April 20, 2023/InvestmentOne Report

• Gross revenue of N1,387.91trillion, up 47.86%q/q, 42.81%y/y.         
• Interest income of N827.47billion, up 27.95%q/q, 37.52%y/y.
• Profit before tax of N167.68billion, down 58.02%q/q, 5.04%y/y.
• Profit after tax of N152.20billion, down 66.24%q/q, 5.01%y/y.

The recently released FY 2022 financial report by Access Holdings Plc showed that the group posted a gross revenue of N1,387.91 trillion for the period, compared to N971.89 billion recorded in the previous year. This was majorly driven by the 34.33% and 160.93% increase in net interest income and non-interest income, respectively. The rise in interest income on loans and advances to customers (+24.37% y/y), interest on financial assets (+126.88% y/y) and interest on financial assets at amortized cost (+128.73% y/y) propelled net interest income higher to N359.63 billion, despite the 55.82% y/y surge in interest expense to N467.34 billion. Meanwhile, the increase in non-interest income which amounted to N508.08 billion was due to the 63.77% y/y jump in net fee and commission income as well as the spike seen in net gains on investment securities from N44.78 billion in 2021 to N281.30 billion in 2022. 

Furthermore, impairment charges on financial assets grew by 137.70% y/y to N197.790 billion, mostly due to allowance for impairment on money market placement and allowance for impairment on investment securities both amounting to N600 million and N108.22 billion, respectively. We posit that the rise in interest rates due to inflationary challenges and losses on securities investment with respect to Ghana significantly increased impairment charges. According to the report, the group incurred an impairment of N103.10 billion from the result of the unprecedented crisis on local and foreign debt facing the Ghanian government. In addition, there was an increase of 20.71% y/y and 46.98% y/y in personnel expenses and other operating expenses to N116.62 billion and N341.32 billion, respectively. These factors put together led to a decline in bottom-line as profit before tax and profit after tax fell marginally by 5.04% y/y and 5.01% y/y to N167.68 billion and N152.20 billion, respectively. Nevertheless, a final dividend of N1.30 was declared by the bank which amounts to a yield of c.13.13% (as at close of market today). 

Sequentially, gross earnings expanded by 47.86% q/q, despite the increase in interest expense (+51.21% q/q) due to the substantial rise of 27.95% q/q in interest income and 105.77% q/q jump in non-interest income which supported profit before provision with an increase of 56.41% q/q. However, the surge in loan impairment charges (+800.17% q/q) weighed on PBT and PAT as they both dragged by -58.02% q/q and -66.24% q/q. 

Despite the growth in earnings, the decline in bottom-line can be attributed to the spike in impairment cost on financial assets. Going forward, we believe that the company will further leverage on its HOLDCO structure to boost earnings in the coming period, thus we expect the impressive earnings growth to be sustained. Hence, ACCESSCORP remains a notable opportunity in the banking sector.