May 2, 2024/CSL Research

Access Holding’s Q1 2024 unaudited numbers showed a 183.1% y/y growth in Interest Income driven by growth in both Interest Income on Net Loans and yields on investment securities due to a higher yield environment and growth in earnings assets. Net Loans grew 19.7% in Q1 2024 compared with the December 2023 position, inclusive of the impact of devaluation on foreign currency loans.

Interest Expense also grew strongly reflecting the high interest rate environment, up 179.3% y/y driven mainly by strong growth in Interest Expense on deposits from financial institutions (up 364.7% y/y) and deposits from customers (up 108.4% y/y). Overall, Net Interest Income grew strongly, up 189.4% y/y Customer Deposits were up 18.0% in Q1 2024 compared with the December 2023 position also inclusive of the impact of devaluation on foreign currency deposits.

Net Fee and Commission grew strongly, up 91.4% y/y. The strong growth in Fee and Commission Income was driven mainly by growth in credit-related fees and commissions (up 97.4% y/y), account maintenance charge and handling commission (up 109.9% y/y), commission on other financial services (up 71.5% y/y) and channels and other E-business income (up 61.6%y/y).

Q1 2O24

Source: Company’s Financials, CSL Research

Other Income (Fair value and foreign exchange gain/(loss) and Other Operating Income) was up 29.8% y/y to N142.3bn in Q1 2024 from N109.6bn in Q1 2023.The group reported Net loss on financial instruments held at fair value of N95.8bn in Q1 2024 compared with a loss of N6.7bn in Q1 2023 and Net foreign exchange gain of N214.99bn in Q1 2024 compared with N112.53bn in Q1 2023.

Impairment charge of N22.8bn was up 21.8% y/y bringing Q1 2024 annualised Cost of Risk (COR) to 1.0%.

The bank’s operating expenses (Opex) surged by 86.5% y/y to reach N279.3billion. This significant uptick in Opex was overshadowed by an even greater increase in Total Operating Income, which rose by 101.7% y/y. Consequently, there was an improvement in the Cost to Income Ratio (CIR ex provisions) to 55.3% in Q1 2024 from 59.9% in Q1 2023.The primary contributors to the notable Opex growth included a substantial rise in personnel expenses, up by 137.9% y/y, driven by adjustments for the cost of living. Additionally, expenses related to Amcon charges grew significantly due to an enlarged balance sheet driven partly by the devaluation of the Naira. IT and e-business-related expenses which are likely FX denominated expenses also grew significantly.

Overall, PBT was up 148.0% y/y to N202.7bn. The company reported significant growth in Tax Expense to N43.4bn from only N9.9bn in Q1 2023. This, according to the management, was due to some changes to the Company Income tax brought about by the New Finance Act. Effective tax rate was up to 21.0% in Q1 2024 from 12.0% in Q1 2023. Net Profit also grew 121.8% y/y to N159.3bn bringing Q1 2024 annualised RoAE to 29.6% compared who 36.2% for FY 2023.

We have a Buy rating on Access Bank with a target price of N36.97/s. Current price of N16.85/s

Kindly click on the below link to download the full report.

​​​Access Holdings Q1 2024 Quick Take.pdf​​​