Access Holding Plc (ACCESSCORP) released its audited H1-22 financial statement recently, reporting an EPS growth of 1.7% y/y to NGN2.46/s (H1-21: NGN2.42/s), supported majorly by growth in the non-core income (+67.2% y/y) segment.
The board has proposed an interim dividend of NGN0.20/s (H1-21: NGN0.30/s), which equates to a dividend yield of 2.2% based on the last closing price of NGN8.95/s (14 September).
Interest income grew by 16.4% y/y to NGN372.31 billion, supported by impressive growth in income from loans & advances to customers (+37.0% y/y to NGN238.94 billion) and a slight expansion in income from loans & advances to banks (+1.8% y/y to NGN8.09 billion) amid a decline in income from cash and balances with banks (-23.2% y/y to NGN3.97 billion) and investment securities (-37.7% y/y to NGN45.84 billion). We highlight that the growth in loans and advances was driven by an increase in the holdco’s strong risk assets creation (+11.0% YTD to NGN4.62 trillion).
The holdco recorded a significant increase in interest expense (+46.1% y/y to NGN174.80 billion) underpinned by a higher cost incurred on the deposits from customers (+91.3% y/y to NGN108.64 billion) despite the improvement in the CASA mix to 60.5% during the review period (2021FY: 58.4%). In addition, the firm recorded an expansion in its expense on debt securities issued (+11.4% y/y to NGN11.30 billion) and interest-bearing borrowings (+6.8% y/y to NGN23.07 billion). Following the faster growth in interest expenses than interest income, net interest income declined by 1.3% y/y to NGN197.50 billion. After accounting for credit impairment charges (+28.6% y/y to NGN36.86 billion), net interest income (ex-LLE) settled 6.3% lower y/y at NGN160.64 billion.
Elsewhere, non-interest income (NII) expanded by 67.2% y/y to NGN193.84 billion on gains in investment securities (+375.8% y/y to NGN64.14 billion) and FX revaluation (+367.3% y/y to NGN11.28 billion). Meanwhile, income from foreign exchange trading (-22.5% y/y to NGN52.84 billion) and fees and commissions (-5.6% y/y to NGN55.44 billion) both recorded declines. Despite the weaker funded income growth, non-funded income growth was substantial enough to support operating income (+23.4% y/y) growth.
Operating expenses increased by 35.2% y/y to NGN256.68 billion as all the contributory line items expanded during the period, evidenced by higher regulatory costs and inflationary pressures. Precisely, increment was recorded in personnel expenses (+33.6% y/y to NGN58.27 billion), AMCON levy (+27.0% y/y to NGN52.73 billion), NDIC premium (+11.4% y/y to NG11.10 billion), and depreciation & amortization (+8.0% y/y to NGN21.70 billion). Following the faster OPEX growth relative to the operating income, the cost-to-income ratio (ex-LLE) settled higher at 72.4% in H1-22 (relative to 66.1% in HY-21).
Overall, ACCESSCORP recorded a marginal profit before tax growth of 0.3% y/y to NGN97.80 billion. However, given the lower income tax expense (-14.3% y/y), profit after tax settled 2.1% y/y higher at NGN88.75 billion.
Comment: COrdros Capital says “We like that the Holdco maintained a positive performance in the first half of the year, despite the macroeconomic headwinds locally & internationally. Although we are concerned about the increasing cost of funding of the company, we will seek more clarity from the management on this. For the rest of the year, we remain optimistic that the Holdco will maintain a positive growth trajectory given our expectation that the payment, asset management, and insurance businesses will be fully integrated by the second half of this year. Also, we expect the growth in operating expenses to temper in H2-22 since the increase in OPEX in H1-22 is partially attributed to the bank completing its transition to a Holding Company.
