Business
Access Holding delivers strong earnings in Q1
Access Holding has once again delivered strong earnings in across all the income lines in the First quarter March 31, 2023.
According to its unaudited Q1 results released recently at NGX Exchange Group Access Holdings grew Interest income by 46.4 per cent per cent to N254.22billion in Q1, 2023 from N173.688billion in the corresponding period of 2022. Profit before tax also increased 28.4 per cent to N81,594billion from N65,559billion in the review period.
The results also revealed a double-digit, earnings per share, EPS, growth (+26.4% y/y to NGN2.06 I Q1-22: NGN1.63).
Analysts believe the rise in the Holdco’s earnings was supported by the strong growth across its funded (+46.4% y/y) and non-funded (+42.5% y/y) income
The analysts at Cordros Research also observed the group’s non-interest income advanced by 42.5% y/y to NGN154.82 billion, primarily driven by the gains in FX trading (+30.9% y/y to NGN112.39 billion) and net fees & commission (+5.8% y/y to NGN45.38 billion).
‘’Likewise, the lower losses on investment securities amounting to NGN6.71 billion (vs a loss of NGN44.63 billion in Q1-22) further aided the growth in non-interest income.
Consequently, the group’s net interest income settled at 9.1% y/y higher to NGN95.28 billion.
‘’Further in, operating expenses surged by 27.8% y/y to NGN149.79 billion, triggered by the combined impact of higher regulatory costs and inflationary pressures in the review period.
For clarity, the group incurred higher costs on business travel expenses (+676.6% y/y to NGN7.58 billion), administrative expenses (+105.2% y/y to NGN15.92 billion), AMCON levy (+24.8% y/y to NGN33.32 billion), NDIC premium (+22.0% y/y to NGN7.65 billion), and personnel expenses (+14.8% y/y to NGN33.57 billion). Consequent to the higher rate of increase in expenses than income, the Holdco’s cost-to-income ratio (after accounting for LLEs) inched slightly higher to 64.7% (from 64.3% in Q1-22). It said.
Access Bank had also showed resilience in its audited results for year ended December 31, 2022.
The Holding Company paid dividends of N1.30 per share, representing 14.4 percent of the closing price of N9.00 a share on April 19, 2023. But the dividends came to a total of N1.50 per share.
Access Holdings Plc also posted gross earnings of N1.39 trillion for the 2022 financial year.
The company disclosed this in its Consolidated and Separate Financial Statement for the year ended Dec. 31, 2022 released on Thursday in Lagos.
The gross earnings represented an increase of 43 per cent when compared with N971.88 billion recorded in the corresponding period of 2021.
The company attributed the growth in gross earnings to the dividends of organic and inorganic activities across the ecosystem.
However, its profit before tax stood at N167.68 billion, representing a 5.04 per cent year-on-year decline against N176.58 billion realised in 2021.
The statement said that the company showed strong growth across revenue lines, despite the strong macroeconomic headwinds locally and internationally.
“We registered a record revenue of N1.4 trillion, a 43 per cent year-on year growth (FY’21:N971.9) as we begin to see the dividends of organic and inorganic activities across the ecosystem.
“Access Holdings Plc recorded a profit before tax of N167.7 billion, five per cent year-on year decline (FY’21: N176.6bn) following huge write downs from the Ghana sovereign debt crisis.
“Overall, Interest Income grew 37 per cent year-on-year to N827 billion, driven by a strong loan book growth despite the high inflationary environment.
“Net loans and advances to customers grew by 25 per cent across the banking group, with deliberate focus on credit disbursement to critical segments and growth sectors of the economy.
“We also saw a good growth across the subsidiaries, in particular the UK (up 36 per cent to N1.1 trillion in 2022),’’it said.
The statement also said that the company ended the year with over 58 million customers across the extensive network of subsidiaries and business verticals.
Access Holding delivered this impressive performance amidst harsh macro-economic environment in with inflation rate hitting the roof top at 22.7 per cent in 2022; high unemployment at more than 40 per cent; underemployment above 25 per cent; and high insecurity caused by the Boko Haram sect, insurgents, kidnappers and bandits. It is much more difficult to transact business in Nigeria presently.
At the same time, Diaspora remittances, of course is now lower than the $23.55billion it attained in 2020 while investors both domestic and foreign are scared stiff to bring their resources here after exiting Nigeria.
Also remarkable is the country’s heavy debt burden at almost N44.6 trillion and expected to hit N77 trillion and above if the N23trillion the CBN’s overdraft to the federal governments is securitized. Of the budget of N21.8trillion for 2023, the budget deficit stood at N11.3trillion as over 90 per cent of revenues are now used to service debts.
Experts fear that we are again plunging into another round of debt trap as the country witnessed before 1999. At the recently concluded IMF/World Bank Spring meetings in the United States of America (USA), the IMF advised.
‘’Policymakers can take several steps to mitigate possible adverse impacts on the economy as a result of the necessary currency adjustments. In countries where inflation is aggravated by the exchange rate passthrough, tighter monetary policy will help alleviate the pressure by keeping inflation expectations in check and stem capital outflows while attracting inflows. Where fiscal imbalances are key drivers of exchange rate pressures, fiscal consolidation can help to rein in external imbalances and contain the increase in debt related to currency depreciation.”
Recent controversial election seem to have further heightened existing uncertainty in the political instability in the Country.
At the same time, insecurity has not only hobbled agriculture, many parts of Northern Nigeria have been taken over by bandits such that not much business activities can subsist. Flood has disabled a substantial part of the farms as millions of people have been pushed out of their homes.
The World Bank just noted that Nigeria’s revenue to GDP ratio hovered between five and six per cent last year and remains the lowest in the world. Recently, the world bank recorded that over 133million Nigerians are multidimensionally poor.
Event: Access Holdings Plc (ACCESSCORP) released its Q1-23 unaudited financials after trading hours on Thursday (20 April), revealing a double-digit EPS growth (+26.4% y/y to NGN2.06 I Q1-22: NGN1.63).
The rise in the Holdco’s earnings was supported by the strong growth across its funded (+46.4% y/y) and non-funded (+42.5% y/y) income lines.
The group’s interest income grew by 46.4% y/y to NGN254.22 billion in Q1-23, as all major contributory lines, save for income from cash and balances with banks (-6.4% y/y to NGN2.56 billion) recorded increases. In nominal terms, higher income was generated from loans and advances to customers (+62.6% y/y to NGN149.10 billion), investment securities (+18.0% y/y to NGN90.47 billion) and loans and advances to banks (+360.6% y/y to NGN12.10 billion). We attribute the higher income generated from investment securities to the volume growth (+27.3% YTD to NGN3.51 trillion) and improved yield on securities during the period.
Interest expense advanced by 84.1% y/y to NGN158.94 billion, as the group incurred higher costs on deposits from financial institutions (+152.2% y/y to NGN39.12 billion), deposits from customers (+82.2% y/y to NGN98.09 billion), and other borrowings – interest-bearing borrowings (+27.1% y/y to NGN14.31 billion) and debt securities issued (+11.4% y/y to NGN6.00 billion) – in the period under review.
Similarly, the group’s non-interest income advanced by 42.5% y/y to NGN154.82 billion, primarily driven by the gains in FX trading (+30.9% y/y to NGN112.39 billion) and net fees & commission (+5.8% y/y to NGN45.38 billion). Likewise, the lower losses on investment securities amounting to NGN6.71 billion (vs a loss of NGN44.63 billion in Q1-22) further aided the growth in non-interest income. Consequently, the group’s net interest income settled 9.1% y/y higher to NGN95.28 billion.
Further in, operating expenses surged by 27.8% y/y to NGN149.79 billion, triggered by the combined impact of higher regulatory costs and inflationary pressures in the review period. For clarity, the group incurred higher costs on business travel expenses (+676.6% y/y to NGN7.58 billion), administrative expenses (+105.2% y/y to NGN15.92 billion), AMCON levy (+24.8% y/y to NGN33.32 billion), NDIC premium (+22.0% y/y to NGN7.65 billion), and personnel expenses (+14.8% y/y to NGN33.57 billion). Consequent to the higher rate of increase in expenses than income, the Holdco’s cost-to-income ratio (after accounting for LLEs) inched slightly higher to 64.7% (from 64.3% in Q1-22).
On a balancing note, the Holdco recorded a profit before tax growth of 25.3% y/y to NGN81.60 billion. Eventually, the group delivered a 24.8% y/y growth in profit-after-tax to NGN71.66 billion, amid the higher income tax expense (+28.5% y/y to NGN9.94 billion) in the period.
Comment: The group’s Q1-23 financial performance was remarkable, despite the challenging and dynamic macro-economic environment. Specifically, we like the stellar growth across the group’s core and non-core income lines. For 2023E, we believe the rising interest rates in the fixed-income market and the continuous leverage of its Holdco status will boost the group’s earnings growth. Our estimates are under review.
