Zenith Bank Plc (‘The Company’) in its Q1 2022 earnings release, reported a 22% YoY gross earnings growth, driven by a 25% YoY interest income growth and a 16% YoY non-interest income growth.

Operating income grew by 16% YoY, however, profit before tax growth was moderated to 11% YoY due to a 200 basis points increase in cost-to-income ratio to 55% in Q1 2022. On the back of higher effective tax rate, profit after tax grew by 10% YoY to N58.19bn.


On the back of a higher-than-anticipated earnings growth in Q1 2022, our earnings per share forecast for FY 2022 is now N8.42 (previous: N8.15). Our growth catalysts played out in Q1 2022 where loan book growth spurred interest income while fee and commission income growth drove non-interest income. Our growth expectations remain unchanged.

Accordingly, we estimate a N26.58 fair value for the stock (previous: N25.96). The stock currently trades at 2.86x multiple of our FY 2022 EPS forecast, 10% lower than our estimated justified multiple of 3.16x. In addition to an estimated 13% dividend yield based on our N3.10 projection, the stock offers a 23% total return. Thus, we maintain our BUY recommendation.

Please click the link “Zenith Bank Plc Q1 2022 – Focus on Risk Assets Spurs Earnings Growth” to view the whole report on Zenith Bank Plc.

Thank you.

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