April 25, 2023/CSL Research
Access Holding’s Q1 2023 unaudited numbers showed a 46.4% y/y growth in Interest Income driven by growth in both Interest Income on Net Loans and yields on investment securities. Net Loans declined marginally in Q1, down 1.2% in March compared with December 2022. Interest Expense also grew strongly, up 84.1% y/y driven by strong growth in Interest Expense on deposits from financial institutions (up 152.2% y/y) and deposits from customers (up 82.2% y/y). Overall, Net Interest Income grew moderately, up 9.1% y/y. Customer Deposits were up 7.5% in Q1 2023.
Net Fee and Commission grew slightly, up 5.8% y/y. Some Fee and Commission Income lines that showed growth were credit related fees and commissions (up 6.3% y/y), commission on other financial services (up 41.4% y/y) and commission on bills and letters of credit (up 52.4% y/y).
| Q1 2023 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 66.5% y/y to N109.4bn in Q1 2023 from N65.7bn in Q1 2022. The group reported Net Foreign Exchange gain of N112.4bn in Q1 2023 compared with N85.8bn in Q1 2022.
Impairment charge of N16.7bn was up 36.7% y/y.
The bank’s Opex grew significantly, up 28.4% y/y. The slightly slower y/y growth in Total Operating Income (up 27.6%y/y) compared with the growth in Opex led to a marginal deterioration in the Q1 2023 Cost to Income Ratio (CIR ex provisions) to 59.9% compared with 59.6% in Q1 2022. Major drivers of the strong opex growth were business travel expenses (up 676.6% y/y), Amcon charge (up 24.8% y/y) and administrative expenses (up 105.2% y/y).
Overall, PBT was up 24.5% y/y while Net Profits also grew 23.9% y/y bringing Q1 2023 annualised RoAE to 23.3%.
The Group reports Capital Adequacy Ratio under Basel II guidelines of 22.38%.
We have a Buy rating on Access Bank with a target price of N20.84/s. Current price of N9.90/s.
