September 20, 2022/FSDH Research

Key Performance Highlights:

• Access Bank recorded a 31.2% YoY growth in gross earnings to N296.0 billion in 2Q22, principally driven by an 18.6% YoY rise in Interest Income calculated using the effective interest rate and a significant net gain of N108.8 billion on financial instruments held at fair value (net loss in the prior-year quarter), partially offset by foreign exchange losses and higher interest expenses. Interest income on investment securities jumped 12.9% YoY to N198.6 billion in 2Q22 compared to N175.9 billion in 2Q21 due to increased volume and improved securities yield during the period. The Group’s Interest expense soared 26.7% YoY to N88.5 billion in 2Q22 due to an increase in customer deposits during the period. Consequently, Access bank’s net interest income climbed 3.9% YoY to N110.1 billion in 2Q22.
   
• A 43.6% YoY jump in net impairment charges to N23.2 billion in 2Q22 further sank the net Interest Income after loan impairment charges by 3.3% YoY to N87.0 billion in 2Q22. The Fee & Commission Income declined 28.1% YoY to N24.8 billion, as the credit-related fees and commissions declined by 56.0% YoY to N4.2 billion in 2Q22. Fee & Commission Expenses grew by 81.2% YoY to N12.3 billion, driven by a 90.8% YoY decrease in E-banking expenses to N90.8 billion.
   
• Net gains on financial instruments held at fair value stood at N108.8 billion in 2Q22 compared to a loss of N50.3 billion in 2Q21, resulting from an N41.1 billion trading loss on Fixed income securities. The company reported a net foreign exchange loss of N33.0 billion in 2Q22 against a net gain of N67.1 billion in 2Q21. The group’s personnel expenses rose 20.2% YoY to N28.2 billion, and other operating expenses spurted 54.9% YoY to N98.4 billion in 2Q22 on the back of rising inflationary pressure. The group’s profit after tax declined 3.7% YoY to N33.0 billion in 2Q22 against N34.4 billion in 2Q21, cushioned by a lower effective tax rate of 4.5% in 2Q22 compared to 8.2% in the prior period. The basic earnings per share came in at N0.93/share in 2Q22 versus N0.99/share in 2Q21.
   
• Looking at the segmental loan book, Business Banking grew the most (+126.6% YoY) to N353.7 billion, followed by a 34.5% YoY jump in Commercial Banking to N2465.4 billion in 2Q22. Corporate & Investment banking vaulted 12.6% YoY to N2,015.0 billion, while Retail Banking fell 56.3% YoY to N92.70 billion.
   
• On a sequential basis, Groups’ gross earnings inched 0.1% higher to N295.9 billion in 2Q22. Net interest income advanced 26.1% QoQ, primarily from a 13.7% QoQ rise in interest income calculated using the effective interest rate to N182.2 billion in 2Q22. The fee and commission income declined 55.9% QoQ, while the fee & commission expense decreased by 8.5% to N12.3 billion in 2Q22. The company’s net loss on the fair value hedge came in at N6.2 billion (versus a net gain of N17.5 billion in 1Q22), while the net foreign exchange loss stood at N32.9 billion (1Q22: N85.8 billion gain), resulting in a 43.0% QoQ fall in profit to N33.0 billion in 2Q22 against N57.8 billion in 1Q22.
   
• On August 31, 2022, Access Bank Plc announced the completion of the divestment of its entire equity interest in Access Pension Fund Custodian Limited to First Pension Custodian Nigeria Limited, a subsidiary of First Bank of Nigeria Limited.
   
• On June 8, 2022, Access Bank Plc announced a proposed acquisition of an 83.4% equity stake in Kenya-based Sidian Bank Limited. The purchase consideration is approximate up to N15 billion ($37 million), representing a price to book multiple of 1.1x. Sidan will be merged with Access Bank’s subsidiary in Kenya, Access Bank Kenya, to create a more robust banking institution better positioned to serve the Kenyan market. This transaction is subject to the fulfilment of conditions precedent, including regulatory approvals in Kenya and Nigeria.
   
• On May 4, 2022, Access Bank Plc announced the successful closure of the $50 million 5-Year Step-Up Puttable Green Notes due 2027 under its $1,500 million Global Medium Term Note Programme. The proceeds will be used for the financing or refinancing, in part or in full, of new and/or existing projects and/or assets meeting the eligibility criteria set out in the Bank’s Green Financing Framework dated 18 November 2021.

Market Reaction: The investor reaction to the 2Q22 results was restrained as the stock closed 5.14% lower at N8.30 versus a 0.13% decline for the All-Share Index on Friday (16/9). However, the stock closed flat on Monday (19/9) versus a marginal 0.07% decline for the All-Share Index.

Access Bank Earning Highlights 2Q22

Source: Company Financials, FSDH