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Zenith Bank Plc has released its 2024 audited financial results, prompting analysts to revisit their estimates.
Here’s a breakdown of the bank’s performance and future prospects:
Key Highlights
– Funded Income Growth: A projected 24.9% year-over-year increase in funded income is expected to drive the bank’s performance.
– Non-Funded Income: An 8.4% year-over-year decline in non-funded income is anticipated due to a less volatile naira, resulting in lower FX-related trading gains.
– Net Fees and Commission Income: A 57.2% year-over-year growth in net fees and commission income is expected, driven by the bank’s digital banking transactions and agency banking business.
– Profitability: A 16.6% year-over-year increase in profitability is forecasted, with an EPS of ₦29.34.
Core Income Drivers
The bank’s core income is expected to be driven by:
– Credit Creation: A 25.0% year-over-year increase in credit creation
– Investments in Securities: A 33.7% year-over-year growth in investments in securities
Liquidity Position
Zenith Bank’s liquidity ratio rose significantly to 83.0% in 2024, reinforcing its position as one of the most liquid banks in the industry. The bank’s loan-to-deposit ratio (LDR) also met the minimum requirement of 50.0%, with an LDR of 50.1%.
Valuation
The analysts’ year-end target price for Zenith Bank is ₦74.17 per share, derived from a blend of valuation methodologies. The bank is trading on a 2025E P/E of 2.8x and P/B of 0.6x.
Outlook
Based on the analysis, the recommendation is to “BUY” Zenith Bank shares, with a forecasted dividend yield of 14.2% and a potential for long-term growth.
