ZENITH Bank Delivers: Profit Up 20.7%, Dividend Raised

In an increasingly stable yet competitive Nigerian banking landscape, ZENITHBANK has once again delivered a strong earnings statement for Q1-25, showcasing the power of a solid core banking model. The bank posted a 20.7% year-on-year (y/y) growth in profit after tax, powered by an impressive 71.5%year-on-year  increase in core income. This came despite a significant 67.1% drop in non-core income—mainly due to reduced FX-related trading gains following the relative stability of the naira.

So, what does this tell us? That ZENITHBANK’s core fundamentals are not just intact—they’re accelerating. And investors are noticing.

A New Dividend High in Sight

Off the back of strong profitability, ZENITHBANK has revised its gross dividend per share (DPS) for 2025E upward to NGN8.00 (from NGN7.00). At the current share price of NGN49.00 (as of May 7), this translates to a juicy dividend yield of 16.3%—a clear reward for shareholders staying the course.

With this update, analysts have nudged the bank’s target price (TP) up by 1.5% to NGN75.29 and reaffirmed their “Hold” recommendation. For context, the bank is now trading at just 2.4x estimated 2025 earnings and 0.5x book value—one of the most attractive valuations in the Nigerian banking sector.

What’s Driving the Growth?

Here’s a quick snapshot of the key growth drivers:

• Core Income: Projected to rise by 34.8%year-on-year  in 2025E (vs previous 24.9% forecast)
• Credit Creation: Expected to jump +25.0% year-on-year
• Investment Securities Base: Projected to expand +46.5% year-on-year
• Digital Channels & Fees: Net fees and commissions are forecast to grow +40.0% year-on-year, driven by booming digital and agency banking services

In short, ZENITHBANK is getting the fundamentals right—from growing its balance sheet to scaling fee-based income. Even with an expected 28.3% drop in non-funded income, the core momentum is more than enough to maintain upward earnings trajectory.

Stable Assets, Prudent Risk Management

While many banks are still trying to clean up their books post-devaluation and inflation, ZENITHBANK has shown discipline in its credit risk management.

• NPL Ratio: Remains flat at 4.7%, below the 5% regulatory threshold
• Provision Coverage: A robust 217.2% (2024FY: 223.0%)
• Cost of Risk: Down to 1.8% in Q1-25 (vs 2.8% in Q1-24), and expected to settle around 4.5% for 2025E

With most Stage 2 loans already restructured and major provisioning done in 2024, the bank enters the rest of 2025 with a cleaner balance sheet and fewer earnings shocks to fear.

The EPS Story: A Small Dip, Big Picture Remains Strong

EPS is forecast at NGN31.52 for 2025E, which is down 4.2% year-on-year, but this is purely due to share dilution from a recent 9.67 billion additional shares. The underlying earnings power, however, is intact—if not stronger.

Valuation Math That Works

ZENITHBANK’s new TP of NGN75.29/s is built from a balanced blend of valuation techniques:

• DDM: NGN77.59/s
• GGM: NGN79.21/s
• Relative P/E: NGN46.49/s
• Relative P/B: NGN52.94/s

This mix reflects a conservative yet optimistic view of what’s ahead. With a forecasted RoE of 16.8% and cost of equity at 31.3%, the models signal that there’s still significant upside for investors who can look past short-term noise.

Why ZENITHBANK Is Still a Star

In a year where FX gains are shrinking and inflation remains a risk, ZENITHBANK’s performance in Q1-25 proves that core strength matters more than ever. From booming interest income to digital fee growth, and a generous dividend outlook, the bank is not just surviving—it’s leading.

If you’re a value-seeking investor looking for income and resilience, ZENITHBANK remains one of the best plays in the Nigerian financial market today.

What’s Next?
Will the core income keep beating expectations? Can digital banking continue driving commission growth? All signs point to “yes”—and with the fundamentals this strong, ZENITHBANK’s future looks as solid as its balance sheet.

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