While Zenith had decent 9M 2024 gross earnings and profit, stage 2 impairment provisions are a concern.

About the bank 

Zenith Bank Plc was incorporated in Nigeria under the Companies and Allied Matters Act as a private limited liability company on May 30, 1990. It was granted a banking licence in June 1990,  and commenced business on June 16, 1990. 

The Bank was converted into a Public Limited Liability Company on May 20, 2004 and listed on October 21, 2004 on the Nigerian Stock Exchange.

The principal activity of the Bank is the provision of banking and other financial services to corporate and individual customers.

It has six subsidiary companies namely: Zenith Bank (Ghana) Limited, Zenith Pensions Custodian Limited, Zenith Bank (UK) Limited, Zenith Bank (Sierra Leone) Limited, Zenith Bank (Gambia) Limited and Zenith Nominees Limited.

Gross earnings 

Gross earnings is the total amount of money a firm has made. Gross earnings for Zenith (the group) was up 118% year on year. It moved from N1.3 trillion in 2023 to N2.8 trillion in 2024. 

Profit after tax 

Profit after tax grew by 91% year on year. It moved from N434 billion in 2023 to N827 billion in 2024. That places it just behind GTCO, which had a profit after tax of N1.08 trillion 

Earnings per share 

Earnings per share moved from N13.82 in 9M 2023 to N26.34 in 9M 2024. FY 2023 earnings per share was N21.55. 

Q3 2024 earnings per share was N7.93. If the firm maintains that performance, it could end up with an earnings per share of at least N30.

Impairment provisions are a concern. 

As at 9M 2024, Zenith Bank had 

• Stage 1 provisions of N66.8 billion
• Stage 2 provision of N323 billion
• Stage 3 provision of N542 billion

Stage 2 provisions are particularly heavy compared to the other FUGAZ banks. Those can only move in one of two directions. Either back to stage 1, or down to stage 3. 

Here is an excel sheet containing key numbers for the FUGAZ banks (FBN Holdings, UBA, GTCO, Access and Zenith).

UBA figures are for HY 2024 as a breakdown wasn’t included in their 9M numbers. I have sent an email to their investor relations, and will update the sheet if i get the numbers. 

Likely FY 24 final dividend 

For the 2023 financial year, Zenith Bank paid a total of N4 as dividend from the N21.55 it earned during in the year.

An interim dividend of N0.50 and a final dividend of N3.5. 

An interim dividend is one paid before the end of a company’s financial year (which runs for 12 months). A final dividend is one paid after a company’s results have been audited. 

That amounts to 18.5% of total earnings earned during that financial year.

An interim dividend of N1 was paid for HY 2024. That’s 100% higher than the 50 kobo it paid for HY 2023. (HY means half year. Half year for this firm runs from January to June). 

If the firm maintains the same payout ratio, it means it could pay a final dividend of between N4 to N5 a share. 

Price movement

Year to date, the stock is up 4.23%, underperforming the NGX All Share Index which is up over 30%. The index measures the average performance of stocks on the exchange.