Access Holdings Plc (ACCESSCORP) released its Q1-24 unaudited financials after trading hours on Tuesday (30 April), revealing a stellar diluted EPS growth (+118.6% y/y to NGN4.35 I Q1-23: NGN1.99). The rise in the Holdco’s earnings was supported mainly by the strong growth in its core (+183.1% y/y) income amid a rise in non-core (+47.9% y/y) income.
The group’s interest income grew by 183.1% y/y to NGN719.60 billion in Q1-24, as all major contributory lines recorded increases – investment securities (+255.4% y/y), loans and advances to customers (+125.2% y/y), loans and advances to banks (+292.4% y/y) and cash and bank balances with banks (+478.0% y/y). We attribute the higher core income to growth in investment securities (YTD: +142.5% y/y to NGN8.52 trillion) and elevated interest rates in the fixed-income market.
Sequentially, interest expense advanced by 179.3% y/y to NGN443.88 billion, driven by the high interest rate environment. Notably, the group incurred higher costs on deposits from financial institutions (+364.7% y/y), deposits from customers (+108.4% y/y), and other borrowings – interest-bearing borrowings (+102.7% y/y) and debt securities issued (+352.5% y/y) – in the period under review. Consequently, the group’s net interest income settled 189.4% y/y higher to NGN275.72 billion after accounting for credit impairment charges of NGN22.79 billion (+21.8% y/y).
Similarly, the group’s non-interest income advanced by 47.9% y/y to NGN229.12 billion, primarily driven by FX revaluation gains (+91.1% y/y) and net fees & commissions income (+91.4% y/y) outweighing the losses on investment securities (+13.3x y/y to NGN95.76 billion), triggered by the loss on non-hedging derivatives (NGN288.50 billion | Q1-23: NGN26.90 billion) amid gains on equity investments (NGN111.98 billion | Q1-23: nil).
Further in, operating expenses spiked by 86.5% y/y to NGN279.31 billion, due to the combined impact of higher regulatory costs and inflationary pressures in the review period. For clarity, the group incurred higher costs on personnel expenses (+137.9% y/y), AMCON levy (+68.4% y/y), NDIC premium (+27.2% y/y) and other expenses (+75.6% y/y). Nonetheless, the higher rate of increase in income relative to expenses improved the Holdco’s cost-to-income ratio (after accounting for LLEs) to 57.9% (from 64.7% in Q1-23).
Finally, the Holdco recorded a profit before tax growth of 148.0% y/y to NGN202.74 billion. Eventually, the group delivered a 121.8% y/y growth in profit-after-tax to NGN159.29 billion, amid the higher income tax expense (+337.2% y/y) in the period.
Comment: We highlight that ACCESSCORP delivered an impressive performance in Q1-24 amid the weak macroeconomic environment and dampening regulatory environment. Notably, we like the strong expansion in funded income and growth in non-funded income and envisage a sustenance for the rest of the year.
