Access Bank Holdings records Strong financial growth amid rising costs in Q1 of 2024

Access Bank Holdings (ACCESSCORP) released its unaudited Q1 24 results on April 30, reporting a 148.5% year-on-year growth in pre-tax profits and a 118.9% year-on-year growth in net profits. The earnings were primarily boosted by an increase in interest income and other income sources such as dividend income, bad debt recoveries, and income from investments. The stock has decreased by 27.21% year-to-date, attributed to negative sector sentiment following the CBN’s announcement of system-wide bank recapitalization.

Financial Performance 

Interest income showed a significant 183.1% year-on-year growth, linked to a 19.7% expansion in the group’s loan book. Interest earned from investment securities rose by 141.2% year-on-year, alongside a 59.5% year-to-date increase in investment assets. Non-interest income also saw a 48.0% year-on-year rise, driven by various sources including dividends on equity securities, bad debt recoveries, and other investments.

Operating expenses increased by 86.5% year-on-year, mainly due to higher fees, IT expenses, and personnel costs. Despite this, the group’s cost-to-income ratio decreased to 55.3%, leading to a 124.8% year-on-year growth in pre-provision operating profit. Additionally, loan impairment provisions rose by 21.8%, impacting pre-tax profits and resulting in a higher effective tax rate compared to the previous year.

Asset quality

Asset quality showed signs of improvement, with the cost of risk decreasing by 43 basis points to 1.0%. The Capital Adequacy Ratio also improved to 20.8%, above the regulatory requirement of 16.0%.

Conclusion

In conclusion, the group faced upward pressure on its cost of funds, potentially impacting interest expenses. However, it is expected that increased market yields will support interest earnings in the upcoming months. SOURCE: Coronation Asset Management Limited