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These days, there isn’t a lot you can do with N17, except of course you want to buy Zenith Bank shares. At N17.15 the stock is off its one-year low of N16 and still at one of its lowest share prices since 2017. How low can it go or how high can it climb to? That’s anyone’s guess at the moment, and we do not suggest you bother making one.  

Zenith Bank released its 2019 9 Months results with pre-tax profits rising 5% to N176.1 billion. The bank’s result is by no means a mirage or guesswork. Take deposits, for exampleit has increased by N261.5 billion this year aloneclosing at N3.9 trillion at the end of the third quarter. Surely, it is on track to cross the N4 trillion mark, a record by any standards. Zenith Bank is not just racking up deposits, it is also piling on loans adding N241.1 billion in new loans in the third quarter of the year.  

Loans and advances have now crossed the N2 trillion mark after hovering around N1.8 trillion since 2018though it is still far from its record N2.3 trillion in loans and advances attained in the first quarter of 2017. Mobilizing these deposits has also gotten cheaper. It now costthe bank just 2.95% to drive deposits, helping it to some nice profits when it lends for 16% or above.  

Zenith Bank is also getting more efficient at running its business. The bank posted a cost to income ratio of 50.1% at the end of the quarter, improving from 51.2% in Q3 2018. It’s still far from its main rival GT Bank (37%) but rather impressive when you consider its sheer size. Even on the risk side, the bank also shows up positively. Non-performing loans (NPL) ratio declined from 4.98% in December 2018 to 4.95% in the current period. Liquidity and capital adequacy ratios are at 63.8% and 23.8% respectively, both above regulatory thresholds. So, what are investors seeing without the naked eyes? 

At the current price of N17.15 Zenith Bank trades at just 2.69 its earnings, an incredibly cheap proposition when you consider the fundamentals we painstakingly enumerated above. Heck, its current price is about 15% in dividend yields and investors will smile home with a return on equity (earnings yield) of 37.2%, based on current share price and trailing 4 quarters EPS of N6.38. Now you wonder why this stock continues to under-perform. 


This year alone the stock is down 25%, worse than the All-Share index of negative return of 16%. In fact, there is every chance that its share price could fall further if the economic outlook remains gloomy. Three years ago, Zenith fell to N9.40 as investors dumped Nigerian stocks at the peak of the recession and the exchange rate crisis. It climbed back to N33 two years later before commencing its recent decline. The bank is one of the most liquid stocks out there, so investors buy and sell in droves, negatively or positively impacting the share price. If market sentiments are high, Zenith Bank stock does well and if they are low, it fares worse.  

You don’t have to read between the lines to note that this is a stock that is cheap and cheerfulExcept If you are one to follow the crowd, then this stock is perhaps not for you. But should you be looking for an example of a cheap stock with strong fundamentals, then perhaps this is one. It just requires courage and faith in the return of the bulls to stay the course.  


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  1. Thank you for brilliant analysis. But what is main reason for the sharp fall over time considering that industry ratio isn’t this bad.

    Also help with analysis on Access Bank

  2. Good day,

    This is quite a review.

    Kindly do similar thorough review on the other FUGAZ stocks.

    That will be much appreciated.

    Thank you.


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