assets as well as expansion of the Group’s loan book.

Gross earnings grew markedly by 64% to N346.97bn in Q3 2023 (Q3 2022: N212.02bn), buoyed by strong growth in interest income of 71% to N255.51bn (Q3 2023: N149.03bn) and trading income. Trading income grew by 290% to N24.35bn in Q3 2023 from N6.25bn in Q3 2022.

Outlook

We expect the high yield environment to continue to support growth in interest income. However, we hold concerns about the sharp rise in cost of funds and its impact on net interest margin. Accordingly, we have reviewed our fair value estimate to N39.90 per share (previously: N36.45), and we now recommend a HOLD on Zenith Bank given the current market price of N43.05, which is at 7% discount to our fair value excluding a dividend yield of 10%.

Please follow the link “Zenith Bank Q3 2023 -Elevated Interest Rate Environment Spur Earnings” to view the whole report.

Thank you.