A fresh analysis from Renaissance Capital Africa (Rencap) has positioned Zenith Bank Plc as the foremost investment choice in Nigeria's banking sector, surpassing competitors like Guaranty Trust Holding Company (GTCO) and Access Holdings Plc (ACCESSCORP).
Published on January 18, 2026, the research underscores Zenith Bank's resilience and identifies significant potential for growth in its market valuation and shareholder returns.
Zenith Bank Emerges as Top Conviction Pick
Following a detailed review of the Nigerian banking landscape, Rencap's analysts expressed renewed confidence in Zenith Bank. Their conviction stems from the bank's robust balance sheet, the quality of its earnings, and its compelling long-term value proposition.
The report highlights that despite the strong performance of the NGX Banking Index, Zenith Bank's current market price does not fully reflect its improving fundamental strengths. This discrepancy, according to Rencap, leaves ample room for the stock's value to appreciate further.
The research firm explicitly ranked its top picks in order of conviction as: ZENITHBANK, GTCO, and ACCESSCORP.
Balance Sheet Clean-Up Fuels Positive Outlook
A central factor driving this optimistic assessment is the successful resolution of regulatory forbearance exposures, which has led to a significant clean-up of Zenith Bank's balance sheet. Through loan write-offs and enhanced asset quality, the bank has fortified its financial standing.
This stronger foundation is expected to support sustainable growth and allow Zenith Bank to capitalize on ongoing policy reforms within Nigeria's financial system.
The report also addressed recent sector profitability, noting that past earnings were buoyed by substantial foreign exchange gains. However, these were largely unrealized and, following regulatory guidelines, could not be used to increase cash dividend payments to shareholders. This led to constrained dividend payouts between 2023 and 2024, even amid record headline profits.
Upgraded Valuation and Dividend Prospects
In a major move, Renaissance Capital Africa Research upgraded its rating on Zenith Bank from HOLD to BUY. Crucially, the firm increased its target price for the bank's shares by a substantial 96%.
This revision is based on improved valuation assumptions, including adjustments to the risk-free rate and refined beta estimates. Although near-term earnings growth may face challenges, Rencap maintains that the bank's valuation remains highly attractive.
Historically, Zenith Bank has shown a strong commitment to rewarding its shareholders, boasting one of the highest dividend payout ratios in the sector in 2021 and 2022. Analysts now anticipate a return to higher and more sustainable dividend payouts as cash profits improve and balance sheet pressures diminish.
This expected recovery in dividend capacity is seen as a key catalyst that will drive the bank's market valuation higher, especially as investors increasingly value income stability.
Rencap concludes that the combination of a cleaner balance sheet, stronger cash earnings, and improved dividend prospects positions Zenith Bank for superior long-term value creation. The bank is seen as transitioning from a phase of balance sheet repair to one of renewed growth and enhanced shareholder value.
This endorsement aligns with Zenith Bank's recent achievement of being ranked as Nigeria's number one bank by tier-1 capital for the 16th consecutive year by The Banker magazine.
