A look into Zenith Bank audited results for H1 2025
On 18 September 2025, Zenith Bank audited results for H1 2025 results was released, reporting modest top-line growth as gross earnings rose 19.7% y/y to N2.45trn. Growth was driven primarily by funded income streams, with interest income benefiting from higher yields on investment securities, particularly Treasury Bills. As a result, asset yields expanded by 97bps to 16.2% (H1 2024: 15.2%), lifting interest income by 60.0% y/y to N1.84trn. Non-interest revenue, however, weakened by 31.8% y/y to N613.2bn, reflecting a mixed performance: fees and commissions increased 16.8% y/y to N128.1bn, other income rebounded strongly (+395.3% y/y), while trading revenues fell sharply by 41.2% y/y to N467.8bn.
For the rest of the year, we expect expansion in the bank’s loan portfolio to be the major driver of income given the current trajectory of yields in the market, this should support growth in interest income. Continued adoption of the bank’s digital platforms by customers is also projected to drive higher transaction volumes, bolstering fee-based income. However, trading gains are likely to moderate further amid the relative stability of the FX market. Overall, we forecast a c.1.0% y/y decline in gross earnings to N3.93trn for FY 2025 from N3.97trn in FY 2024.
Zenith fully exits positions on loans under forbearance
Despite some relief from a lower cost of funds (4.0% vs. 4.4% in H1 2024), interest expense rose 11.5% y/y to N484.5bn, reflecting a 1.7% year to date increase in interest-bearing liabilities. Net interest income nevertheless expanded strongly by 89.5% y/y to N1.35trn, driving a 382bps improvement in net interest margin to 11.9%.
Operating costs climbed 23.2% y/y to N581.4bn, largely due to higher regulatory costs i.e. AMCON Levy (+56.0% y/y), personnel expenses (+16.1% y/y), IT related expenses, and general higher costs across business operations, pushing the cost-to income ratio slightly higher at 29.5% (vs. 29.2% in H1 2024). Loan impairment provisions more than doubled to N760.8bn (H1 2024: N415.3bn) as the bank accelerated efforts to fully exit CBN forbearance positions. Consequently, cost of risk rose 469bps y/y to 14.3%. Despite a robust operating income number, elevated provisions weighed heavily on profitability: pre-tax profit declined 13.9% y/y to N625.6bn, while net profit fell 8.0% y/y to N531.8bn. EPS printed at N12.95, down from N14.07 in H1 2024. Return ratios also moderated, with ROAE down 1,715bps y/y to 24.8% and ROAA lower at 3.5%. Nonetheless, Zenith declared an interim dividend of N1.25/share, a 25.0% y/y increase from N1.00 in H1 2024, reaffirming its robust shareholder payout policy.
We continue to see underlying inflationary pressures reflected in operating costs, despite the moderation in headline inflation numbers. Accordingly, we expect some upward pressure on expenses, particularly from personnel costs and general operating expenses, while the AMCON levy will remain a significant cost burden through 2025. Impairment provisioning is projected to record only modest increases following the bank’s full exit from the CBN’s regulatory forbearance regime. Consequently, we forecast a c.4.0% y/y growth in profit after tax to N1.07trn for FY 2025.
Zenith Bank Balance sheet and asset quality position
On the balance sheet, total assets grew 3.5% year to date to N30.99trn, driven by a 31.4% increase in securities holdings and modest growth in interest-earning assets. Gross loans contracted by 7.0% to N10.22trn, likely due to Naira appreciation against the US Dollar in the FX market, while customer deposits rose 6.9% to N23.48trn, further strengthening funding. Asset quality metrics remain solid with NPL ratio improving to 3.1% (-183bps y/y) and coverage ratio at 229.4%, although the cost of risk weakened by 469bps to 14.3%. Furthermore, the CAR improved to 26.3% (+70bps y/y), while liquidity ratio slowed to 69.0% (-1,400bps); both well above the respective regulatory thresholds.
Zenith Bank Interim Dividend
Zenith Bank declared an interim dividend of N1.25 per share (H1 2024: N1.00), representing a dividend yield of 1.95% based on the closing price of N64.00 as of 19 September 2024.
Recommendation
We have revised our fair value estimate for Zenith Bank upward to N76.12 (previously N69.58), following adjustments to our blended valuation (FCFE, DDM, and Relative Valuation). This revision implies an upside potential of 18.9% from the stock’s closing price of N64.00 as of 19 September 2025, and we maintain our BUY rating. SOURCE: Coronation Asset Management
