Friday, March 15, 2019 09:00 AM / NSE With Additional Notes from FBNQuest
Initial Reaction – FBNQuest
Access Bank’s 2018 PBT of N103.2bn surprised positively relative to ours and consensus forecasts of N91.9bn and N102.3bn. On a post-tax basis, the bank’s earnings imply an ROAE of 15.6%. Although the bank’s ROAE missed management’s 20% guidance for the year, it was well ahead of our 14.0% ROAE forecast. Following the strong set of results, we expect to see a positive reaction from the market.
Q4 2018 PBT and PAT showed significant growth partly due to weak base effects. The key drivers were a 61% y/y growth in pre-provision profits and a -71% y/y reduction in loan loss provisions. In terms of revenue contribution, although both revenue lines contributed strongly to pre-provision profit growth, non-interest income which growth by 188% y/y was the major driver. Funding income also grew by 21% y/y. Relative to our forecasts, PBT beat by 52% mainly because of positive surprises in funding income and provisions.
Limited; opex increased by 74% y/y, slightly higher than expected. The bank has proposed a final dividend of N0.25 which is around -40% lower than our N0.42 forecast ( N0.51 consensus) and implies a yield of 4.2%. It is also lower than the 40kobo the bank paid in 2017 as final dividend.
We rate Access Bank Outperform. Our estimates are under review.
Access Bank Q4 2018 results: actual vs. FBNQuest Capital Research estimates (N millions)
Source: NSE; FBNQuest Capital Estimates
3. Access Bank partners World Remit for instant money transfers to Nigeria
4. Access Bank Plc H1 2018 Conference Call and Earnings Presentation - The Key Takeaways