Advertisements

Advertisements

Advertisements

Access Holdings Plc (ACCESSCORP) published its 9M-23 unaudited financial statements after the close of business yesterday (25 October), reporting a 78.8% y/y increase in EPS to NGN6.92 (9M-21: NGN3.87).

This earning expansion was driven by the gains across the group’s funded (+83.3% y/y) and non-funded (+63.7% y/y) income lines. Notably, the holdco reported a standalone EPS growth of 135.6% y/y to NGN3.18 in Q3-23 (vs Q3-22: NGN1.35).

Interest income crossed the NGN1.00 trillion mark in the year’s first nine months, growing by 83.3% y/y to NGN1.05 trillion. We attribute this solid performance to the (1) elevated interest rates in the period and (2) the rise in the group’s earning assets (+41.5% YTD to NGN14.55 trillion). As a result, the group recorded higher income across all contributory lines – investment securities (+165.1% y/y to NGN531.84 billion), loans and advances to customers (+30.7% y/y to NGN458.41 billion), loans and advances to banks (+202.7% y/y to NGN37.48 billion), and cash and bank balances (+150.7% y/y to NGN20.74 billion).

The holdco’s interest expense spiked by 125.9% y/y to NGN658.51 billion, mirroring the rising interest rates. Precisely, ACCESSCORP incurred higher costs across its funding base – deposits from financial institutions (+266.1% y/y to NGN232.45 billion), debt securities (+99.9% y/y to NGN33.99 billion), deposits from customers (+92.3% y/y to NGN338.17 billion), and interest-bearing borrowing (+54.6% y/y to NGN53.07 billion) – in the review period. Accordingly, net interest income settled at NGN389.96 billion, translating to a +39.0% y/y growth. Given the NGN61.83 billion credit impairment charges taken in the period, the net interest income ex-LLE expanded by 44.2% y/y to NGN328.13 billion.

Further down, non-interest income rose by 63.7% y/y to NGN485.65 billion, driven by the increased revenue generated from investment securities trading (+120.9% y/y to NGN173.22 billion) and fees and commission (+56.1% y/y to NGN148.55 billion), which neutered the lower gains from FX revaluation (-47.6% y/y to NGN50.73 billion). Consequently, the group’s operating income grew by 55.2% y/y to NGN813.78 billion.

Elsewhere, operating expenses inched higher by 37.8% y/y, primarily driven by an increase in personnel expenses (+30.9% y/y to NGN117.63 billion), depreciation and amortization (+31.8% y/y to NGN43.17 billion) and regulatory charges – NDIC premium (+55.5% y/y to NGN24.73 billion) and AMCON levy (+30.5% y/y to NGN68.81 billion). Considering the group’s operating income advanced faster than OPEX (+37.8% y/y), the cost-to-income ratio (ex-LLE) settled lower at 63.8% relative to 71.9% in the prior year.

Overall, profit before tax was 99.9% y/y higher at NGN294.42 billion. Likewise, profit-after-tax grew by 82.8% y/y to NGN250.45 billion after accounting for the income tax expense of NGN43.97 billion (+327.4% y/y).

Comment: ACCESSCORP’s 9M-23 financial performance was in line with our expectations, as the group reported sturdy growth across its core and non-core income lines amid the improvement in its operational efficiency. Over the rest of the year, we believe the group will maintain this positive momentum, particularly as the elevated interest rates remain a catalyst for earnings growth. In addition, we believe that the group’s non-banking verticals will continue to boost its non-funded income.