Company Analysis

Zenith Bank Plc 2021Q1: Higher Fair Value, Needs Upward LDR Reworking, Income Growth

Rating: Buy
Current Market Price: N22.20
Year High: N27.50
Year Low: N19.50
Fair Value: N39.74
Equity Analyst:  Tunde Segun Jeariogbe


  • This report reviewed the first quarter financial performance indices of Zenith Bank Plc for the period ended 31st March, 2021, compare same with the similar numbers of 2020 to establish growth.
  • The first quarter numbers show a mild growth, when compared to those of the corresponding quarter in 2020.
  • In our attempt to match valuation with economic growth expectations, we have mildly re-valued Zenith Bank’s share price up from our previous valuation. This, in our opinion is conservative enough and reveals the true reality of the nation’s economy.
  • See below for further analysis:
Sources: Company Report, NGX, Investdata Research

Company Figures

  • Gross Earnings for the quarter was N157.30 billion, same as 5.70% below the N166.81 billion achieved at the end of 2020 first quarter.
  • Interest Income inched south by 11.51%, from the previously reported N114.33 billion to N101.17 billion.
  • On the other hand, Interest Expense stood 45.15% below the comparable period at N18.00 billion, versus N32.89 billion in the previous year’s first quarter.
  • Net Interest Income was estimated at N83.16 billion, 2.05% above the N81.50 billion achieved at the end of the first three months of 2020.
  • Operating Expenses marginally built up by 7.65% to N62.80 billion, as against N58.34 billion in 2020 first quarter.
  • Profit before Tax was estimated at N61.02 billion, this is only a 3.80% improvement over the 2020 first-quarter estimate.
  • Having adjusted for tax expense for the quarter, the management of Zenith Bank reported a Profit after Tax of N53.06 billion, which is 5.02% above the N50.52 billion reported in the corresponding period.
  • Total Assets grew by 21.81% over the 2020 first quarter valuation, just as total asset rose to N8.68 trillion from N7.12 trillion in the period.
  • Total Liabilities also grew by 22.40% to N7.59 trillion, as against N6.20 trillion in the similar period of 2020.
  • Net Assets is currently valued at N1.09 trillion same as 14.57% above the previous estimate of N952.94 billion.
  • Retained Earnings improved by 30.69% from the previous estimate of N374.09 billion to N488.84 billion.
  • Total Deposits equally appreciated to N5.67 trillion, a 27.16% growth from N4.46 trillion achieved at the end of 2020 first quarter business session.
  • Total Loan and Advances for the period dropped marginally by 5.21% to N3.40 trillion, versus N3.58 trillion in the comparable period in 2020.

Financial Strength/Solvency Ratios

  • The debt Ratio was stable through the two compared periods, inching from 87.01% to 87.43%, signifying a controlled assets ratio through the period.
  • Total Debt to Equity was estimated at 6.95x, same as 6.83x above the 6.51% in the 2020 first quarter, implying that Total Debt (Deposit inclusive) can replicate equity 6.95 times.
  • Similarly, Equity Ratio was stable within the two periods compared, at 12.57% from 13.37% in the corresponding quarter.
  • We have estimated a Beta value above the market Beta for Zenith Bank Plc shares. Take note that at 1.15 beta value, it is above the 1.11industry average.
Sources: Company Report, NGX, Investdata Research

Profitability Ratios

  • Pre-Tax Margin stood at 38.79% a growth of 10.07% from the last estimate of 35.24% at the end of 2020 first quarter.
  • Interest Expense for the period is same as 11.45% of the Estimated Gross Earnings figure; a reduced position when compared to the previously estimated 19.68%.
  • Returns Achieved on Average Equity used through the period was estimated at 4.86%, which is below the 5.30% return achieved in 2020.
  • See below table for detailed profitability ratios and comparison:
Sources: Company Report, NGX, Investdata Research

Efficiency Ratios

  • Operating Expenses is estimated at 39.92% of the Gross Earnings Value estimated for the period, an improvement from the 34.97% estimated from its 2020 financial statistics.
  • Similarly, Gross Earnings was estimated at 1.81% of Total Assets, which is a 22.59% 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 59.96% from the 80.42% achieved in 2020 first quarter.
Sources: Company Report, NGX, Investdata Research

Investment/Valuation Ratios

  • Profit on each unit of Zenith Bank at the end of the quarter was estimated at N1.69, as against the previously estimated N1.61
  • Total Comprehensive Income per unit is estimated at N1.88, versus N1.99 in the comparable period.
  • Price to Earnings Ratio adjusted for three months stood at 3.29x, as against 2.28x in 2020.
  • The said earnings per share is same as 7.60% of the current market price of Zenith Bank Plc shares on the exchange when the result was released; this is a lower yield when compared to the previous first quarter yield.
  • The current Book Value of Zenith Bank is N34.78, a 14.57% improvement from the N30.35 estimated last year.
  • Confirming a seemingly under-priced position is the Price to Book Value ratio that stood clearly below unity.
Sources: Company Report, NGX, Investdata Research


As noted in our intro above, we fairly adjusted our fair value for each unit of Zenith Bank Plc shares to N39.74 each. Considering the distance between the current market price of the equity on the exchange and our achieved fair value, we have rated it a Buy.

Five Year Financial History

Sources: Company Report, NGX, Investdata Research

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