ACCESS BANK PLC H1'19 Earnings - Stronger Asset Yield Comes To The Rescue
Stronger asset yield comes to the rescue
ACCESS recently released its H1’19 audited results; its maiden audit post-merger. Gross earnings increased by 28% y/y and 3% q/q to ₦324.4 billion in H1’19 (H1 2018: ₦253.0 billion), with interest income contributing 84%. Interest Income grew by 46% y/y to ₦257.9 billion from ₦186.7 billion in H1’18. The bank realized a Yield on Asset (YoA) of 13.4% from 12.2% in H1’18. On the other hand, Non-Interest Income decreased by 22% y/y to ₦51.5 billion from ₦66.1 billion in H1’18. These results deviated considerably from our topline estimates, with Q2’19 Interest Income 38.9% higher than expected, while Q2’19 Non-interest Income underperformed significantly due to a net Foreign Exchange loss. That said, PBT for the period was up 62% y/y to ₦74.1 billion (Q2’19: ₦29.0, billion down 36% q/q) but 10.0% below our estimate, while PAT increased by 59% to ₦63.0 billion (Q2’19: ₦21.9 billion, down 47% q/q) 16% behind our estimate. The bank recorded Q2’19 EPS growth of 40% y/y to ₦1.90 with an annualized Return on Average Equity (ROAE) of 23.5% (FY’18: 19.17%) and a Return on Average Asset (ROAA) of 2.2% (FY’18: 2.5%) for the quarter.
The Bank has expanded total assets by 31% since FY’18 to ₦6.4 trillion with liabilities (customer deposits) of ₦4.2 trillion up 63% YTD, expanding faster than core assets (loans and advances up 34% YTD to ₦2.9 trillion) during the period. Asset quality (measured by NPLs) has improved since Q1’19 (10.0%) to 6.4% in H1’19, albeit above the H1’18 (Pre-merger) figure of 4.7% - loan restructuring and a few recoveries have reduced NPLs by just over ₦100 billion post-merger. The banks LDR of 66% remains well above the CBN floor of 60%, while its CAR remains adequate at 20.8% flat y/y.
ACCESS BANK PLC (ACCESS) is a leading full-service commercial Bank with over 660 branches and service outlets, with a customer base of over 29 million spread across 12 countries. The Bank employs over 28,000 people in its operations in Nigeria and has subsidiaries in Sub-Saharan Africa and the United Kingdom. The bank has been listed on the Nigerian Stock Exchange since 1998.
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