ACCESS recently released its Q1’21 results, reporting 6% y/y growth in Gross Earnings to ₦222.1 billion, against industry trend. The growth was due to a 9% growth in Interest Income, which was driven by an 82% jump in income from investment securities -- a departure from other banks that reported reductions on that income line -- attributed to an increase in trading activities during the period. Meanwhile, Non-Interest Revenue grew 1% y/y to ₦78.3 billion, amid a 39% increase in fees and commissions to ₦38 billion, which offset a 58% y/y decline in fair value gains on derivative instruments to ₦35 billion. Furthermore, the bank also reported losses in fair value of T-bills and Bonds.
Meanwhile, Loan loss provisions jumped 47% y/y to ₦12.5 billion after impairments on loans to customers grew by 71% y/y to ₦12.2 billion. On a more positive note, the bank reported a 4% y/y decline in Opex which was driven by reductions in various expenses related to on-site banking operations. As a result, the bank reported a 47% y/y growth in PBT to ₦68.3 billion and PAT of ₦60.8 billion- a 48% y/y improvement, yielding an ROAE of 34.2% (Q1’20: 26.7%).

Bank on course for record-setting profit gains
Despite the challenges of weaker returns on investment securities which have hampered growth and profitability among several of our coverage banks, ACCESS has managed to deliver another strong results. Breaking away from industry trend, the bank’s reported improvement in Interest Income came about primarily as a result of fair value gains in investment securities. Due to the bank’s current position on investment securities, we expect these gains to continue to prop up interest income and revise our interest Income projection to ₦550.9 billion (Previous: ₦538.3 billion). Also, the bank’s Non-Interest Revenue, especially from Fees and Commissions (+39% y/y), represents a more stable income line than trading and revaluation gains as those are more susceptible to regulatory changes. Therefore, we raise our FY’21 NIR forecast to ₦300.3 billion (Previous: ₦280.7 billion).  Ultimately, this gives us a new revised PBT projection of ₦223.8 billion (Previous: ₦157.9 billion) and PAT of ₦189.1 billion (Previous: ₦133.5 billion), giving us an ROAE of 22.5%.