Access Bank Q1 2019 Results Review: Still Sizable Upside Potential Post Q1 Results


Tuesday, April 23, 2019 / 08:40 AM / FBNQuest Research


10% avg. increase to our 2019-20E EPS forecasts

Access Bank’s (Access) Q1 2019 results beat ours and consensus forecasts on every criterion. In particular, funding income was exceptionally strong, with a growth of 27% y/y and a positive variance of 23% relative to our forecast. The stellar growth in funding income was driven by a 159% y/y increase in income from investment securities on the back of a 54% volume growth on the investment securities line during the quarter. 

In contrast to the growth trends on the P&L, there was visible deterioration in balance sheet metrics because unlike the P&L which showed only Access Bank’s numbers, the balance sheet numbers reflected consolidated numbers for the post-merger entity (including Diamond). On its Q1 2019 earnings call, management disclosed that total NPLs and impairments taken by Diamond were c.N269bn and N219bn respectively as at December 2018. Further write-offs of N61bn, loan recoveries of N4.5bn and loan repayments of N63bn in Q1 2019 resulted in a reduction of impairments and NPLs to c.N156bn and over N200bn for Diamond. 

As such, NPL and coverage ratios for the combined entity deteriorated to 10.0% and 88.2% (compared with 2.5% and 160% respectively for Access as at Q4 2018). Following the results, we have increased our 2019-20E EPS forecasts by an average of 10% and our price target by c.8% to N14.7. The upgrades to our forecasts translate to 2019E PBT and PAT of N140bn and N117bn respectively and an implied ROAE of c.19.6%, just shy of management’s 20% guidance. Our new price target implies a potential upside of c.114% from current levels. As such, we retain our Outperform rating on the shares. 


Q1 PBT up 64% y/y, driven by pre-provision profits & impairments

Access Bank’s Q1 results showed strong growth across the P&L. PBT grew by 64% y/y to N45.1bn. Although a -32% y/y decrease in loan loss provisions contributed to the strong earnings growth, pre-provision profits which was up by 22% y/y was the major driver. 

From a revenue perspective, funding income was the main driver, with a growth of 27% y/y. However, non-interest income also grew strongly by 17% y/y. Below the tax line, PAT grew by 192% y/y, thanks to a positive result of N5.9bn in other comprehensive income. (OCI). Sequentially, PBT and PAT grew by 37% q/q and 95% q/q respectively. 

Similar to the y/y trends, double digit q/q growth in pre-provision profits, a significant reduction in loan impairments and a positive result in OCI were the key drivers behind the strong earnings growth.


Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.


Related News

1.       ACCESS Declares N41.15bn PAT in Q1 2019 Results,(SP:N6.05k)

2.      Diamond Bank Shareholders: How To Process N1 Cash Payment Arising From Scheme of Merger

3.      NSE Lists Additional Shares Arising from the Scheme of Merger between ACCESS and DIAMONDBNK

4.      Access Bank Ratings Affirmed; Outlook Stable; Diamond Bank Ratings Discontinued On Effective Merger

5.      ACCESS Updates on Scheme Consideration of Cash and Shares for Shareholders of DIAMONDBNK

6.      Full Suspension of Trading In Shares Of Diamond Bank Plc - NSE

7.      Access Bank Plc Announces the Company’s Board Meeting Date and Closed Period

8.     Access Bank Plc Holds Signing Ceremony for N15 Billion Green Bond Issuance

9.      Access Bank Plc Obtains Court Sanction Of The Merger With Diamond Bank

10.  Access Bank Notifies of CBN and SEC’s Final Approval of the Proposed Merger with DIAMONDBNK

11.   Access Bank Plc FY 2018 Conference Call and Earnings Presentation - The Key Takeaways

12.  ACCESS Declares N94.98bn PAT in Q4 2018 Results, Proposes N0.25k Final Dividend

13.  Diamond Bank Shareholders Approve Merger with Access Bank

14.  Shareholders Endorse Access Bank’s Plan to Merge with Diamond Bank Plc

15.   Another Merger Benefit as Diamond Bank Introduces PayDay Loan

16.  Access Bank Gets CBN, SEC’s Approval To Acquire Diamond Bank

17.   Access Bank to have 12million BVN Accounts After Merger with Diamond

18.  Access Bank Announces The Cancellation Of EGM Scheduled To Hold On February 1, 2019

19.  Access Bank Plc Announces Date of Board Meeting and Closed Period

20. Access Bank Gets CBN, SEC’s Approval To Acquire Diamond Bank – Vanguard – Jan 15, 2019

21.  Access Bank to have 12million BVN Accounts After Merger with Diamond

22. Nigeria-Based Access Bank And Diamond Bank Ratings Affirmed On Announced Merger; Outlook Stable

23. Customers To Access 3,100 Access-Diamond Bank ATMs Free By January 1st, 2019

24. Fitch Places Diamond and Access on Rating Watch on Merger Announcement

25.  Moody’s: Access, Diamond Deal, Positive for Nigerian Banking System – ThisDay – Dec 22, 2018

26. Access Bank To Hold An EGM On February 01 2019 To Seek Shareholders’ Approval on Potential Merger

27.  Key Takeaways From The Conference Call On The Potential Access Bank – Diamond Bank Merger

28. Access – Diamond Merger: Post-Consolidation, Capital Raise, Jobs, Branches And Investors

29. Diamond Bank Gains N4.40bn In Market CAP In Two Days - ACCESS Dips By -5.52% As DIAMOND Gains 9.62%

30. Initial Thoughts on Potential Merger To Create Nigeria’s Largest Bank

31.  SEC Nigeria Confirms Notice OF Access - Diamond Bank Potential Merger Plans

32. Access Bank Gains N20.25b In Market CAP Today - ACCESS Grows By 9.40% As DIAMONDBNK Gains 9.47%

33. Diamond Bank Eurobond Rallies 800bps Following Merger Announcement

34. Diamond Bank Selects Access Bank As Preferred Bidder For Potential Merger

35.  ACCESS, DIAMONDBNK Share Prices Move Up On Potential Merger News

36. Access Bank Confirms The Signing of Memo of Agreement with Diamond Bank Over A Potential Merger

37.  What Does It Mean That Independent Directors Accuse Diamond Bank Of Corporate Governance Issues?

38. Why Diamond Bank Opted For A CBN-Managed Acquisition By Access Bank Over The Carlyle Group

39. Access Bank and Diamond Bank Issue Denials on M and A

40. Diamond Bank Receives CBN Approval To Operate As A National Bank

41.  DIAMONDBNK Lost N5.09bn This Week To Date; Extends November Loss to N15.75bn

42. Diamond Bank Plc - Overblown Fright Or Justified Concerns?

43. Diamond Bank Trades 59% of Total Market Volume; Hits 208.68m, Highest in 10 Months

44. DIAMONDBNK Has Lost N12.74bn in Market CAP, 39.01 per cent Month To Date

45.  Fitch Downgrades Diamond Bank to 'CCC'

46. Fitch Affirms Access Bank at 'B'; Stable Outlook

47.  Nigerian Diamond Bank Downgraded On Weaker-Than-Expected Asset Quality; Outlook Negative

48. Diamond Bank Plc Postpones 9M 2018 Conference Call Due to Unforeseen Circumstances

49. Diamond Bank Plc 9M 2018 - Underlying Pressures Persist

50. Access Bank Plc Q3''18 Results - Lower Cost of Funds; Better Asset Quality Propel Earnings

51.   Diamond Bank Plc Refutes Recent Speculations On Capital Injection

52.  Access Bank Plc 2018- 2022 Strategy – Presentation

53.  2018-2022 Transformational Strategy: Access Bank targets 30ml customers

54.  Access Bank Launches New Five-Year Strategy – to Become Africa’s Gateway to the World

 Proshare Nigeria Pvt. Ltd.

Related News