ACCESS Declares N39.46 billion PAT in Q2 2017 Results; Proposes 25k Interim Dividend ,(SP:N10.24k)


Wednesday, August 23, 2017 3:51PM /NSE


Access Bank Plc., (Bloomberg: ACCESS NL / Thomson Reuters: ACCESS.LG) (“Access Bank” or the “Bank”), the full service commercial bank with headquarters in Nigeria and with operations across Sub-Saharan Africa, the UK, Asia and the Middle East, announces its audited results for the half year ended 30 June 2017 and proposes an interim dividend of 25 kobo per share.  

Group Managing Director / Chief Executive Officer’s Review
“The Group’s performance in the first half of the year reflects the strength and sustainability of our business, and the effective execution of our strategy.  

We delivered gross earnings of 246.6 billion - up 42% y/y, and pre-tax profits of 52 billion during the period. Net interest margin expanded to 6.7% y/y in H1’17, on the back of a higher interest rate environment. Non-interest income remained strong on the back of 68.8% growth in FX income demonstrating our optimisation of revenue generating opportunities.  

We maintained stable asset quality, recording non-performing loans and cost of risk ratios of 2.5% and 1.0%, respectively and wound down on our foreign currency exposures as a deliberate strategy to de-risk the business. As we cautiously grow our loan portfolio in light of macro realities, we will continue to uphold our proactive risk management principles in order to maintain asset quality within acceptable limits. Whilst balancing our appetite for growth and profitability, we remain committed to maintaining solid liquidity and capital ratios (45.4% and 21.6% respectively).  

Our retail expansion drive led to investments in our channels, distribution network, service quality and brand enhancement. These, as well as AMCON charges resulted in higher operating expenses in the period. We continue to, however, intensify the implementation of our cost reduction initiatives in order to improve the bottom-line despite high inflationary environment.  

In view of the recovering macro, our focus remains growing the retail franchise through digital expansion to enable diversified earnings as well as continuous and proactive risk management as we selectively grow risk assets. We will remain resilient in the execution of our bold strategy for increased growth and profitability whilst maximizing shareholder value in 2017 and beyond.”

– Herbert Wigwe, GMD/CEO  

Financial Performance Review  

Revenue and Profitability
·         Gross Earnings rose 42% y/y to ₦246.6 billion as against ₦174.1 billion recorded in H1’16, with interest income and non-interest income contributing 66% and 34% respectively

·         Interest Income grew by 44% y/y to ₦161.9 billion in H1 2017 from ₦112.3 billion in H1 2016

·         Non-Interest Income of ₦84.4 billion (+37% y/y) compared with ₦61.7 billion in H1 2016, underlined by strong FX income on the trading portfolio

·         Operating Income increased to ₦167.5 billion (+29% y/y) compared with ₦130.2 billion in the corresponding period in 2016  

·         Profit Before Tax (PBT) for the period rose to 52.0 billion, representing a 18% y/y growth when compared to 43.9 billion1 in H1 2016

·         Profit After Tax (PAT) grew to 39.5 billion in H1 2017 from 33.6 billion1 in H1 2016

·         Return On Average Equity (ROAE) of 16.9% in H1 2017 flat y/y (H1 2016: 16.9%) on account of higher income tax of 12.6 billion in the period (June 2016: 7.4 billion)  

Balance Sheet
·         Loans and Advances totaled 1.79 trillion as at June 2017 (December 2016: 1.86 trillion) reflecting a cautious approach in light of a recovering macro

·         Customer Deposits declined by 9% to 1.90 trillion in the period, from 2.09 trillion in December 2016

·         Total Assets was flat at 3.46 trillion as at June 2017 (Dec’16: 3.48 trillion)

·         Capital Adequacy of 21.6% and Liquidity ratios of 45.4%, remain consistently above the regulatory minimum requirement  

Asset Quality
·         Non-performing loans to total gross loans stable at 2.5% as at June 2017 (December 2016: 2.1%)

·         NPL Coverage Ratio (with regulatory risk reserves) stood at 174.8% as at June 2017 (December 2016: 169.0%)

·         Cost of risk stable at 1.0% in H1 2017, from 1.1% in H1 2016 on the back of prudent risk management practices during the period  

Operational Efficiency
·         Cost-to-Income Ratio (CIR) up 430bps to 62.7% in H1 2017 (H1 2016: 58.4%) driven by increase in operating expenses

·         Operating Expenses increased by 38% y/y to 105.1 billion (H1 2016: 75.9 billion), and 34.8% q/q, driven by the high inflationary environment and the effect of unamortized AMCON charges

·         Net Interest Margin (NIM) remained unchanged q/q at 6.7% in Q2’17: however increased y/y by 40bps from 6.3% in H1 2016. Cost of Funds (CoF) of 5.6% increased from 5.1% in March 2017 and 3.6% in H1 2016  

Operational Highlights during the Period
·         Obinna Nwosu resigned as the Group Deputy Managing Director of the Bank

·         Roosevelt Ogbonna succeeded Obinna Nwosu as the Group Deputy Managing Director

·         Gregory Jobome appointed as the Executive Director, Risk

·       The Group received a national scale rating upgrade to AA- (previously rated A+) from Agusto and Co.

·        Redeemed $245.01 million outstanding principal and final coupon on the 5-year $350 million Eurobond  

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