April 21, 2023/CSL Research

Access Holding’s FY 2022 Audited numbers showed a 37.5% y/y growth in Interest Income driven by growth in Interest Income on Net Loans to Customers (up 22.6% y/y) and Interest Income on Investment Securities. Interest Expense also grew strongly, up 55.8% y/y and 19.1% above our forecast driven by steep growth in Interest Expense on deposits from Customers and financial institutions. Net Interest Income was up 19.0% y/y but was 6.0% lower than our forecast. Customer Deposits were up 33.0%y/y.  

Net Fee and Commission grew 23.2% y/y, 12.1% above our forecast. Some fee lines grew strongly y/y, such as credit related fees and commission (up 108.7%y/y), Commission on bills and letters of credit (up 27.6% y/y), and Account maintenance charge and handling commission (up 15.1% y/y).

FY 2022 Nm

Source: Company, CSL Research.

Other Income (Net (loss)/gains on financial instruments at fair value, Net foreign exchange gain/(loss), Net loss on fair value hedge (Hedging ineffectiveness), and Other Operating Income) was up 71.6% y/y to N361.9bn from N210.9bn in FY 2021 driven by a 314.8% y/y growth in Net gains on fixed income securities held at fair value of N281.3bn in FY 2022 compared with only N44.8bn in FY 2021.

Impairment charge of N197.8bn was up 137.7% y/y bringing FY 2022 Cost of Risk (COR) to 1.6%. The Group took an impairment of N103.10bn in recognition of the loss impact of Ghana sovereign debt crisis. The group however noted that while the economic loss on Ghana Domestic debt has been determined through Domestic Debt Exchange Programme (DDE), the Ghanaian government has not yet presented restructuring terms for the Eurobonds. Management however notes that the possibility of further material impairment charge is remote. The fair value for Ghana sovereign debts in the books of the Group is estimated at N348.15Bn.

The bank’s Opex grew significantly, up 35.4% y/y. The slightly higher y/y growth in Total Operating Income (up 37.5%y/y) compared with the growth in Opex led to a slight moderation in the FY2022 Cost to Income Ratio (CIR ex provisions) to 57.9% compared with 58.8% in FY 2021. The growth in Opex was driven by a 20.7% y/y growth in personnel expenses and a 47.0% y/y growth in Other Operating Expenses.

Overall, PBT was down 5.0% y/y and 17.0% below our forecast and Net Profits also declined 5.0 y/y bringing FY 2022 RoAE to 13.3%. compared with 16.7% in FY 2021.

We have a Buy rating on Access Bank with a target price of N20.84/s. Current price of N9.90/s.