March 27, 2025/CSL Research
Zenith Bank’s FY 2024 audited numbers showed a strong 137.7% y/y growth in Interest Income driven by growth in Interest Income on both Net Loans and Investment Securities. Net Loans to Customers grew 52.0% y/y, inclusive of the impact of devaluation on foreign currency loans. Interest Expense also grew strongly, up 143.0% y/y. Customer Deposits grew 44.8%y/y also inclusive of the impact of devaluation on foreign currency deposits. Overall, Net Interest Income grew 134.8%y/y to N1,728,903 largely in line with our forecast of N1,700,583.
Net Fee and Commission Income recorded strong growth, rising 89.3% year-on-year (y/y) and significantly surpassing our projection. This increase was driven by substantial growth across multiple fee categories, including credit related fees (up 339.1% y/y), account maintenance fee (up 54.5% y/y), income from financial guarantee contracts issued (up 92.7% y/y), fees on electronic products (up 54.5% y/y), foreign withdrawal charges (up 298.2% y/y), and commission on letters of credit (up 131.3% y/y), foreign currency transaction fees and commission (up 221.7% y/y) and income from financial guarantee contracts issued (up 92.7% y/y).
Zenith Bank’s FY 2024 audited numbers showed a strong 137.7% y/y growth in Interest Income driven by growth in Interest Income on both Net Loans and Investment Securities. Net Loans to Customers grew 52.0% y/y, inclusive of the impact of devaluation on foreign currency loans. Interest Expense also grew strongly, up 143.0% y/y. Customer Deposits grew 44.8%y/y also inclusive of the impact of devaluation on foreign currency deposits. Overall, Net Interest Income grew 134.8%y/y to N1,728,903 largely in line with our forecast of N1,700,583.
Net Fee and Commission Income recorded strong growth, rising 89.3% year-on-year (y/y) and significantly surpassing our projection. This increase was driven by substantial growth across multiple fee categories, including credit related fees (up 339.1% y/y), account maintenance fee (up 54.5% y/y), income from financial guarantee contracts issued (up 92.7% y/y), fees on electronic products (up 54.5% y/y), foreign withdrawal charges (up 298.2% y/y), and commission on letters of credit (up 131.3% y/y), foreign currency transaction fees and commission (up 221.7% y/y) and income from financial guarantee contracts issued (up 92.7% y/y).
The higher OPEX growth (+87.6% y/y) outpaced the 70.9% y/y growth in Total Operating Income, leading to a slight deterioration in the Cost-to-Income Ratio (ex-provisions) to 29.8% in FY 2024, compared to 27.2% in FY 2023.
Overall, PBT grew strongly y/y, up 66.7% y/y to N1.3trn in FY 2024 from N796bn in FY 2023 while Net Profit grew 52.6% y/y to N1.0trn bringing FY 2024 ROAE to 32.5% down from 36.6% for FY 2023, mainly due to injection of new capital. We note that total tax paid by the bank included a windfall tax levy of N63.3bn, which represents 70% of the total windfall tax charge for the three years.
We have a Buy recommendation on the stock with a target price target of N59.69/s. Current Price: N48.9/s.
The bank’s management proposed a final dividend of N4.00/s which in addition to the interim dividend of N1.00/s paid, brings total dividend to N5.00/s, implying total dividend yield of 10.2% based on yesterday’s closing price of N48.9/s.
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