October 31, 2024/InvestmentOne Report
Surge in Gross Earnings: Zenith bank’s 9M’2024 results disclosed that the tier-one bank recorded an EPS of NGN26.34 in the review period, compared to NGN13.82 in the corresponding period in 2023. This reflects the bank’s substantial performance with respect to earnings growth. We highlight that gross earnings increased by 118.17% YoY to NGN2.90trn as of September 2024. This emanated from the 190.21% YoY growth in interest income to NGN1.95trn, which masked out the 160.63% YoY increase in interest expense to NGN666.44bn given the impact of high interest rates. Nevertheless, net interest income saw a notable increase of 208.43% YoY to NGN1.28trn.
Trading Gains Boost Non-Interest Income: Just like interest income, non-interest income also
treaded the northward path, rising by 44.72% YoY to NGN952.49bn. For context, trading gains contributed about 72.06% to non-interest income, amounting to NGN686.34bn. This was spurred by gains on other trading books (+654.25% YoY to NGN754.98bn) and trading gains on bonds (+174.89% YoY to NGN8.82bn). However, there was a loss of NGN77.46bn on treasury bills in the same period. Meanwhile, fee and commission income also improved by 107.74% YoY to NGN270.74bn supported by account maintenance fees, fees on electronic products and foreign withdrawal charges.
PBT crosses the 1 trillion mark: Given the stellar growth in revenue, the bank achieved a landmark pre-tax profit, which crossed NGN1.00trn, while PAT increased by 90.54% YoY to NGN827.28bn. Notably, profitability improved significantly despite the 113.46% YoY jump in OPEX to NGN656.07bn, which reflects the current inflationary economy and higher regulatory costs. The increase in ROE and ROA from 29.97% and 3.28% in 9M’2023 to 39.42% and 4.41% respectively also reiterates the commendable performance in terms of profitability.
Outlook: Looking ahead, we are optimistic about the outlook for Zenith bank based on the expectation of further improvement in earnings. Judging by the steady growth in the loan book,
which has increased by 43.42% from December 2023 to NGN9.40trn, we expect interest income
to maintain an upward trend. Furthermore, the expansion of investment securities holdings (+44.98% up from December 2023 to NGN4.77bn) also supports our outlook for higher interest
income. In addition, trading gains are expected to fortify non-interest income as the bank tries to take advantage of volatility in interest rates. Thus, we envisage that profit after tax could likely reach the NGN1.00trn mark.
Click here to read full PDF copy of report
