September 18, 2025/Cordros Report

Zenith Bank Plc (ZENITHBANK) published its H1-25 interim financial results today (18 September). The group reported a 7.9% y/y decline in profit after tax to NGN532.18 billion (H1-24: NGN578.00 billion), translating to an EPS of NGN12.95 (H1-24: NGN18.41). Earnings momentum in H1-25 was constrained by weaker trading income and significantly higher credit impairment charges, while EPS also declined due to the impact of new share issuances. The Board proposed an interim dividend of NGN1.25/share (H1-24: NGN1.00/share), translating to a dividend yield of 1.9% based on the last closing price of NGN66.95/share.

The elevated interest rate environment continues to be a positive for banks, driving a 60.0% y/y increase in interest income to NGN1.84 trillion. Across contributory lines, income from customer loans grew by 53.3% y/y to NGN935.75 billion, loans to banks rose by 71.1% y/y to NGN121.08 billion, while gains from fixed income securities surged by 67.1% y/y to NGN782.41 billion.

However, interest expense rose modestly by 11.5% y/y to NGN484.53 billion, reflecting increased customer deposit costs (+34.6% y/y to NGN349.84 billion), partly offset by lower borrowing expenses (-23.5% y/y to NGN132.38 billion). As a result, net interest income nearly doubled (+89.5% y/y) to NGN1.35 trillion. After accounting for higher credit impairment charges (+83.2% y/y to NGN760.81 billion), net interest income (ex-LLE) settled at NGN593.91 billion (+98.1% y/y).

Non-interest income fell by 31.8% y/y to NGN613.15 billion as lower gains on investment securities (-41.2% y/y to NGN467.79 billion) overshadowed modest improvements in net fees and commissions (+16.8% y/y to NGN128.06 billion) and FX revaluation gains (NGN11.13 billion vs. NGN2.65 billion loss in H1-24). As a result, operating income inched slightly to NGN1.21 trillion (+0.7% y/y).

Operating expenses increased by 23.2% y/y to NGN581.43 billion, driven by higher personnel costs (+16.1% y/y), AMCON levy (+56.0% y/y), and NDIC premium (+43.6% y/y), which pushed the cost-to-income ratio higher to 48.2% (H1-24: 39.4%).

Accordingly, PBT declined by 13.9% y/y to NGN625.63 billion, while PAT settled 7.9% lower y/y at NGN532.18 billion, despite a 37.3% y/y drop in tax expense.

Comment: ZENITHBANK’s H1-25 results highlight resilient interest income growth underpinned by elevated yields and growth in investment securities. However, the combination of higher impairment charges and weaker trading gains capped profitability in the review period. Looking ahead, we expect that anticipation of a lower interest rate environment could stimulate credit growth, strengthening core performance and supporting profitability despite a moderation in non-core income. Our estimates are under review.