Sunday, September 28, 2025
26 C
Lagos

Access Bank: Will Diamond Synergy Spur Growth Long Term?

Access Bank Plc released its H1-20 earnings recently which revealed that the bank recorded a marginal decline in profitability. On the EPS of NGN1.73 (-8.9% vs. H1-19), the bank’s board has proposed an interim dividend of NGN0.25/s (H1-19: 0.25/s), which equates to a yield of 3.9% based on the closing price of NGN6.40 as of the 3rd of September 2020.
The bank recorded an interest income decline of 9.6% y/y to NGN246.72 billion in the period, pressured by the decline in income from investment securities (-31.4% y/y to NGN74.00 billion).

According to Cordros Capital, the decline in income from investment securities was expected given increased capital allocation to risk asset creation given the CBN’s LDR policy, as well as the precipitous decline in yields on assets from the prior year.

This decline was steep enough to offset growth in other contributory lines, as income from loans and advances to customers (+0.3% y/y to NGN160.61 billion) and banks (+7,598% y/y to NGN6.72 billion), as well as cash and balances with banks (+11.5% y/y to NGN5.39 billion) all expanded over the period.
Interest expense expanded moderately over the period, advancing by 2.3% y/y to NGN120.52 billion, with the most pressure exerted by interest on deposits from financial institutions, which rose by 48.8% y/y to NGN34.07 billion, and offset the declines from  deposit from customers (-11.6% y/y) and debt securities (-31.3% y/y).

The bank seems to have now optimised its deposit base and is taking advantage of the synergy with Diamond bank, as cost of deposits declined by 27.9% from the Q4-19 standalone period to the Q2-20 period. While there was a moderate growth in expense on deposits from customers q/q in Q2-20 (+4.2%), the run rate would still be well below expense in 2019FY.
Non-interest income grew by 194.5% y/y to NGN138.85 billion, supported by strong growth in income from investment securities (3,152% y/y to NGN134.84 billion), primarily driven by derivative instruments, which offset the substantial FX revaluation loss recorded (+988.7% y/y to NGN57.6 billion).
Operating expenses increased substantially during the period by 40.0% y/y to NGN174.29 billion, given the effects of the consolidation with Diamond bank. Consequently, all major contributory lines recorded spikes, with regulatory charges – AMCON levy (+56.5% y/y to NGN35.44 billion) and NDIC premium (+28.8% y/y to NGN7.54 billion) –, personnel expenses (+16.0% y/y to NGN36.25 billion), and other expenses (+49.2% y/y to NGN77.70 billion) all expanding.

Given the significant year-on-year expansion in operating expenses, the bank’s cost-to-income ratio (after accounting for LLEs) deteriorated to 70.1% from 66.1% and 55.0% in the previous quarter and corresponding period of the prior year, respectively.
Consequent on the growth in income relative to expenses, the bank recorded a profit before tax growth of 1.8% y/y to NGN74.31 billion, while PAT settled 1.4% lower y/y at NGN61.03 billion, given the higher income tax expense (+19.7% y/y).

spot_img
spot_img

Hot this week

AIICO Deepens Bond with Retirees, Holds Annuity Forum in Lagos, PH

Mr. Gbenga Ilori, Head, Retail Business at AIICO, in...

Sovereign Trust Insurance Holds 30th AGM

L-R: Eric Balogun, Independent Director, Emi Faloughi, Director, Kayode Adigun,...

Unity Bank Shareholders Approve Merger with Providus Bank

  EGM: From left: Mr. Usman Abdulkadir, Executive Director, Risk...

NNPCL: Ogoni Re-entry is a Beacon of Reconciliation through Collaboration

The re-entry into Ogoniland marks a historic turning point...

NLNG, NCDMB Celebrate 122 Graduates of Train 7 HCD Training Program

NLNG in collaboration with the Nigerian Content Development and...

Topics

AIICO Insurance Brings Joy, Hope to Visually Impaired Children on Children’s Day

In commemoration of this year’s Children’s Day, AIICO Insurance...

Local Content, NCDMB on the Spotlight at 2025 NOG Conference

The recently held 2025 Nigeria Oil and Gas (NOG)...

P+ Measurement Services Wins 6 Awards in 2022…LaPRIGA, Brandcom, Others

P+ Measurement Services, Nigeria’s leading Independent Public Relations measurement...

Global Telcos May Dump Africa over Profit Threat

Africa may well be the next frontier for growth...

Nigeria Drives 23m Units African Smartphone Market in Qtr3

While market saturation and U.S.–China tensions are placing the...

Stanbic IBTC Asset Mgt Launches N20bn Infrastructure Fund Series III Issuance

Stanbic IBTC Asset Management, a subsidiary of Stanbic IBTC...

Fidelity Bank Wins Citigroup Excellence Award for Superior Payment Efficiency

Nneka Onyeali-Ikpe Managing Director/CEO Fidelity Bank Plc In recognition of its excellent...

BPE to Commercialise NTA, NAN, FRCN

The Bureau of Public Enterprises (BPE) says it is...
spot_img

Related Articles

Popular Categories

spot_imgspot_img