ZENITH BANK PLC – Strategic East African Expansion as Paramount Bank Acquisition Anchors Pan-African Growth Agenda

Executive Summary

Zenith Bank Plc has taken a landmark step in its pan-African expansion strategy with plans to acquire Paramount Bank Kenya, marking its formal entry into East Africa. The deal—currently awaiting regulatory approval from the Central Bank of Nigeria (CBN) and the Central Bank of Kenya (CBK)—is expected to be finalized by January 2026, positioning Zenith as the fourth Nigerian bank to operate in Kenya.

This acquisition comes at a pivotal time for Kenya’s banking industry, which is entering a phase of rapid consolidation following CBK’s revised prudential guidelines that will raise the core capital requirement from KSh1 billion to KSh10 billion by 2029. Paramount Bank, with core capital of KSh2.67 billion, is among mid-tier lenders facing pressure to recapitalize. Zenith’s entry provides a timely and strategic opportunity for value creation, operational restructuring, and long-term market penetration.

The acquisition aligns with Zenith’s broader African growth blueprint supported by the successful ₦614.65 billion hybrid capital raise, which strengthened its capital base by 160%. The bank is simultaneously expanding into Côte d’Ivoire and eight other Francophone African markets—an expansion facilitated by the recent opening of its Paris branch and ongoing licence processing in Abidjan. The move underscores Zenith’s commitment to scale, diversification, and cross-border competitiveness as it follows customer flows into high-growth African regions.

Segmental and Operational Highlights

1. East Africa Expansion – Paramount Bank Acquisition

• Zenith to acquire Paramount Bank (Kenya) pending regulatory approval.
• Paramount operates eight branches, with core capital of KSh2.67bn, below the new CBK requirement of KSh10bn.
• Zenith’s acquisition offers:
  • Recapitalization opportunity
  • Improved governance
  • Enhanced digital capabilities
  • Better risk management and funding structure

2. Francophone Africa Expansion

• Zenith currently processing banking license in Côte d’Ivoire.
• Paris branch opened as strategic gateway to French-speaking West Africa.
• Côte d’Ivoire license will enable passporting rights into eight Francophone markets.

3. Customer-Led Regional Expansion

Zenith’s expansion follows its philosophy of trailing corporate clients to high-growth African corridors including:

• East Africa
• UEMOA region
• Central Africa

Strategic Initiatives Driving Future Growth

1. Entry into East Africa via Kenya

The acquisition provides Zenith with:

• A strategic foothold in a $113bn economy
• Access to the region’s most sophisticated mobile-money ecosystem
• Entry into the EA regional financial corridor (Kenya–Uganda–Tanzania–Rwanda)
• A platform to scale corporate banking, trade finance, and payments

2. Positioning for Regulatory-Driven Consolidation

Kenya’s raised capital requirement will spur M&A activity.

Zenith enters at the perfect time to:

• Consolidate market share
• Acquire undervalued assets
• Integrate operations quickly due to strong capital base

3. Strengthening Pan-African Network

Zenith is building an interconnected African franchise that supports:

• Corporate clients expanding regionally
• Intra-Africa trade finance flows
• Cross-border payment channels
• FX liquidity diversification

4. Capital Raise Deployment

Its ₦614.65bn capital raise enables:

• Acquisitions (Kenya, Francophone Africa)
• Digital expansion
• Balance sheet growth
• Regulatory resilience

5. Leveraging Côte d’Ivoire as a Francophone Hub

Côte d’Ivoire will grant passporting rights to:

• Senegal
• Mali
• Benin
• Burkina Faso
• Niger
• Togo
• Guinea-Bissau
• Côte d’Ivoire

This supports scale, revenue diversification, and low-cost regional expansion.

Strengths

• Strong capital buffer enabling acquisitions
• Robust earnings from interest income
• Efficient and conservative risk management track record
• Expanding African footprint aligned with customer flows
• Strategic timing of Kenya market entry

Weaknesses

• Decline in non-interest income due to lower trading gains
• FX volatility may weigh on short-term non-core revenues
• Integration risks associated with new acquisitions

Outlook

Zenith is well-positioned for multi-market growth driven by:

• Paramount Bank acquisition (East Africa)
• Expansion into Côte d’Ivoire and Francophone Africa
• Strengthened capital position to pursue regional dominance
• Sustained earnings growth from high-yield assets

The bank’s focus on cross-border expansion is expected to enhance long-term competitiveness, support earnings diversification, and deliver improved shareholder value.

Financial Highlights (9M 2025 vs 9M 2024)

₦’ trillion       9M 2025       9M 2024       % Δ YoY

Gross Earnings       3.4     2.9     +16%

Interest Income     2.7     1.9     +41%

Interest Expense    0.814  0.667  +22%

Net Interest Margin (NIM)          12%    10%    +2pp

Non-Interest Income       0.535  0.863  -38%

Earnings and Operational Performance

Zenith Bank delivered robust performance in 9M 2025, driven by:

• Strong interest income growth (+41%) supported by a larger asset base and higher yields in a tightening monetary environment.
• Healthy NIM of 12%, reflecting improved asset pricing despite a 22% rise in interest expense.
• Decline in non-interest income (-38%), driven mainly by lower trading gains amid volatile FX and fixed-income market conditions.
• Resilient funding base, enabling the bank to sustain earnings momentum despite sectoral headwinds.

The bank’s strong profitability and liquidity position provide capacity to fund cross-border acquisitions such as Paramount Bank.

Profitability Analysis

• Net Interest Margin: Improved to 12% (vs 10% YoY).
• Interest Income Contribution: 79% of gross earnings, underscoring Zenith’s asset efficiency.
• Cost of Funds: Moderately higher due to monetary tightening but offset by strong earning assets.

Zenith’s performance remains anchored by its low-risk culture, efficient balance sheet, and strong capital buffers.

Balance Sheet & Capital Position

The successful ₦614.65bn hybrid capital raise has fortified Zenith’s capacity to:

• Undertake acquisitions
• Expand organically across African regions
• Meet rising regulatory capital requirements
• Absorb market volatility
• Scale foreign subsidiaries effectively

The capital boost has strengthened Zenith’s Pan-African ambition and provided strategic liquidity for market entry into Kenya and Francophone Africa.

Analyst View

“Zenith Bank’s acquisition of Paramount Bank marks a significant step in its evolution into a truly pan-African financial powerhouse. Backed by a fortified capital base and strong earnings momentum, the bank is strategically positioned to deepen its African presence, diversify revenue streams, and capitalize on regulatory-driven consolidation across the continent.”