Is it time to buy Zenith Bank shares?


Thursday, August 18, 2016 6.18 PM Taiwo Ologbon-ori

Technically, the shares of ZENITHBANK have been battling negative sentiments in recent weeks to post an 11.30% loss of its market value over the past 2weeks, with a corresponding steady decline in demand.

According to the observed volume pattern, this sell-down is mostly from short-term traders reducing their exposures accordingly, while the stock maintained a price range of N16.99 and N14.90kobo in the past 2weeks. The general sell-down on Big-CAPs by speculators could not be isolated from this pattern. Furthermore, the latest unimpressive earnings report of the bank played a role in the increased mixed sentiments towards the stock.

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The bank's earnings report came with contractions across the board, key performance indicators had shown. Both top-line and bottom-line figures contracted by -6.23% and -15.68% respectively, taking hits from weakness in Net interest income, non-interest income and operating efficiency. The 97.64% surge in impairment charges had been attributed to a couple of obvious factors i.e. low oil price, the devaluation of the Naira and exposure to state bailout funds etc.

However, the stock at N15.00kobo is still a good buy for mid-term and long term investors. The stock has a strong potential to still trade above N20.00. Despite all the weaknesses noted above, the fundamentals of the bank remain healthy and strong, i.e. strong earnings capacity and a healthy and liquid capital base- The bank maintains strong market share with a 16% contribution to sector turnover so far for half-year 2016- strongly above the average 8% contribution in the sub-sector.

The bank's NPL (Non Performing Loan) ratio at 2.3% is far below the 5% regulatory benchmark- it reflects an insignificant exposure level. This further indicates that the bank has strong risk & assets management strategies, which are important, considering the mounting macroeconomic challenges and tough operating environment faced.  Both liquid and capital adequacy ratios are above the regulatory threshold, these in all reflect healthy posture of the bank.

A conclusion from technical stand point, a price break below N14.44kobo may drive price lower to N12.30kobo as bearish sentiments may gain momentum anytime soon.


1.       Zenith Bank Plc Outperform Rating Maintained Shares Up c.7 vs a Loss of -c.5 for the ASI

2.      Zenith Bank Plc Earnings Update - More Prudence as Bank Adopts New Impairment Model

3.      ZENITHBANK Half-Year Earnings Presentation: The key takeaways

4.      Zenith Bank Plc Earnings Miss as Loan Loss Expense Pressures PAT

5.      Zenith Bank Plc Records Group Capital Adequacy Ratio of 19% in Q2'16

6.      Zenith Bank Reports Q2 2016 Results; Significant FX-Related OCI Gains Boosted PAT

7.      Zenith Bank Plc Records Group Capital Adequacy Ratio of 19% in Q2'16

8.      ZENITHBANK Declares N44.84bn PAT in Q2 16 Result Proposes 25k Interim Dividend SP N15.60k

9.      Zenith Bank Plc Seeks Extension to Submit Half Year Financial statements on August 31 2016 Public Companies such as Zenith Bank lead efforts to connect Africans to the Internet

10.   Alleged Funding Of Ekiti State Governorship Election - Zenith Bank Plc

11.    Zenith Bank Launches Eazybanking solution

12.   Zenith Bank and AFD Sign 100Million Power Sector Credit Facility

13.   ZENITHBANK Reassuring Q1 2016 results

14.   ZENITHBANK Non-Interest Income Slumps by 52% YoY as Operating Expenses Decreases by 3.2% in Q1 2016

15.   ZENITHBANK Declares N26.57bn PAT in Q1 2016 Result SP N11.20k

16.   Erin Energy Announces Agreement with Zenith Bank on Terms of Loan Facility

17.   ZENITHBANK Expect defensive qualities to be visible in 2016

18.   ZENITHBANK Q4 15 Conference Call Earnings Presentation The key takeaways

19.   ZENITHBANK Grows Interest Income by 11.1 as Loan Loss Expense Spikes by 135 QoQ in Q4 15

20.  ZENITHBANK’s Weaker than Expected Underlying 2015 Results Likely to Lead to Cuts in 2016 Consensus Estimates

21.   ZENITHBANK Proposes 155kobo per share Dividend in 2015 Audited Result,(SP:N12.83k)

22.  ZENITHBANK Appoints Prof. Ibidapo-Obe and Gabriel Upkeh as Independent Non-Executive Directors

23.  ZENITHBANK Healthy upside potential even after mixed Q3 – Proshare

24.  ZENITHBANK Impairment  Charges  Drops by 50% in Q3 2015

25.  ZENITHBANK Net Interest Income Grows by 12.6% in Q3’15

26.  ZENITHBANK Declares N83.09 bn PAT in Q3'15 result,(SP:N17.78k)

27.  Zenith Bank Q3 2015 returns slower growth (9% y/y) in funding income

28.  ZENITHBANK on Course to Consolidate Its Industry Leadership; Grows Earnings by 55%

29.  ZENITHBANK declares 25kobo Interim Dividend in Q2'15 result,(SP:N16.40k) 

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