Zenith Bank Plc FY ’13 results

Zenith Bank Plc FY ’13 results


Current rating: Buy

Performance: Results slightly ahead of expectation

  • EPS was down 6% y/y from NGN 3.19 in FY12 to NGN 3.01 in FY13.
  • Proposed dividend implies a DPR of 58%, up from 50% in FY12
  • The gradual increase in the DPR is very encouraging given that Zenith is currently sitting on excess capital.
  • The 17% y/y increase in total operating income was offset by a 23% y/y increase in operating expenses
  • PBT was up 8% y/y to NGN 110.6bn. On a q/q basis (3Q13 vs 4Q13) PBT was up 9%.
  • The bank realized a PAT of NGN 95.7bn, ahead of our estimate of NGN 93.2bn.
  •  Loans and deposits were up 26% and 18% y/y respectively.
  • FY13 RoE came in at 20%


  • FY14 will likely be a more challenging year for Zenith and Nigerian Banks
  • We expect earnings pressure to came from
    • Lower earning assets ratios ( EAR), underpinned by an  upward revision in the CRR for public sector funds from 50% to 75%
    • Decline in COT charge from 30 bps to 20bps
    • Additional AMCON  expenses levied on 30% of total off balance sheet exposure.
  • Performance may however be supported by strong growth in volumes
  • The sharp growth in deposits and loans in 4Q13 is very encouraging


  • We place our BUY recommendation under review and will update our rating after knowing  management’s intention  in the coming weeks
  • Among other things, there is a  need for more clarity on the management succession plan given the anticipated departure of the incumbent CEO this year.
  • Currently, Zenith is trading on FY13 PE of 7.1x, FY13 PBV of 1.4x, and FY13 dividend yield of 8%.

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