December 14, 2011
Access Bank Plc presented its Q3’11 figures with an impressive performance as both headline and bottom-line sustained positive positions.
Specifically, the PAT came in more stronger with 34% (YoY) performance growth against 21% (YoY) recorded in Q2’11 while the gross earnings closed with continued uptrend performance – an insignificant weakness observed as its 5% (YoY) performance growth appeared weak compared to the 6% (YoY) recorded in Q2’11.
More so, the gross earnings closed below sector average performance of 10.00% as against above the average performance recorded in the previous quarter. The impressive active posture of interest income of the bank continued to drive the performance of the earnings profile of the bank as net interest income closed with 27% positive growth while non-interest income came alive with 5% growth as against a decline of -15% observed in the previous quarter .
The improved outlook observed in non-interest income components stands as a true reflection of increased transaction volume largely driven by retail segments of the business as claimed by the management
Meanwhile, the performance observed in the interest income stream could be attributed to the impressive 27% YTD growth in Loans and Advances by the bank - a better outlook when compared with 19% YTD loan growth observed in the previous quarter, which indicates a healthy posture of the core income stream of the bank.
On the other hand, we call attention of the management to a quarterly weak performance observed in both top-line and bottom-line results of the bank when compared the Q3’11 performance growth of 56.60% and 58.58% which delivered 115.37% and 93.09% in Q2’11 as recorded by gross earnings and PAT respectively.
In addition, we observed that the bank’s deposit closed weaker with 20% growth (YoY) against 47% (YoY) and 41% (YoY) growth recorded in Q2 and Q1’11 respectively while YTD deposit growth stands at 32.80%.
A similar trend was observed in the quarterly trend as the deposit growth closed lower at 1.18% (QoQ) against 8.51% (QoQ) recorded in the previous quarter. This could be attributed to the slight weakness the loan growth experienced in the quarter to close lower at 6.97%(QoQ) against 9.42% (QoQ) recorded in the Q2’11 while the weakness also reflected in the deposit to assets ratio which closed lower at 63.05% as against 64.94%.
More so, the sustained bloated posture of LDR at 84.76% as against 80.18% recorded in the previous quarter is not pleasant as this continued to give us more concerns in the face of low deposit growth while this is likely to reduce the elbow room for potential growth in the near term.
In our opinion, this is likely to pose liquidity challenges as regards to desirable business expansion and emerging opportunities in the industry. We therefore, call attention of the management to this trend as this threatens the possibility of growing loan book considerably as we have observed in the quarter.
On the brighter side, we commend the continued improvement witnessed in cost to income ratio. The outlook is not too far away from our expectation given the concerns shown in our previous reports. This also justifies the cost-cutting initiatives put in place by the management as stated in their Q1’11 presentation .
The operating profit appeared more robust with 30.35% performance growth against comparable period in the previous year. This has been one of the contributory factors for improved bottom-line position recorded in the quarter as buttressed by improved and stronger EPS, PAT margin and ROE of the bank- a true reflection of improved operating efficiency of the bank.
The PAT came in stronger to close at N12.81billion against N8.07billion recorded in the previous quarter, a stronger position against N9.56billion recorded comparable period in the previous year.
On the final note, the technical analysis revealed as at November 25th 2011, Access bank plc traded below its 20days, 50days and 200days moving averages of N5.12, N5.19, N7.17 respectively.