Sunday, October 19, 2025
24.4 C
Lagos

Business

Troyka Holdings Chair, Biodun Shobanjo, Inducted into Loeries Hall of Fame

Nigeria’s foremost advertising leader and Chairman of Troyka Holdings,...

Zenith Bank, NEM, Seplat, AIICO, Dangote Cement, First HoldCo Recognised as Nigeria’s High-Performing Companies

L-R:    Michael Ani, Manager, Investor Relations, Dangote Cement; Oluseyi...

Finance Min, Wale Edun, to Keynote FiBOP Annual Confab Oct 18

The Honourable Minister of Finance and Coordinating Minister of...

Niteon Unveils First African Manufacturers Bank to Unlock $200bn Digital Export Market

Niteon, one of Nigeria's largest digital export marketplaces, has...

FG Boosts MSME Financing with NCGC Initiative

In a bid to boost economic growth and development,...

ICT

Konga Partners Verve to Delight Customers with Free Shopping Vouchers

  Konga, Nigeria’s leading composite e-commerce platform has partnered with...

NCC Spotlights Renewable Energy on World Consumer Rights Day

  The Nigerian Communications Commission (NCC) has concluded arrangements to...

Governors, NCC Set for Broadband Awareness Forum Oct 20

All Nigeria State Governors are set to discuss how...

VerveLife 5.0 Gears Up for Nairobi, Lagos Events

Following a successful series of Verve Life 5.0 satellite...

Telecom Infrastructure Critical to Successful 2023 Elections – Danbatta

The Executive Vice Chairman of the Nigerian Communications Commission,...

Capital Market

SEC DG: Commission Considering Gradual Implementation of ISSB Standards

The Director General of the Securities and Exchange Commission...

ISSB-Aligned Disclosures Will Lower Capital Costs, Attract Global Investors — SEC

The Securities and Exchange Commission (SEC) has unveiled plans...

SEC DG to Cadets:  Invest Early, Long Term to Create Wealth

Graduating Cadets of the Nigerian Defence Academy (NDA) have...

SEC DG: Accountability, Transparency will Boost Investor Confidence in Capital Market

The Director General of the Securities and Exchange Commission...

SEC DG: Digital Assets Represent $10tn Opportunity by 2030

The Director General of the Securities and Exchange Commission...

Insurance

13-year-old Rhema-Love Abraham Emerges Winner of 2025 Heirs Insurance Essay Championship

L:R- Funmi Olotu, National Coordinator, National Social Safety-Nets Coordinating...

Leadway Assurance: Insurance Company of the Year at 2025 BAFI Awards

L-R: Managing Director, Leadway Assurance, Gboyega Lesi; Publisher, BuisnessDay...

Heirs Insurance Group Announces Inaugural Travel Festival: A Call for Inclusive Travel Ecosystem for Africans

Heirs Insurance Group (HIG), Nigeria’s fastest-growing insurance group, has...

Sovereign Trust Insurance Celebrates 2025 Customer Service Week

Sovereign Trust Insurance Plc has been actively involved in...

Leadway: 55 Years of Innovation, Expanding Financial Access, Inclusion Across West Africa

Leadway, one of Nigeria’s foremost non-banking financial services and...

Business

Troyka Holdings Chair, Biodun Shobanjo, Inducted into Loeries Hall of Fame

Nigeria’s foremost advertising leader and Chairman of Troyka Holdings,...

Zenith Bank, NEM, Seplat, AIICO, Dangote Cement, First HoldCo Recognised as Nigeria’s High-Performing Companies

L-R:    Michael Ani, Manager, Investor Relations, Dangote Cement; Oluseyi...

Finance Min, Wale Edun, to Keynote FiBOP Annual Confab Oct 18

The Honourable Minister of Finance and Coordinating Minister of...

Niteon Unveils First African Manufacturers Bank to Unlock $200bn Digital Export Market

Niteon, one of Nigeria's largest digital export marketplaces, has...

FG Boosts MSME Financing with NCGC Initiative

In a bid to boost economic growth and development,...

ICT

Konga Partners Verve to Delight Customers with Free Shopping Vouchers

  Konga, Nigeria’s leading composite e-commerce platform has partnered with...

NCC Spotlights Renewable Energy on World Consumer Rights Day

  The Nigerian Communications Commission (NCC) has concluded arrangements to...

Governors, NCC Set for Broadband Awareness Forum Oct 20

All Nigeria State Governors are set to discuss how...

VerveLife 5.0 Gears Up for Nairobi, Lagos Events

Following a successful series of Verve Life 5.0 satellite...

Telecom Infrastructure Critical to Successful 2023 Elections – Danbatta

The Executive Vice Chairman of the Nigerian Communications Commission,...

Capital Market

SEC DG: Commission Considering Gradual Implementation of ISSB Standards

The Director General of the Securities and Exchange Commission...

ISSB-Aligned Disclosures Will Lower Capital Costs, Attract Global Investors — SEC

The Securities and Exchange Commission (SEC) has unveiled plans...

SEC DG to Cadets:  Invest Early, Long Term to Create Wealth

Graduating Cadets of the Nigerian Defence Academy (NDA) have...

SEC DG: Accountability, Transparency will Boost Investor Confidence in Capital Market

The Director General of the Securities and Exchange Commission...

SEC DG: Digital Assets Represent $10tn Opportunity by 2030

The Director General of the Securities and Exchange Commission...

Insurance

13-year-old Rhema-Love Abraham Emerges Winner of 2025 Heirs Insurance Essay Championship

L:R- Funmi Olotu, National Coordinator, National Social Safety-Nets Coordinating...

Leadway Assurance: Insurance Company of the Year at 2025 BAFI Awards

L-R: Managing Director, Leadway Assurance, Gboyega Lesi; Publisher, BuisnessDay...

Heirs Insurance Group Announces Inaugural Travel Festival: A Call for Inclusive Travel Ecosystem for Africans

Heirs Insurance Group (HIG), Nigeria’s fastest-growing insurance group, has...

Sovereign Trust Insurance Celebrates 2025 Customer Service Week

Sovereign Trust Insurance Plc has been actively involved in...

Leadway: 55 Years of Innovation, Expanding Financial Access, Inclusion Across West Africa

Leadway, one of Nigeria’s foremost non-banking financial services and...

Access Bank Poised for Greater Performance Beyond H1-18 Result

Access Bank Plc in its latest result for H1-2018, grew EPS by a marginal 0.42% vs. H1-17 to NGN1.37. Interest income increased by 15.31%, driven by growth in interest earned on customer loans. However, a faster growth in interest expense by 29%, led to a meagre 3% increase in net interest income.

Most non-interest income (NIR) lines – net fee & commission, net trading income and other income – grew, but offset by forex income which dropped by 157%. As a result, NIR in H1-18 was lower by 22% y/y – weighing significantly on the bank’s performance.

In its analysis, Cordros Capital said the bottom line, however, was supported by decline in impairment charge provision (-29%), lower opex (-6.5%), and significantly low ETR of 13.6%.

Improved Yield on Assets: ACCESS recorded impressive growth in asset yield in H1-18 (+86 bps to 12.97% in H1 vs. FY-17), despite the drop in interest rates on fixed income securities – which was largely accountable for the decline in interest income for some of its peers: ZENITHBANK (-12.81%), GUARANTY (-2.41%), and FBNH (-3.00%).

The growth emanated from improved yields on customer loans, which, by our estimate, surged 297 bps to 14.54% (vs. 11.56% in FY-17) in the half year, following fx translation impact (H1-18: NGN350/USD, vs. FY-17: NGN331/USD) on FCY loans, which constitutes 39% of total loan book.

Also contributing to the improvement in yield is the traction gained by the bank’s PayDay Loan product, which involves granting short-term (30-days) loans to retail customers (particularly salary earners). Total turnover on the platform has grown significantly by 2,737% to NGN10.9 billion in H1, and currently attracts up to NGN3 billion worth of transactions monthly.

We think this is sustainable and is expected to contribute more significantly to yields going forward. As a result, we estimate yield on customer loans of 15% in 2018E.

Furthermore, with an effective CRR of 40%, we see room for the bank to explore the opportunities inherent in the CBN’s new Differentiated CRR guideline, which permits DMBs to take out of their excess CRR, and give out as loans to the specified sectors.

Lastly, yields on fixed income instruments have resumed upward trajectory — as seen in the recent bond, NTB, and OMO auctions — further supporting our projection of improvement in asset yield in the second half. As a result, we estimate 64 bps y/y increase in asset yield to 12.75% in 2018E. Together, with expected growth in interest-earning assets by 7.80%, we estimate growth in interest income by 20% y/y in 2018E.

Elevated Cost of Funds: An expensive debt mix, as well as high cost of deposits, were major drivers of the elevated cost of funds (5.49%) recorded in H1-18. Cost of deposits was higher by 133 bps in H1 (vs. FY-17), amidst growth in total deposits by 7.31% in H1, vs. FY-17.

The cost of debt securities issued by the bank was also higher by 21 bps in H1, at 12.11% (vs. FY-17), as the bank continued to run its NGN100 billion CP programme, of which three tranches matured in H1, and three others are due for maturity in H2 (valued at NGN56 billion).

Also, the bank continues the servicing of its two outstanding Eurobonds, with one of the bonds callable in 2019, and the other due for maturity in 2021. However, there are efforts by management to reduce CoF, by repricing some outstanding CPs in the second half, and this reflected in the most recent tranche issued this month, wherein its implied yield reduced to 13.79%, as against 16.05% in its previous issue in February.

However, the recent rise in yields may limit how much room the bank has to reduce its cost of debt. As a result, we expect CoF will be lower by 23 bps (vs. H1-18) in FY-18 at 5.26%, but still higher than our computed CoF of 4.73% recorded in FY-17.

Asset Quality: Improvements in macro-economic fundamentals, following the rise in oil prices, has led to improved servicing of loans by debtors, particularly by in the upstream oil & gas sector.

Furthermore, the recent resolution of the sale of 9 mobile assets to Teleology has increased optimism around the repayment of the telco’s outstanding loan to the consortium of banks, standing at USD1.2 billion, and of which USD200 million is to be written off by the affected banks.

The proceeds from the sale (USD301 million) is to be shared among the banks on pro-rata basis, and c. NGN20 billion (according to management’s rough estimate) is expected to be paid to ACCESS in a few weeks and the balance restructured over 7 years.

With 9mobile constituting a bulk of the bank’s NPL (59.0%, as at H1-18), the resolution of the telco’s sale is likely to improve asset quality significantly. It is also worth stating that 37% of the 9 mobile exposure has been provided for.

Hence, we project a 86 bps y/y dip in cost of risk to 0.91% in 2018E, but remain conservatively above the 0.73% recorded in H1.

Improved Cost Efficiency: As we highlighted earlier, the 6% decline in opex in H1 contributed to the marginal uptick in the bottom line. However, owing to the drop in operating income (-9.58% y/y), cost-to-income ratio increased to 64.9% in H1, vs 62.15% in FY-17. In 2018E, we expect opex to inch up by 2% over 2017fy. However, with operating income expected to rise by 6% y/y in 2018E, we estimate cost-to-income ratio of 59.8% for the full year.

Estimate and Valuation: Overall, we forecast EPS of NGN3.00 and NGN3.05 in 2018E and 2019E respectively. Our TP of NGN13.34/s translates to 66.69% upside potential from today’s closing price of NGN8.75, with BUY rating.

On our estimates, ACCESS trades at forward P/E and P/BV multiples of 4.4x and 0.79x, below Bloomberg’s Middle East Africa peer average multiple of 10.2x and 1.0x, respectively.

Hot this week

13-year-old Rhema-Love Abraham Emerges Winner of 2025 Heirs Insurance Essay Championship

L:R- Funmi Olotu, National Coordinator, National Social Safety-Nets Coordinating...

Stanbic IBTC Bank, LOXEA BYD forge alliance for Electric Vehicle Financing

In a strategic move to advance Nigeria’s shift toward...

CBN, Bank of Angola Sign MoU on Technical Co-operation at IMF/World Bank Meeting

In an effort to enhance bilateral cooperation and technical...

NBS: Nigeria’s Inflation Falls to 18.02% in September, Lowest Level in Three Years

Nigeria’s headline inflation rate fell for the sixth consecutive...

NUPEMCO Marks 2025 CSW with Nationwide Pension Awareness Activities, Huawei-Supported National Essay competition

The Nigerian University Pension Management Company (NUPEMCO) celebrated the...

Topics

Stock Market Slightly Upturns After Bearish Run… ASI Up 1bp

The local bourse slightly upturned at the close of trade...

AMCON Acquired N3.7tr NPLs, Injected N2.2tr into 10 Banks

The Asset Management Corporation of Nigeria (AMCON) has so...

The Cement War

The global supremacy for cement production is growing per...

BEDC Alleges Illegal Entry into Premises by Henry Ajagbawa, Others

The BEDC Electricity Plc (BEDC) has alleged that one Henry...

NAIPE 2024 Conference Attracts 26 Insurance, Pension Firms as Partners

A total of 26 insurance and pension companies as...

Profit Taking in Bellwethers Drag Benchmark Index… ASI down 15bps

In yesterday’s trading session, profit taking in bellwethers - GUARANTY (-2.6%), ACCESS (-6.3%)...

Stanbic IBTC Bank Showcases upgraded EOL 2.0 Transaction Solution

Stanbic IBTC Bank Limited, a subsidiary of Stanbic IBTC...

Fitness Walk Will Drive Insurance Awareness, Penetration-NEM Insurance GMD

Mr. Tope Smart, Group Managing Director/CEO of NEM Insurance...
Exit mobile version