October 31, 2024/Cordros Report
Access Holdings Plc (ACCESSCORP) published their 9M-24 unaudited financial statements at the close of business yesterday (30 October), reporting a 79.2% y/y increase in EPS to NGN12.40 (9M-23: NGN6.92). The expansion in earnings was driven by gains across the group’s funded (+128.7% y/y) and non-funded income (+95.4% y/y) lines. Remarkably, ACCESSCORP surpassed NGN3.00 trillion in gross earnings in the period under review, becoming the first bank to achieve such a feat.
Interest income crossed the NGN2.00 trillion mark in the year’s first nine months, growing by 128.7% y/y to NGN2.40 trillion. We attribute this solid performance to the (1) high yield environment and (2) the growth in the group’s earning assets (+69.4% YTD to NGN29.34 trillion). Analysing the breakdown, the group recorded accretion across all income streams – loans and advances to customers (+146.7% y/y to NGN1.11 trillion), investment securities (+103.2% y/y to NGN1.08 trillion), loans and advances to banks (+205.2% y/y to NGN114.37 billion), and cash and bank balances (+247.3% y/y to NGN72.02 billion).
The HoldCo’s interest expense spiked by 135.9% y/y to NGN1.55 trillion, reflecting the rising interest rates. Precisely, ACCESSCORP incurred higher costs across the group’s funding base – deposits from financial institutions (+204.6% y/y to NGN707.99 billion), deposits from customers (+91.2% y/y to NGN646.61 billion), borrowings (+171.7% y/y to NGN144.21 billion), and debt securities (+14.7% y/y to NGN39.00 billion) – in the review period. Accordingly, net interest income settled at NGN844.84 billion, translating to a +116.6% y/y growth. Given the NGN144.95 billion credit impairment charges incurred, the net interest income ex-LLE expanded by 113.3% y/y to NGN699.89 billion.
Expectedly, non-interest income also advanced by 95.4% y/y to NGN948.86 billion underpinned by the increased income generated from investment securities (+246.6% y/y to NGN463.95 billion), net fees and commission (+122.1% y/y to NGN329.90 billion) and FX revaluation (+66.4% y/y to NGN84.43 billion). Consequently, the group’s operating income grew by 102.6% y/y to NGN1.65 trillion.
Operating expenses surged by 110.0% y/y, as the group incurred higher costs on personnel (+139.9% y/y to NGN282.18 billion), Information technology (+487.1% y/y to NGN131.42 billion) and regulatory fees – AMCON levy (+63.1% y/y to NGN112.22 billion) and NDIC premium (+45.5% y/y to NGN36.00 billion). Considering the group’s OPEX advanced faster than operating income, the cost-to-income ratio (ex-LLE) settled higher at 66.1% relative to 63.8% in the prior year.
Overall, profit before tax was 89.6% y/y higher at NGN558.18 billion. Likewise, profit-after-tax grew by 82.8% y/y to NGN457.75 billion after accounting for income tax expense of NGN100.43 billion (+128.4% y/y).
Comment: We like that ACCESSCORP recorded marked growth in the group’s asset portfolio (+54.0% YTD to NGN41.09 trillion), retaining the top spot as the bank with the largest asset base. Consequently, the HoldCo leveraged the preceding and the high-yield environment to deliver milestone core income numbers. Over the rest of the year, we believe the group will maintain this positive momentum, particularly as the elevated interest rates and accelerated risky asset creation remain catalysts for earnings growth. In addition, we believe that the group’s non-banking verticals will continue to boost non-funded income. Our estimates are under review.
