Zenith Bank Plc has completed its acquisition of Paramount Bank Kenya Limited, securing regulatory clearance from authorities in both Kenya and Nigeria.
The deal, which gave Zenith Bank full ownership of Paramount Bank’s entire issued share capital, marks the Nigerian lender’s formal entry into the East African market. Zenith joins Access Bank, United Bank for Africa and Guaranty Trust Bank as the fourth Nigerian commercial bank to establish a presence in Kenya.
In a statement, Zenith Bank said the acquisition reinforces its standing as a leading financial institution across Sub-Saharan Africa and reflects its strategy of following its corporate clients into new markets.
A Bank Built Over Three Decades
Paramount Bank traces its roots to 1993, when it launched as a non-banking financial institution under the name Combined Finance Ltd. It obtained a commercial banking licence in 1995, converting to full banking operations under the Paramount Bank name. In 2000, it merged with Universal Bank Ltd to form Paramount Universal Bank, before reverting to its current name. The lender now runs nine branches across Kenya.
Steady Earnings, a Rising Bad Loan Problem
In the nine months to September 2025, Paramount Bank recorded profit after tax of KES 234.8 million, a 0.7% rise from KES 233.2 million a year earlier. Net interest income slipped 5% to KES 474.9 million, while non-funded income surged 93.1% to KES 280 million.
Customer deposits grew 5% to KES 12.9 billion. Loans and advances expanded 4.4% to KES 8.6 billion, holding the loan-to-deposit ratio steady at 66.6%, matching the level recorded in Q3 2024. Against that backdrop, asset quality deteriorated sharply: gross non-performing loans climbed 48.3% to KES 2.2 billion, a figure Zenith Bank will need to address under its ownership.
Capital Threshold Met Early
Paramount Bank entered the acquisition having already satisfied the Central Bank of Kenya’s new KES 3 billion minimum core capital requirement, ahead of the 2025 deadline. A rights issue completed during the period raised KES 332 million from existing shareholders, lifting core capital to KES 3.12 billion.
The capital challenge does not stop there. The CBK requires commercial banks to meet a higher minimum core capital threshold of KES 5 billion by end of 2026. Zenith Bank will therefore need to inject fresh capital into its Kenyan subsidiary to ensure compliance within that timeline.
Zenith Bank’s Own Numbers: Growth With a Caveat
Zenith Bank posted gross earnings of N4.19 trillion for the 2025 financial year, up 5.6% from N3.97 trillion in 2024. A 35% jump in interest income to N3.67 trillion drove net interest income 52.7% higher to N2.64 trillion, with the net interest margin widening to 13% from 10%.
Non-interest income, however, told a different story. Trading and foreign exchange gains swung to a loss of N63.1 billion from a gain of N1.1 trillion the prior year, capping overall operating income growth at 7.6%, reaching N3.04 trillion. Net income edged up less than 1% to N1.04 trillion.
The balance sheet stayed strong. Total assets rose 5% to N31.46 trillion, while shareholders’ equity climbed 22.2% to N4.92 trillion. Loans and advances grew 4.9% to N10.45 trillion. The bank also rotated capital toward lower-risk instruments, with investment in treasury bills surging 74% to N4.66 trillion.
Valuation and Dividends
Despite the muted profit growth, Cowry Asset Management Limited notes that the bank’s valuation remains undemanding, trading at a price-to-earnings ratio of 2.44x and a price-to-book ratio of 0.52x, with an earnings yield of 41% and a dividend yield of 8.5%.
The board declared a final dividend of N8.76 per share for the 2025 financial year, bringing the full-year payout to N10.00 per share, more than double the N4.00 paid in 2024.
The Kenya acquisition and a strong capital base position Zenith Bank to pursue its continental ambitions, but the real test lies ahead: cleaning up Paramount Bank’s bad loan book and meeting Kenya’s rising capital bar within two years.
