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Access Bank Plc has released its cumulative nine months (9M-18) results showing 37% y/y and 33% q/q growth in EPS to NGN0.80 in Q3-18. In the 9-months period, PAT was up 12% y/y, at NGN62.91 billion.
Whereas industry analysts say the performance is mixed across income lines, the bank’s gross earnings grew 3%, supported by a surge in trading income (+141%) as well as growth in interest income (+5% y/y).
The uptick in interest income – the lowest of the three quarters so far this year — was driven by improved earnings on loans (+5.7%), amidst growth in total loans by 4.33%, vs. H1-2017 (YtD: +1.05%).
Overall, annualized asset yield, by our estimates, inched lower by 96 bps q/q and -29 bps y/y to 12.01%.
Interest expense in the quarter was largely driven by the higher interest paid on deposits from financial institutions – which was 2.34x bigger than in similar period last year. As a result, cost of funds printed at 6% (+41 bps y/y, +51 bps q/q) in the quarter.
Together with the slower pace of growth in interest income, net interest income declined by 2% y/y in the quarter, for the first time this year, and NIM contracted by 70 bps y/y and 57 bps q/q to 5.38%.
Non-interest income (+0.35% y/y), on the other hand, was flattish in the quarter, following declines in net fees & commission income (-4% y/y) and forex income (-93% y/y).
Over the 9-months period, gross fee and commission income increased by 12% y/y, with growth in credit related fees and commissions (+26% y/y) making the most contribution.
On asset quality, similar to the previous two quarters, impairment charges (-59% y/y) continued to decline, translating to a lower cost of risk (-68 bps to 0.54%) in the period, as against 0.7% in H1, and 1.7% in FY-17.
On lower Opex and tax charge boost bottom line, it was observed that while pre-tax profit remained healthy at NGN24.43 billion (+17% y/y) in the quarter – supported by the 6% y/y drop in opex, a much lower tax charge (-71% y/y) gave further support to the 37% PAT growth posted.
However, similar to Q2, the effective tax rate in the quarter remained at a meagre 4.67% (Q2: 4.86%) in the quarter.
Industry pundits who assessed the overall performance agreed that the Access Bank Q3-18 result is impressive as the annualized NGN83.88 billion net profit reported as at 9M-18 is above Bloomberg consensus’ estimate for the full year by 7.8%, but lags our forecast by 2.25%. We expect a positive reaction from investors in today’s trading session.
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