EUR 4.00 For Business Accounts Only

ACCESSCORP Q1 2022-Asset Expansion Enhance Performance

• In its recently released Q122 financial statements, Access Bank Plc posted a 33.1% and 8.5% respective YoY growth in Gross Earnings and Profit before Tax to ₦295.7bn and ₦65.1bn. The performance was supported by impressive performance on both the Interest and Non-Interest Income legs.
• As reported across peers, Interest Expense soared 73.2% to ₦86.3bn due to a surge in interest paid on customer deposits by 156% to ₦54bn. As customer deposits grew by 31.8% to ₦7.5tn compared to a faster rise in interest paid on the deposits, annualized Cost of Funds surged 79bps to 3.8%. Overall, Net Interest Income declined 7.0% to ₦87.4bn due to the sharper rise in interest expense and Net Interest Margin dropped 1.81ppts to 3.8%.
• We observed that topline growth was enough to amplify profitability, evidence by the 8.5% and 9.2% growth in PBT and PAT to ₦65.1bn and ₦57.4bn, respectively. Nonetheless, Efficiency ratios – RoE and RoA dropped to 20.9% and 3.8% in Q122 from 26.5% and 5.6% in the corresponding period in 2021. A testament to the impact of a not-so-favourable regulatory environment, and how it continues to impair profitability per unit of Total Assets and Shareholders Fund.
• Access Bank, given its size, is poised for growth in topline and increased profitability. Already, Gross Earnings and profits, when annualized, slightly exceeded our estimates for FY22. It is noteworthy that we expect this performance to be sustained through the year. In addition, cost of funds, relative to its peers, remains a major concern. We set a 1-year target price of ₦12.80 for ACCESSCORP, a 33.3% upside to its current close of ₦9.60. Thus, we give a STRONG BUY rating on the stock.