Zenith Bank 2021Q3: Improved Valuation, Amid Income, Loan-Deposit Drop

Rating: Buy
Current Market Price: N24.50
Year High: N27.50
Year Low: N19.50
Fair Value: N40.05
Equity Analyst:  Tunde Segun Jeariogbe


  • This report reviewed the recently published nine-month-financial performance indices of Zenith Bank Plc ended 30th September 2021, compared same with a similar result in 2020 to establish growth.
  • In our attempt to match valuation with economic growth expectations, we have mildly re-valued Zenith Bank share price up from our previous valuation, this, in our opinion, is conservative enough and represents the true state of the nation’s economy side by side growth expectations in the bank’s performance indices.
  • See below for further analysis:
Sources: NGX, Company reports, Investdata Research

Company Figures

  • Gross Earnings for the period was N518.67 billion, representing a 1.91% improvement over the N508.97 billion achieved in the corresponding period of 2020.
  • Interest Income inched south by 3.13% from the previously reported N318.82 billion to N308.84 billion.
  • On the other hand, Interest Expense rose 20.87% below that of the comparable period at N74.09 billion, versus N93.64 billion in the corresponding period.
  • Net Interest Income was estimated at N234.74 billion, 4.25% above the N225.17 billion achieved at the end of the first nine months of 2021.
  • Operating Expenses built up by 12.61% to N197.26 billion, against N175.16 billion in 2020.
  • Profit before Tax at N179.81 billion recorded a 1.43% improvement over the 2020 nine months estimate.
  • Having made allowance for Tax Expenses, the Profit reported for the period stood above the corresponding quarter’s profit by a marginal 0.80% at N160.59 billion, from N159.31 billion in the corresponding period.
  • Nevertheless, Total Comprehensive Income dropped by 9.18%, against comparable period to N163.08 billion, versus N180.36 billion in the corresponding nine-month.  
Sources: NGX, Company reports, Investdata Research
  • Total Assets grew by 9.76% over the 2020 nine months asset valuation to N8.75 trillion, up from the N7.97 trillion recorded at the end of December 2020.
  • Total Liabilities also grew by 9.02% to N7.56 trillion from N6.93 trillion.
  • Net Assets is currently valued at N1.18 trillion, the same as 14.76% above the previous estimate of N1.03 trillion in the comparable quarter.
  • Retained Earnings improved by 21.49% from the previously reported N459.31 billion to N558.04 billion.
  • Total Deposits equally improved to N6.04 trillion, a 15.62% growth over the N5.22 trillion achieved at the end of 2020.
  • Total Loans and Advances for the period improved by a marginal 2.14% to N3.59 trillion versus N3.52 trillion.

Financial Strength/Solvency Ratios

  • The Debt Ratio was stable through the two compared periods, down from 87.03% to 86.44%, signifying a controlled assets ratio through the period.
  • Total Debt used through the period will replicate Equity 6.37 times, as against the 6.71 times replicate estimated similar quarter.
  • Similarly, the Equity Ratio grew by a marginal 4.56% to 13.56%, against the previously estimated 12.97% in the corresponding quarter.
  • We have currently estimated a Beta value above the market Beta for Zenith Bank Plc shares. Note that at 1.10 Beta value, it’s only slightly below the industry average of 1.11.
Sources: NGX, Company reports, Investdata Research

Profitability Ratios

  • Pre-Tax Margin stood at 34.67%, a marginal drop of 0.47% from the last estimate of 34.83% at the end of 2020 third quarter.
  • Interest Expense for the period is the same as 10.69% of the Estimated Gross Earnings figure; a reduced position against the previously estimated 18.40%.
  • Return Achieved on Average Equity used through the period was estimated at 13.53% this is below the 15.40% return achieved in 2020.
  • See below table for detailed profitability ratios and comparison:
Sources: NGX, Company reports, Investdata Research

Efficiency Ratios

  • Operating Expenses is estimated at 38.03% of the Gross Earnings Value for the period, this is a growth from the 10.51% estimated from 2020 financial statistics.
  • Similarly, Gross Earnings was estimated at 5.93% of Total Assets, this is a 7.16% drop in efficiency when compared to estimate from the corresponding period.
  • Total Loan to Deposit Ratio achieved at the end of the quarter stood at 59.55%, down from the 67.41% achieved in the corresponding quarter
Sources: NGX, Company reports, Investdata Research

Investment/Valuation Ratios

  • Profit recorded per unit of Zenith Bank at the end of the quarter is estimated at N5.12 as against the previously estimated N5.07 each.
  • Total Comprehensive Income per unit shares is down to N5.22, versus N5.74 in the comparable period.
  • Our Price to Earnings Ratio adjusted for nine months stood at 1.63x from 1.71x in 2020.
  • The said earnings per share is the same as 20.42% of the current market price of Zenith Bank Plc shares on the Exchange when the result was released; this is a better yield when compared to the previous third-quarter estimate.
  • The current Book Value of Zenith Bank is N37.81, a 14.76% improvement from the N32.94 estimated last year
  • Confirming a seemingly under-priced position is the Price to Book Value ratio that stood clearly below unity
Sources: NGX, Company reports, Investdata Research


As noted in our introduction above, we slightly adjusted our fair value for each unit of Zenith Bank Plc’s shares to N40.05, considering the difference between the current market price of the equity on the Exchange and our achieved fair value. We have, therefore, rated it a Buy.