Business
ZENITH Bank Plc has firmly established itself as a powerhouse in the Nigerian banking industry, consistently delivering exceptional financial performance.
The bank’s 2023 business year stands as a testament to its robust growth trajectory, with an earnings per share, EPS, of N21.55, translating to an impressive earnings yield of around 60%. This positions Zenith Bank as an unparalleled value investment in the Nigerian financial sector, offering not just industry-leading dividends but significant long-term value creation for investors.
In 2023, Zenith Bank achieved remarkable milestones, leading the banking sector with a pre-tax profit of N796 billion and a profit after tax of N677 billion. These figures were driven by aggressive business expansion and a strong brand presence across domestic and international markets. The bank’s gross earnings more than doubled, rising from N946 billion in 2022 to an extraordinary N2.13 trillion in 2023, making Zenith one of only three Nigerian banks to surpass the N2 trillion mark in gross earnings.
The bank’s first-quarter results for 2024 further underscore its growth potential. Gross earnings surged by an astonishing 189% year-on-year, reaching N781 billion. This explosive growth was mirrored in the bank’s profitability, with profit before tax tripling to N320 billion and net profit increasing by 291% to N258 billion. Consequently, EPS in the first quarter alone soared from N2.10 to N8.22, indicating that Zenith Bank is on track to surpass its 2023 performance.
Amidst this stellar performance, Zenith Bank has embarked on a strategic capital-raising initiative, offering a hybrid rights issue and public offer at attractive price points. The rights issue, priced at N36 per share, and the public offer, at N36.50 per share, represent a significant opportunity for both existing shareholders and new investors to gain exposure to one of Nigeria’s most profitable and well-managed banks. The recent trading history of Zenith Bank’s shares, which have reached as high as N47.35 per share, suggests that the ongoing offers include a built-in potential gain of around 32%, making this an enticing proposition for investors.
The bank’s current price-to-earnings (P/E) ratio of 1.30x, significantly lower than the industry average of 2.2x, indicates that the stock may be undervalued. Furthermore, its price-to-book (P/B) ratio of 0.4 and price-to-sales (P/S) ratio of 0.44 highlight a considerable discount relative to its intrinsic value, reinforcing the potential for capital appreciation.
Zenith Bank’s ongoing capital raise, aimed at meeting the Central Bank of Nigeria’s new minimum capital requirement of N500 billion, is a crucial step in ensuring the bank’s continued leadership in the industry. The additional capital will not only meet regulatory demands but also support the bank’s expanding operations and investments in information technology infrastructure.
Under the leadership of Group Managing Director/CEO Adaora Umeoji, Zenith Bank is poised to leverage this capital infusion to enhance its technological capabilities, further solidifying its position as Nigeria’s leading bank. Investors seeking stability and growth should consider participating in Zenith Bank’s hybrid rights and public offer, as it presents a rare opportunity to invest in a financial institution with a proven track record of delivering exceptional returns.
A.I
Aug. 12, 2024
Tags: Zenith Bank
