Improved Profitability in Q1:2025: Access Holdings Plc opened 2025 with a laudable set of first-quarter numbers, reflecting the group’s resilience and ability to achieve profitability. Profits before tax rose by 9.88% YoY to NGN222.78bn in Q1:2025, up from NGN202.74bn a year earlier. After tax, profit increased by 14.73% YoY to NGN182.75bn from NGN159.29bn, driving EPS to NGN4.88, representing a 12.07% YoY improvement on the NGN4.35 delivered in Q1:2024. This performance was mainly propelled by non-interest income, while interest income remained positive; however, higher interest expense stoked lower net interest income compared to the previous year.

Specifically, net interest income contracted by 20.10% YoY to NGN220.21bn, as interest income
rose by 36.30% YoY to NGN980.68bn but was more than offset by a 71.42% YoY surge in interest expense to NGN 760.47bn amid sustained monetary policy tightening by the apex bank. After credit impairment provisions—which eased 4.54% YoY to NGN21.77bn—net interest income after impairments stood at NGN198.44bn, down 21.50% YoY versus Q1 2024.

Significant Expansion in Non-Interest Income: However, non-interest income saw substantial growth in the first quarter of 2025 as net fee and commission income climbed by 68.40% YoY to
NGN146.22bn (gross fees up by 55.32% YoY to NGN174.48bn) on robust transaction volumes across credit-related fees, account maintenance charge and commission on other financial services. Further, treasury and trading operations generated NGN214.39bn in fair value and FX
gains, a 79.74% YoY uplift reflecting healthy mark-to-market gains on fixed income securities and solid FX execution. Other operating income moderated to NGN12.83bn from NGN23.04bn, as sundry recoveries and non-core trading revenues normalized in Q1:2025. As such, gross earnings expanded by 41.89% YoY to NGN1.38trn in Q1:2025.

Modest Rise in Cost: On the cost front, operating expenses increased by 24.98% YoY to NGN349.10bn driven by personnel costs, which rose by 32.29% YoY to NGN105.56bn, reflecting
increased staff compensation given the 31.99% YoY in wages and salaries to NGN100.46bn. Other operating expenses climbed 21.01% YoY to NGN213.76bn, spurred by IT and e-business expenses (+87.26% YoY to NGN41.85bn), administrative expenses (+21.53% YoY to NGN23.80bn) and deposit insurance premium (+87.47% YoY to NGN18.24bn).

Outlook: Looking ahead, we opine that Access Holdings is well-positioned to sustain its earnings momentum. The diversification into fee-rich digital channels and income from fixed income securities trading should strength non-interest income. Additionally, interest income is expected to remain elevated amidst the relatively high interest rates in the market. Heightened cost pressure remains a risk for the bank in line with recent trends. However, we expect revenue growth to be strong enough to provide respite. Hence, we maintain our STRONG BUY rating on the stock.

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