FSDH Initial Reaction: Access Holdings 2Q23 results 
Kindly click here to download the report.

September 29, 2023/FSDH Research

Key Performance Highlights:

• Access Holdings recorded a strong 74.0% YoY rise in gross earnings to N515.0 billion in 2Q23, primarily driven by an 89.4% YoY jump in interest income calculated using the effective interest rate, significant growth in fee and commission income (+157.1% YoY) and net foreign exchange gain, partially offset by the decline in interest income on financial assets at FVTPL and a significant decline in gains on financial instrument held at fair value. Interest income on investment securities jumped 77.5% YoY to N352.6 billion in 2Q23 compared to N198.6 billion in 2Q22 due to increased volume and the prevailing high-yield environment. The Group’s Interest expense vaulted 152.8% YoY to N223.7 billion in 2Q23 due to increased deposits from customers. Consequently, the company’s net interest income grew 17.1% YoY to N129.0 billion in 2Q23.
   
• Aided by a 20.3% YoY fall in net impairment charges to N18.5 billion in 2Q23, the net interest income after loan impairment charges grew by 27.1% YoY to N110.5 billion in 2Q23. The fee & commission income increased 157.1% YoY to N63.8 billion, primarily due to higher credit-related fees and commissions in 2Q23. Fee & commission expenses increased by 72.2% YoY to N21.1 billion, driven by a rise in E-banking expenses.
   
• The group reported a marked decline in gains on financial instruments held at fair value to N6.7 billion in 2Q23 from N108.8 billion in the prior year quarter. However, the net foreign exchange gain surged to N79.7 billion in 2Q23 against a net loss of N33.0 billion in 2Q22. The group’s personnel expenses declined 38.0% YoY to N31.6 billion, and other operating expenses were up 20.7% YoY to N120.6 billion in 2Q23 due to AMCON surcharge and IT and e-business expenses. The company paid an effective tax at the rate of 25.8% in 2Q23 compared to 4.5% in 2Q22, resulting in a reported profit after tax of N63.8 billion in 2Q23 versus N33.0 billion in 2Q22, a 93.4% YoY rise. The basic earnings per share came in at N1.75/share in 2Q23 versus N0.93/share in 2Q22.
   
• Sequentially, the gross earnings increased by 21.2% QoQ to N515.0 billion in 2Q23. Furthermore, net interest income grew 35.4% QoQ, primarily due to higher interest income on financial assets at FVTPL. The fee and commission income rose by 4.1% QoQ, while the fee & commission expense increased by 33.0% to N21.1 billion in 2Q23. The net impairment charges declined 1.3% QoQ to N18.5 billion in 2Q23 compared to N18.7 billion in 1Q23. Moreover, Access Holdings reported a net foreign exchange gain of N79.7 billion in 2Q23 versus a net foreign exchange gain of N112.4 billion in 1Q23. Furthermore, the company paid an effective tax at the rate of 25.8% in 2Q23 compared to 12.2% in 1Q23. Consequently, Access Holdings reported a profit after tax of N63.8 billion in 2Q23 versus N71.7 billion in 1Q23, an 11.0% QoQ fall.
   
• On September 22, 2023, the bank proposed an interim dividend of 50 kobos per share, subject to appropriate withholding tax and approval by shareholders whose names appear in the Register of Members at the close of business on October 5, 2023.
   
• On July 14, 2023, Access holdings announced the acquisition of Standard Chartered’s majority holdings in its subsidiaries in Angola, Cameroon, the Gambia, Sierra Leone, and its CPBB business in Tanzania. The group also entered into a definitive agreement to acquire a majority equity stake in African Banking Corporation Limited. Moreover, on July 12, 2023, Access holdings announced the completion of the acquisition of a majority stake in Finibanco Angola S.A. by its banking subsidiary.

Market Reaction: The investor reaction to the 2Q23 results was subdued as the stock was down by 9.86% to close at N15.55 versus a 0.66% loss for the All-Share Index on 25/9. However, the stock remained unchanged at N15.55 versus a 0.34% loss for the All-Share Index on 26/9. Nevertheless, the stock has rallied 56.57% compared to 29.39% gain for the All-Share Index since the 1Q23 results on 20/4.

Access Holdings Earning Highlights 2Q23

Source: Company Financials, FSDH