ACCESS BANK Half-Year Earnings Presentation: The key takeaways


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


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