Monday, August 22, 2016 5:22 PM / Research
The microeconomic challenges that influenced business outlook in 2015 financial year are yet to abate in 2016- the banks have witnessed growing headwinds and tougher operating environment in the current year.
The slow economic activities, low global oil price, shortage of FX, technical devaluation of currency with attendant impacts on NPL, eventual floating of Naira, increase in MPR by 200bpts to 14% in the face of growing inflation and negative GDP growth- this had impacted and still impacting both top-line and bottom-line of the banks.
In the face of these mounting challenges, Access Bank Plc sustained both top-line and bottom-line growth, posting 3% and 26% positive growth respectively. The bottom-line closed at N39.49billion against N31.29billion- this had contributed to 19% growth to EPS to close N1.61 per share. We observed improved cost management as CIR moderated at 53.7% against 59.2% (YoY), while the strong performance of 42% growth from interest-income had impacted the bottom-line considerably.
However the bank booked 15% growth in impairment charges to close at N10.21billion- Depreciation of Naira and volatility in FX market had impacted the outlook of the NPL, which was driven by difficult operating environment
Also, the NPL ratio moved up to close at 1.9% against 1.7% posted 2015FY period while the bank maintained the NPL ratio below regulatory benchmark of 5% - this remains commendable and further indicates sustained quality risk management strategies.
Summarily, below are the key takeaways from the Half-year 2016 presentation as presented by the management of the bank;
• NPLs are adequately provisioned
• The bank is adequately capitalized
• The bank plans to convert foreign currency loan to local currency loan
• Strong performance from interest income drives profitability
• Gains on derivatives cushion the effect of FX revaluation
• Impressive gains in fee and commission income contributed bottom-line
• Sustained growth in inflation and currency devaluation impacts cost
• Currency devaluation impacts NPL and cost management
1. ACCESS declares N39.49 billion PAT in Q2 2016 Result Proposes 25kobo Interim Dividend SP N5.34k
2. Inflation Rate to Accelerate to 17.2 in July 2016 - Access Bank
3. Access Bank Plc to Submit Half Year Audited Financials Not Later Than 31st August 2016
4. Access Bank anticipates the MPC will retain the existing FX policy regime
5. Inflation to Moderate Downwards to 15.4% in June 2016 - Access Bank Plc
6. Access Bank anticipates the MPC will retain the existing FX policy regime
7. ACCESS Issues Release Over EFCC s Investigation
8. ACCESS Records 4.9bn Loss in Other Comprehensive Income Line in Q1 2016 Results
9. ACCESS declares N19.42 billion PAT in Q1 2016 Result,(SP:N4.51k)
10. Takeaway from Access Bank Plc Conference Call - March 2016
11. ACCESS: Fundamentals Support Significant Upside Potential
12. ACCESS: NIR gains and lower taxes power 2015 earnings
13. ACCESS Q4 2015 OPEX Grows by 41% YoY; Shares Rated Outperform
14. ACCESS declares N65.87 billion PAT; Proposes 30kobo Dividend in 2015 Audited Result,(SP:N4.51k)