Following an impressive 9M'24 outing (PBT: +98.5% YoY to N1.0 trillion), we now expect ZENITHBANK to close FY'24 on a strong note, with a PAT of N1.1 trillion (+63.5% YoY) and an EPS of N35.25. This growth is expected to be primarily driven by a triple-digit increase in net interest income (NII), alongside strong non-interest revenue (NIR) bolstered by solid trading gains as the bank continues to maintain a resilient trading portfolio. Farther out, we expect the bank's performance to be shaped by the interplay of interest rate dynamics and the bank's readiness to grow risk assets in FY'25. Strong trading gains could also act as a secondary support to earnings in the financial year.
In this report, we made assumptions in our model to accommodate capital inflows of N289.38 billion (from ZENITHBANK's rights issue and public offer). The proceeds are expected to shore up the bank's capital for growing its lending portfolio, investing in technology, and facilitating market expansion. Given our expectations, whilst accounting for the capital raise, we arrive at a new 12-month Target Price (TP) of N70.41 (vs. N65.47 previously).
