September 9, 2019/InvestmentOne Report
· Net interest income of N21.1billion, up 33.9% q/q; down 3.0% y/y
· Non-interest income of N2.2billion, down 74.3% q/q, up 6.3% y/y
· Profit before tax of N8.4billion, up 25.5% q/q; up 15.7% y/y
· Profit after tax of N7.7billion, up 30.4% q/q; up 18.2 y/y
Access bank released its Q2/H1 2019 financial results on Friday – its first post-merger combined group audited results. Not surprisingly, quarter on quarter (q/q) performance was not as exciting as the year-on-year (y/y) performance.
On a sequential basis, PBT and PAT were down 35.7% and 46.8% respectively, owing largely to the 99.2% q/q decline in non-interest income to N364million and the 19.3% q/q increase in total expenses to N68.1billion. These were enough to offset the 73.0% q/q rise in net interest income and the 55.4% q/q decline in credit loss charges to N1.5billion. We note that this trend is unlike what we have seen among its peers, with GTB, FBNH, Zenith and UBA all posting a general rise in non-interest income and a decline in net interest income. However, we believe the shift to a net loss position on investment securities of N15.6billion, from a gain of N19.8billion in Q1 2019, coupled with a FX trading loss of N25.1billion in Q1 2019, contributed to the q/q decline in non-interest income. Consequently, profit before provisioning fell 4.8% to N98.7billion.
Topline story was broadly the same on a y/y basis despite the income statement consolidation in Q2 2019. Net interest income was up 81.9% y/y, while non-interest income was down 28.7% y/y to N47.1billion. However, PBT and PAT were up 61.7% and 59.1% y/y to N74.1billion and N63.0billion respectively. This was supported by the 33.5% y/y decline in credit loss charges and the rise in net interest income mentioned above, which were enough to offset the 25.5% y/y rise in total expenses.
Furthermore, net interest margin improved to 7.4% in H1 2019 from 5.4% in H1 2018, while cost of funds decreased 100bps y/y to 4.8%.
In terms of asset quality, absolute NPLs reduced drastically by N88.1billion q/q to N196.2billion, improving the bank’s NPLs ratio to 6.8% in Q2 2019, from 10.2% in Q1 2019. Net loans were up 33% YtD, albeit flat q/q. However, the bank’s cost of risk was up 20bps q/q to 0.7%.
Impressively, the bank was able to keep costs under wrap, with cost-to-income ratio down 120bps YtD to 61.0% (although up 810bps q/q – reflecting the income statement consolidation). Return on equity also strengthened to 23.5% in H1 2019 from 16.3% in H1 2018.
Finally, the bank declared an interim dividend of N0.25k, implying a dividend yield of 3.9%, based on Friday’s closing price.
ACCESS BANK PLC Q2/H1 2019 (YE: DEC) (N millions) | ||||
Q2 2019 | Q/Q
| H1 2019 | Y/Y
| |
Interest Income | 162,120 | 46.3%
| 272,897 | 46.2%
|
Interest Expense | -63,812 | 18.3%
| -117,750 | 16.1%
|
Net Interest Income | 98,308 | 73.0%
| 155,146 | 81.9%
|
Non-interest income | 364 | -99.2%
| 47,150 | -28.7%
|
Profit before provisions | 98,672 | -4.8%
| 202,296 | 33.6%
|
Loan Impairment charges | -1,505 | -55.4%
| -4,880 | -33.5%
|
Total Opex | -68,152 | 23.6%
| -123,301 | 25.5%
|
PBT | 29,015 | -35.7%
| 74,116 | 61.7%
|
Tax | -7,138 | 80.5%
| -11,091 | 78.4%
|
Tax rate
| 24.6% | 1583bps
| 15.0% | 140bps
|
PAT | 21,877 | -46.8%
| 63,025 | 59.1%
|
Source: Company financials, Investment One Financial Services Research
H1 2019 BANKS COMPARISON SHEET | ||||||||
NGN billion (unless stated otherwise) | FBNH | GTB | ZENITH | STANBIC | FIDELITY | UBA | ACCESS | |
Key Income Statement Figures | Gross Earnings | 294.2 | 221.9 | 331.6 | 117.4 | 103.7 | 214.4 | 324.4 |
Net Interest Income | 146.7 | 222.4 | 142.5 | 39.3 | 36.9 | 110.1 | 155.1 | |
Non-interest Income | 59.9 | 71.4 | 109.7 | 54.9 | 15.6 | 72.5 | 47.2 | |
Total Expenses | -144.6 | -69.8 | -126.8 | -50.1 | -38.2 | -109.6 | -123.3 | |
Loan Impairment Charges | -22.1 | -2.2 | -13.7 | 0.6 | 5.5 | -3.1 | -4.9 | |
Profit Before Tax | 39.9 | 115.8 | 111.7 | 44.7 | 15.1 | 70.3 | 74.1 | |
Y/Y PBT Growth
| 2.6%
| 5.6%
| 4.0%
| -12.0%
| 15.7%
| 20.9%
| 61.7%
| |
Dividend (Kobo per share) | nil | 30 | 30 | 100 | nil | 25 | 25 | |
EPS (kobo per share) | 84 | 350 | 283 | 342 | 47 | 162 | 193 | |
Key Balance Sheet Figures | Total Assets | 5,670 | 3,598 | 5,899 | 1,619 | 1,568 | 5,102 | 6,489 |
Total Liabilities | 5,109 | 2,995 | 5,079 | 1,346 | 1,383 | 4,560 | 5,905 | |
Total Equity | 561 | 603 | 820 | 264 | 184 | 543 | 584 | |
Key Ratios | Net Interest Margin | 7.7% | 9.6% | 8.6% | 4.9% | 5.8% | 6.7% | 7.6% |
Cost of Fund | 3.2% | 2.3% | 3.0% | 5.2% | 6.6% | 4.4% | 4.8% | |
Cost to Income | 70.5% | 37.6% | 53.2% | 53.2% | 72.8% | 60.0% | 61.0% | |
NPL ratio | 14.5%
| 6.7%
| 5.3%
| 3.9%
| 5.4%
| 5.6%
| 6.8% | |
Liquidity (bank level) | 40.3% | 47.3% | 74.6% | n/a | 34.8% | 63.0% | 49.7% | |
Cost of Risk | 2.2% | 0.2% | 1.4% | 0.2% | -0.2% | 0.3% | 0.7% | |
Capital adequacy ratio (bank level) | 15.6% | 23.5% | 25.0% | 27.3% | 17.0% | 20.0% | 20.8% | |
ROE | 11.6% | 33.7% | 21.7% | 28.5% | 13.5% | 21.7% | 23.5% | |
ROA | 1.1% | 5.8% | 3.0% | 4.5% | 0.6% | 2.3% | 2.2% | |
Source: Company financials, Investment One Financial Services Research
