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No Nigerian bank can match Access Bank in next 2 years—Analyst

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Since last week’s release of Access Bank results, many industry pundits have continued to review the statistics churned out by the bank.

The Chief Executive Officer, APT Securities & Funds Limited, Mallam Garba Kurfi has averred that Access Bank has proved several bookmakers wrong in its endless growth and consolidation as a financial institution of first choice.

In an interview in Lagos, the leading stock analyst argued that no Nigerian bank can match Access Bank, stressing that the financial giant is no more a Nigerian bank but an international African bank considering the rate and success of its continental acquisitions.

He said “They (other banks) cannot match with Access and I tell you in the next two years you will not even compare Access Bank even to any other Nigerian banks because with this speed there are growing, the sky is their limit”.

“My advice to the investors is to take position now”.

On whether taking position is for the short medium or long term, Mallam Kurfi made it clear, saying “For both, because a stock that give you 70 kobo now; by August it will give you a minimal of 30 kobo and that is 1 naira. And for the long term, when you look at the stock, all other banks compared, none of them is comparable to it.

“It’s no longer a Nigerian bank, it is growing across Africa, and that’s what we want, so you are not tied by the economy of a particular country, they go beyond that.

Continuing, the APT Securities & Funds Limited boss noted that “Secondly, we want banks with ambition. Go back to 2000, nobody even count Access Bank among the first 40 banks. “Today they are number one. What else do you want?

“It is now left for the others to follow the suit, ­or they will remain where they are. Everybody knows the founders where they lived, can they be compared now? Of course they cannot “When the others are declining, this one is growing by 50%. It’s not comparable, and it is a key testimony that what they are doing is in the right step, and for the other banks, it’s not late, follow the suit

Business Hilights recalls that Access Bank had released 2021FY results last week Thursday (March 17th), which showed that the bank recorded substantial growth in Gross Earnings (+27.1% y/y to NGN971.89 billion).

This was driven by growth in both the funded and non-funded income segments as the bank was more aggressive in creating risk assets, especially through its digital and retail-based products, which bolstered fees and commission income. On the EPS of NGN4.58 (+52.2% y/y), the board proposed a final dividend of NGN0.70/s (2020FY: NGN0.55/s), which equates to a dividend yield of 7.1% based on the last closing price of NGN9.80/s (March 18th).

The bank recorded an interest income growth of 23.0% y/y to NGN601.70 billion in 2021FY, buoyed by the uptick in income from investment securities (+31.7% y/y to NGN203.68 billion). Similarly, income from loans and advances to customers (+16.4% y/y to NGN360.19 billion) and banks (+116.8% y/y to NGN28.38 billion) increased following the double-digit loan growth (+29.3% y/y to NGN4.16 trillion), the highest seen so far among Tier-1 peers. The growth across these income lines offset the sole decline in cash and balances with banks (-20.9% y/y to NGN9.46 billion).

Interest expense also increased by 32.8% y/y to NGN300.24 billion, with a significant spike in the cost of deposit from customers (+41.1% y/y) as the bank took on more expensive term deposits to meet its obligations. Consequently, the bank’s Current Account Savings Account (CASA) mix deteriorated to 58.4% in 2021FY from 64.6% in 2020FY. Likewise, expenses on interest-bearing liabilities (+77.1% y/y) and debt securities (+12.6% y/y) increased during the period.

Similar to Tier-1 peers, non-interest income grew significantly by 30.6% y/y to NGN329.60 billion, supported by the solid income growth from foreign exchange trading (+126.3% y/y to NGN101.10 billion), net fees and commission income (+26.7% y/y to NGN118.60 billion), and bad debt recoveries. This growth in non-funded income further supported the funded income growth, leading to a 21.1% y/y expansion in operating income.

Operating expenses increased by 13.7% y/y to NGN371.14 billion in 2021FY, as all major contributory lines recorded spikes – personnel expenses (+32.2% y/y to NGN96.71 billion), deposit insurance premium (+32.0% y/y to NGN20.44 billion), AMCON levy (+17.1% y/y to NGN41.51 billion) and non-cash depreciation and amortization charges (+12.3% y/y to NGN42.15 billion). Given the more significant year-on-year expansion in operating income than expenses, the bank’s cost-to-income ratio (after accounting for LLEs) improved to 67.7% from 72.2% in 2020FY.

Tying it all together, the bank recorded a profit before tax growth of 40.3% y/y to NGN176.70 billion. However, PAT notched up higher (+51.1% y/y to NGN160.22 billion), given the lower income tax expense (-17.2% y/y).

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