May 2, 2025/Cordros Report

Zenith Bank Plc (ZENITHBANK) published their Q1-25 unaudited results at the close of business on Wednesday (30 April), reporting a 20.7% y/y expansion in profit after tax to NGN311.83 billion. The preceding was driven by the growth in interest income (+71.5% y/y), which offset the lower non-interest income (-67.1% y/y) recorded during the period. However, EPS declined to NGN7.59 (-7.7% y/y) solely due to the dilutive impact of additional share issuances (9.67 billion units).

The bank recorded a 71.5% y/y growth in funded income to NGN837.64 billion, supported by the still elevated yields and a 9.1% YTD growth in earning assets. Growth was broad-based across all contributory lines – loans to customers (+53.4% y/y), investment securities (+113.2% y/y), and placements with banks (+41.4% y/y), in the review period.

Interest expense also advanced by 35.3% y/y to NGN246.45 billion, as the elevated interest rate pushed the group’s funding costs higher. Specifically, the bank incurred higher costs on customers’ deposits (+34.5% y/y) and borrowings (+38.8% y/y). Net interest income grew by 92.9% y/y to NGN591.19 billion, with an even faster growth in NII ex-LLE (+116.3% y/y), aided by an 11.8% y/y decline in loan impairment charges.

Elsewhere, non-interest income (NII) declined by 67.1% y/y to NGN89.27 billion, as the lower income from investment securities (-89.5% y/y) and net fees and commission (-2.9% y/y) undermined the higher FX revaluation gains (+281.9% y/y) recorded. Consequently, operating income expanded by 20.9% y/y to NGN631.09 billion.

OPEX grew by 38.9% y/y to NGN280.27 billion, reflecting higher costs across personnel (+47.1% y/y), AMCON levy (+55.6%), technology (+66.8%), and NDIC premium (+96.6%). Consequently, the cost-to-income ratio (ex-LLE) deteriorated to 41.2% from 34.9% in Q1-24.

Overall, PBT rose 9.6% y/y, while the lower tax expense (-37.0% y/y) boosted PAT growth to 20.7% y/y.

Comment: In line with our expectations, ZENITHBANK’s profitability remained robust as the strong core performance sustained earnings growth despite the weaker non-interest income. YTD, the bank has deployed funds into investment securities (+26.3%) and credit creation (+0.9%), which we expect to support topline resilience amid the still elevated interest rates. Our estimates are under review.