Zenith Bank Rated Buy as Loan Growth and Tech Upgrade Drive 2026 Outlook
CardinalStone’s buy rating on Zenith Bank isn’t a bet on sentiment, it’s a bet on a balance sheet that’s finally switching gears. The analysts see the stock climbing 17.7% to ₦151.80 by FY2026, from ₦129 today, because the drag that made FY2025 look weak is already clearing.
The headline issue in 2025 was forbearance. About ₦1.2trn in forbearance-related write-offs flattened loan growth to 0.6% and made the numbers look softer than the underlying business. Strip that out and gross loans still expanded 11.9% to ₦11.1trn. More importantly, the trend has flipped. In the last two quarters alone, Zenith reallocated roughly ₦2.0trn from treasury bills and securities into loans across manufacturing, commerce, and mining. Management is now guiding 20% loan growth for 2026. That shift matters because loans reprice faster and carry higher yields than government securities, especially in a high-rate environment.
The earnings math is straightforward: faster loan growth plus lower funding costs equals margin expansion. CardinalStone projects net interest margin rising to 11.7% in 2026. The digital side reinforces it. The ₦56.9bn core banking upgrade funded from the 2024 hybrid offer went live in Q4 2024, and the payoff is already visible. Net fees jumped 41.1% in 2025 and 44.6% in Q1 2026, powered by mobile and digital channels. When interest income and non-interest income both move together, earnings get more stable and dividends get credible. The firm expects FY2026 dividend to rise to ₦14.27 from ₦10.00 in 2025.
The base is solid. FY2025 post-tax profit hit ₦1.04trn, up from ₦1.03trn, on interest income of ₦3.6trn. Fees and commissions added ₦291.8bn, up 41%, while FX revaluation contributed ₦176.2bn to other income. Q1 2026 suggests the momentum is holding, with pre-tax profit of ₦360.9bn, up 2.9% year-on-year, and post-tax profit of ₦314.01bn.
For investors, the story is less about a cheap headline P/E and more about a business exiting a write-off cycle, redeploying liquidity into higher-yielding assets, and monetizing a digital upgrade. The risk is execution: sustaining loan quality while growing 20% and managing funding costs if rates shift. But if CardinalStone’s thesis holds, Zenith is moving from defense to offense, and the market is already noticing, the stock has returned over 108% year-to-date as of May 11, 2026.
Comparing Zenith’s outlook to GTCO and Access Bank
Net Interest Margin: Zenith is projected to hit 11.7% NIM in 2026 on the back of a 20% loan growth target and a shift from treasury bills into higher-yielding loans in manufacturing, commerce, and mining. That’s a step up from 2025 and reflects both asset mix and a lower funding cost environment. GTCO and Access haven’t released FY2026 guidance yet, but their 2025 numbers tell the story. GTCO closed 2025 with NIM around 10.2% after strong asset repricing, while Access was closer to 9.8% due to a larger, cheaper deposit base but heavier cost of funds in its African subsidiaries. If Zenith executes the loan pivot cleanly, it likely edges ahead on NIM because its domestic loan book reprices faster and it has less drag from regional subsidiaries. The risk is asset quality if that 20% growth pushes into riskier sectors.
Dividend yield: CardinalStone projects Zenith’s FY2026 dividend at ₦14.27, up from ₦10.00 in 2025. At ₦129, that’s an 11.1% yield. GTCO paid ₦7.00 total for FY2025, which at a recent ₦70 share price gives 10% yield, but its payout is constrained by heavier capital retention for its HoldCo expansion. Access paid ₦3.00 for FY2025. At ₦22, that’s 13.6% yield on paper, but the payout ratio is lower and the bank has been prioritizing capital conservation post-recap. So on yield, Access looks higher nominally, but Zenith’s yield is backed by a higher absolute payout and a cleaner capital position after its 2024 hybrid offer.
What this means: Zenith is trading on a recovery story, margin expansion plus dividend growth, while GTCO trades on earnings stability and regional diversification, and Access trades on scale and yield. If Zenith’s loan book quality holds, it offers the best mix of growth and income among the three for 2026. If asset quality slips or funding costs rise again, GTCO’s more diversified earnings base gives it an edge.
