April 30, 2026/InvestmentOne Report
Zenith bank delivered a gross revenue of NGN1.01trn in Q1:2026, representing a 6.14% increase from the corresponding period in 2025, driven mainly by the resilience in core business income, with non-interest income remaining under pressure. Specifically, interest income rose marginally by 3.76% to NGN869.10bn at the end of the first quarter.
The fragile growth was aided by interest earned in placements (+16.37% YoY) and investment securities (+8.36% YoY), as interest rates remained at attractive levels in the period. However, the slow growth reflects the moderation in interest from loans and advances (-0.84% YoY). On the other hand, interest income saw a 4.64% YoY decline to NGN235.02bn on account of lower (-33.02% YoY) interest incurred on borrowed funds as the bank paid down major borrowings including dues to the Central Bank of Nigeria (CBN) and banks for clean letters of credit over the one-year period. Consequently, net income settled at NGN634.08bn 7.26% YoY higher.
Non-Interest Income Remains Pressured: For non-interest income, other operating income expanded by 353.72% YoY to NGN50.19bn, propelled by loan recovery, which improved from NGN3.58bn in Q1:2025 to NGN19.98bn, and foreign currency revaluation gains (+134.37% YoY to NGN30.06bn). However, trading gain was negative following the significant loss of about NGN17.52bn recorded on other trading books, compared to NGN12.87bn gain in Q1:2025. Overall, non-interest income amounted to NGN139.06bn, representing a modest 5.33% decline.
Earnings Stays Resilient: In the period under review, OPEX grew 14.90% YoY to NGN322.04bn amid higher personnel expense (+10.48% YoY) and costs related to information technology (+99.89% YoY), which mainly drove other operating expenses higher. Impairment charges also increased by 16.59% from a year ago to NGN57.57bn, with impairment on loans and advances accounting for a significant proportion, after reaching NGN41.68bn (+15.95% YoY). As a result, PBT and PAT saw moderate increases to close the quarter at NGN360.92 (+0.70% YoY) and NGN314.02 (+0.66% YoY), respectively. Similarly, Earnings inched up to NGN7.64 per share (vs. NGN7.59 per share in Q1:2025).
Outlook: For the rest of 2026, we expect further advancements in earnings driven majorly by core business income, with support from non-interest income. Q1:2026 came with an 8.93% loan growth, compared to 4.85% in the entirety of 2025. Based on our estimates, we expect to see stronger expansion in loans, leading to formidable asset yield and interest income. Also, we see scope for more upside in non-interest income, underpinned by higher fee and commission income. However, we note that a higher-than-expected rise in operating costs and impairments could depress earnings and pose major threat to our valuation.
Thus, we maintain our STRONG BUY recommendation on the ticker.
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