FSDH Initial Reaction: Access Holdings 3Q23 results 
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October 30, 2023/FSDH Research

Key Performance Highlights:

• Access Holdings recorded a robust 107.4% YoY rise in gross earnings to N653.4 billion in 3Q23, primarily driven by a 130.6% YoY spurt in interest income calculated using the effective interest rate, significant growth in foreign exchange gains (+119.3% YoY), followed by rise in Interest Income on financial assets at FVTPL (+88.6% YoY) and fee and commission income (+58.7% YoY). Interest income on investment securities jumped 121.2% YoY to N441.6 billion in 3Q23 compared to N199.7 billion in 3Q22 due to higher volumes and the prevailing high-yield environment. The Group’s Interest expense ballooned 136.5% YoY to N275.9 billion in 3Q23 due to increased deposits from customers and financial institutions. Consequently, the company’s net interest income grew 99.6% YoY to N165.7 billion in 3Q23.
   
• Despite a 53.2% YoY rise in net impairment charges to N24.6 billion in 3Q23, the net interest income after loan impairment charges jumped 110.7% YoY to N141.1 billion in 3Q23. The fee & commission income increased 58.7% YoY to N83.2 billion in 3Q23, primarily due to higher credit-related fees and commissions as well as other e-business income. In 3Q23, fee & commission expenses surged 78.9% YoY to N22.6 billion, driven by higher e-banking expenses.
   
• The group’s fair value and foreign exchange gain increased 119.3% YoY to N122.6 billion in 3Q23 from N55.9 billion in the prior year quarter. In 3Q23, personnel expenses vaulted 66.3% YoY to N52.5 billion due to higher wages and salaries. Other operating income declined 15.3% YoY to N6.1 billion in 3Q23, and other operating expenses were up 72.5% YoY to N133.9 billion in 3Q23 due to AMCON surcharge, IT and e-business expenses, and cash processing and management cost. The company paid an effective tax at the rate of 9.3% in 3Q23 compared to 2.5% in 3Q22, resulting in a reported profit after tax of N115.0 billion in 3Q23 versus N48.3 billion in 3Q22, a 138.3% YoY growth. The basic earnings per share came in at N3.18/share in 3Q23 versus N1.36/share in 3Q22.
   
• Sequentially, the gross earnings increased by 26.9% QoQ to N653.4 billion in 3Q23 (2Q23: N515.0 million). Furthermore, net interest income grew 28.5% QoQ, primarily due to an 11.3x jump in interest income on financial assets at FVTPL. The fee and commission income rose by 30.4% QoQ to N83.2 billion in 3Q23 (2Q23: N63.8 million), while the fee & commission expense increased by 7.2% QoQ to N22.6 billion in 3Q23 (2Q23: N21.1 million). The net impairment charges were up 33.5% QoQ to N24.6 billion in 3Q23 compared to N18.5 billion in 2Q23. Moreover, Access Holdings reported a net foreign exchange gain of N122.6 billion in 3Q23 versus N86.4 billion in 2Q23, a 41.9% QoQ rise. Furthermore, the company paid an effective tax at the rate of 9.3% in 2Q23 compared to 25.8% in 2Q23. Consequently, Access Holdings reported a profit after tax of N115.0 billion in 3Q23 versus N763.8 billion in 2Q23, an 80.3% QoQ spurt.

Market Reaction: The investor reaction to the 3Q23 results was positive as the stock increased by 0.59% to close at N16.95 versus a 0.18% loss for the All-Share Index on 26/10.

Access Holdings Earning Highlights 3Q23

Source: Company Financials, FSDH