Access Bank 2016 PBT buoyed by 20% to N90.3 billion …Proposes N0.40 final dividend

Access Bank Nigeria Plc shareholders have course to reap from their investments in the bank, as the bank’s Board of Directors will be proposing a final dividend of N0.40 per share at the bank’s forth coming Annual General Meeting.

The Bank’s 2016 audited financial statement for the period ended December 31,  released on Monday by the Nigerian Stock Exchange (NSE) showed that Access bank, irrespective of the severe regulatory headwinds, challenging macro and micro economic environment  and forex challenges, recorded a result which a cross section of analysts described as healthy.

In the audited financial results released to the Nigerian Stock Exchange (NSE) on Monday, the Bank reported strong sustainable growth across all its four business lines despite a weak and volatile macro-economic backdrop.

During the period, the Group posted total revenue of ₦381.3 billion and profit before tax of ₦90.3 billion, accounting for 13% and 20% increase respectively over the same period in 2015.

Specifically, key drivers of the growth include a 20 basis points margin expansion on the back of a 32% year-on-year growth in net interest income of ₦139.1 billion. Non-interest income accounted for 49% of growth in operating income of ₦272.6 billion compared to ₦234.8 billion in 2015.

Commenting on the results, Group Managing Director/CEO, Herbert Wigwe, said, “The full year 2016 results demonstrate the effective execution of our strategy underpinned by a robust risk management framework. With strong business fundamentals, our position in the top tier was further consolidated in the industry.”

According to him, Access Bank’s robust and proactive risk management practices and focus on high quality corporates ensured that the Bank maintained an NPL ratio of 2.1%; well below the industry average, whilst retaining a healthy balance sheet growth. Prudential ratios remained strong and well above the regulatory limits with capital adequacy and liquidity ratios of 21.2% and 43.6%, respectively, consequently allowing the necessary headroom for growth.

“We remain cautiously optimistic about the macroeconomic environment in 2017, nonetheless, our objective of delivering sustainable shareholder value remains unchanged. We will also continue to maintain our proactive and disciplined risk management practices and leadership in sustainability initiatives, whilst positioning ourselves strategically to take the lead in the markets we play,” Wigwe noted.

The result revealed that Access Bank enjoys a healthy capital adequacy of 21. 2 per cent, and has proposed a final dividend of 40kobo, in addition to the 25kobo interim it has already paid. The final dividend implies a yield of around 6 per cent. “It is higher than our 30kobo estimate, which is the same as the 2015 final dividend” noted FBNQuest report.

Amidst challenging operating environment which characterized the 2016 operating environment in Nigeria, Access Bank result showed strong and resilient performance in spite of headwinds.

The result showed robust Profit before Tax (PBT), growth of 25 per cent y/y to N18.3billion. The strong PBT result, was driven by growth in both revenue lines. Funding income grew by 11 per cent y/y, while non-interest income also grew by 49 per cent y/y. These remarkable performances reinforced the revenue lines, outpacing growth in loan loss provisions of +260 per cent y/y) and opex’s 15 per cent y/y.

Thus, profit before provisions grew 6 per cent q/q, propelled by an impressive showing on the non-interest income line which grew by 30 per cent q/q.

The tax charge for the period was N4.0billion in Q4 2016 compares with a tax rebate of N3.1billion in Q4 2015, while Profit After Tax (PAT) of N11.8bn declined -25 per cent y/y, driven by a loss on the other comprehensive income line of –N2.6billion.

FBNQuest Research, in a report shortly after release of the result noted “All in all, we find Access Bank’s results healthy. The underlying results were broadly in line with our expectations, even after tax. The capital adequacy of the bank is sound at 21.2%.”

The investment analysts further noted “The PBT result beat our forecast by 43%, but we suspect that consensus was closer to the result. Profit before provisions beat our forecast by 12%, thanks to another solid quarter for non-interest income.”

The research outfit noted that positive market reaction will trail the bank’s result, hence it is expected that its non-performing loan status remains healthy within regulatory threshold, its NPL in Q3 2016 was 2.1 per cent.

“We believe Access Bank should be trading higher than its current valuation. Although the shares are among the best performing ytd ,following on from their strong performance in 2016 : +21% vs ASIs -6.2%), we expect to see further gains over the rest of the year. Our estimates are under review. We rate Access shares Outperform”

Access Bank Plc, is a full service commercial bank with headquarters in Nigeria and operations across Sub-Saharan Africa, the UK, Asia and the Middle East.