In FY’23, ZENITHBANK demonstrated its capability as a strong pure-play bank with hardy earnings growth (+202.3%). Contrary to our earlier views, NII was at the centre stage of gross earnings expansion (+124.0%), displacing the strong contribution (c.55.0%) we saw from NIR in H1’23. We think this strong progression in core banking earnings will underscore its performance for FY’24. Hence, we reckon that margin protection and expansion will remain paramount in supporting overall performance. Despite expected contractions in trading and other income off the back of tamer volatility in FX, we project FY’24 PAT at N608.7 billion, which is higher than management expectation of N553.0 billion.
ZENITHBANK has made a strategic decision to transition into a HoldCo entity this year, a move that underscores its commitment to adapt to the evolving financial landscape and enhance its operational efficiency.
Core banking revenue, paramount for topline growth
In FY’24, we believe earnings momentum for ZENITHBANK will primarily be dictated by the progression of the bank’s core banking business. Revenue from this source is expected to offset declines in FX-related incomes and, subsequently, non-interest revenue (NIR). We believe that non-interest revenue will print at N736.1 billion compared to 918.9 billion in FY’23.
Emergence of the HoldCo entity and strategic outlook.
ZENITHBANK is embarking on a significant strategic evolution as it looks to transition into a HoldCo entity in H1'24. This transformation, scheduled to take place within a month of the extraordinary general meeting held on April 26, 2024, will mark the transition of all tier-1 banks into a HoldCo structure. With the necessary regulatory approvals secured, ZENITHBANK is preparing to introduce a fintech vertical and payment services platform, Zenpay, before the close of FY'24. This strategic move is aimed at capitalising on the growing opportunities in the Nigerian payment space, expanding its presence across West Africa and beyond, and strengthening its retail and digital franchise.
