Access Holdings Plc 2023FY: Stellar Expansion across Income Lines Boost Earnings

Bolaji Agbede, Acting Group Chief Executive Officer, Access Holdings Plc. Image Credit:

March 27, 2024/Cordros Report

Access Holdings Plc (ACCESSCORP) released its 2023FY results this morning, recording a remarkable 288.1% y/y surge in EPS to NGN17.23 (2022FY: NGN4.44), driven by strong growth in the group’s core (+99.9% y/y) and non-core income (+71.3% y/y) lines for the year. In addition, the board proposed a final dividend of NGN1.80/s (2022FY: NGN1.30/s), which equates to a dividend yield of 7.5% based on the last closing price of NGN24.00/s (27 March).

Interest income expanded by 99.9% y/y to NGN1.65 trillion in 2023FY, driven by the increase in the Holdco’s earning assets (+68.4% y/y) due to the high yield environment. Precisely, the group earned higher income from investment securities (+146.0% y/y to NGN821.57 billion) and loans and advances to customers (+62.0% y/y to NGN747.22 billion), amid a decline in interest from cash and balances with banks (-51.0% y/y to NGN6.00 billion) in the review period.

Following the rising cost of borrowing (due to the consistent hike in benchmark interest rate), the Holdco recorded a notable 105.0% y/y increase in interest expense to NGN958.99 billion. We highlight the higher costs incurred was triggered by interest paid on deposit from banks (+170.6% y/y to NGN320.76 billion), deposits from customers (+85.2% y/y to NGN505.59 billion), debt securities (+127.3% y/y to NGN79.30 billion) and interest-bearing liabilities (+52.5% y/y to NGN79.30 billion).  Given the lower credit impairment charges (-29.5% y/y to NGN139.53 billion) taken for 2023FY, the net interest income ex-LLE expanded by 243.4% y/y to NGN555.83 billion.

Correspondingly, non-interest income advanced by 71.3% y/y to NGN870.70 billion, as the sturdy net gains from investment securities trading (+82.1% y/y to NGN512.36 billion) and fees and commission income (+42.6% y/y to NGN207.78 billion) offset the decline recorded in net FX revaluation gains (-50.0% y/y to NGN17.26 billion) during the period.

Operating expenses increased by 38.9% y/y to NGN697.53 billion in 2023FY, due to accelerating inflation and higher regulatory charges. For clarity, the group incurred higher personnel expenses (+44.0% y/y to NGN167.90 billion), deposit insurance premium (+58.3% y/y to NGN35.65 billion), AMCON levy (+30.5% y/y to NGN68.81 billion) and depreciation and amortization charges (+44.0% y/y to NGN63.96 billion). Notably, the Holdco’s cost-to-income ratio (after accounting for LLEs) improved to 48.9% (2022FY: 75.0%) driven by the faster growth in operating income (+112.9% y/y) relative to expenses (+38.9% y/y).

Accordingly, profitability spiked as the group’s profit before tax increased by 334.8% y/y to NGN729.00 billion. Likewise, PAT settled 305.0% y/y higher at NGN619.32 billion, after accounting for a rise in income tax expense (+642.2% y/y) in the period.

Comment: We are impressed by ACCESSCORP’s 2023FY performance as the group performed exceptionally well across its core and non-core operations owing to the high yielding environment and FX impact on investment securities. Looking ahead into 2024E, we anticipate sustained uptrend in funded and non-funded income given the still elevated interest rate environment and depreciation of the local currency so far in the year. Furthermore, we believe the group’s solid foundation in the financial industry, strategic acquisitions across the continent and significant investments in digital and technological advancements will support its strategy of capitalising on emerging opportunities and help it remain competitive. Our estimates are under review.

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