October 31, 2024/CSL Research

Zenith Bank’s 9M 2024 unaudited numbers showed a strong 190.2% y/y growth in Interest Income driven by growth in Interest Income on both Net Loans and Investment Securities. Net Loans to Customers grew 62.7% y/y but was up 43.4% in 9M 2024 compared with the December 2023 position. (Inclusive of the impact of devaluation on foreign currency loans). Interest Expense also grew strongly, up 160.6% y/y. Customer Deposits grew 61.2%y/y but was up 42.2% in 9M 2024 relative to the December 2023 position (inclusive of the impact of devaluation). Overall, Net Interest Income grew 208.4%y/y and up 38.4%q/q (Q3 2024 compared with Q2 2024)

Net Fee and Commission Income also grew strongly, up 119.6% y/y and 24.5% q/q. The y/y growth was due to significant increases in account maintenance fee, income from financial guarantee contracts issued, fees on electronic products, foreign withdrawal charges, and commission on letters of credit.

ZENITH BANK 9M 2O24

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Source: Company’s Financials, CSL Research.

Other Income (Trading gains and Other Operating Income) grew moderately, up 29.2% y/y to N681.7bn from N527.8bn in 9M 2023, mainly driven by significant gains on other trading books, which grew to N755.0bn in 9M 2024 compared with only N100.1bn in 9M 2023. The impact of this was however moderated by other operating loss of N4.6bn compared with other operating income of N400.4bn in 9M 2023. Q/q, Other Income declined significantly to a loss position of N108bn in Q3 2024 compared with an income of N575.9bn in Q2 2024 mainly due to a loss on other trading books of N116.7bn in Q3 2024.

Impairment charge grew significantly, up 127.5% y/y to N477.8bn in 9M 2024 from N210bn in 9M 2023, bringing 9M 2024 annualised Cost of Risk (COR) to 7.3% same as for FY 2023.

OPEX grew 113.5% y/y to N656.1bn in 9M 2024 mainly driven by growth in personnel expenses (up 70.4% y/y) which we attribute to cost-of-living adjustments to salaries and growth in Other Operating Expense (up 139.0%y/y). The bank saw significant growth in expense items such as information technology (FX based), outsourcing services, licenses, registrations and subscriptions, fuel, and maintenance (subsidy removal), deposit insurance premium and AMCON levy (growth in balance sheet size). The higher y/y growth in Opex when compared with the 109.0% y/y growth in Total Operating Income led to a slight deterioration in Cost to Income Ratio (ex-provisions) to 30.7% in 9M 2024 compared with 30.1% in 9M 2023.

Overall, PBT grew strongly y/y, up 98.6% y/y to N1.0trn in 9M 2024 from N505.0bn in 9M 2024 while Net Profit grew 90.5% y/y to N827.3bn bringing 9M 2024 annualised ROAE to 37.8% compared with 36.6% for FY 2023.

We have a Buy recommendation on the stock with a target price target of N56.77/s. Current Price: N39.95/s.

Kindly click on the below link to download the full report.

​CSL Zenith Bank 9M 2024 Quick Take.pdf​​​​​​​

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