Access Bank Raises Interim Dividend as Profit Jumps 42%

Access Bank Raises Interim Dividend as Profit Jumps 42%

Access Bank Plc declares 30 kobo interim dividend as half year profit expands. Nigeria’s largest bank by total assets posted a profit before tax of N97.49 billion, a 31% increase above N74.31 billion reported in the comparable period in 2020.

The bank’s financial statement shows a profit after tax hits N86.93 billion, 42.4% higher than N61.03 billion it recorded in the first half of 2020 notwithstanding a 74.1% increase in credit impairment charge booked.

In a statement submitted on the Nigerian Exchange, the Board of Directors proposed an interim dividend of 30k per ordinary share of 50k each, against 25k paid in the comparative period of 2020. Following an improved economic performance, the bank recorded significant earnings growth supported by the core income segment.

Access bank booked N28.67 billion as impairment charge on credit losses in the first half, significantly higher than N16.47 billion recorded last year amidst the pandemic.

Cordros Capital said the improvements in the bank’s funded business has continued to outperform its counterparts and deviate from the pattern recorded in the year thus far, even its non-core earnings settled relatively weaker on a year-on-year basis.

Despite the aforementioned and the even higher operating expenses, the growth in funded income was enough to drive a substantial expansion in the bank’s bottom line.

The Pan-African lender sees 40.7% earnings per share growth in the first half of 2021 to N2.42 in the last 12 months.

The bank recorded an interest income growth of 29.6% year on year to N319.73 billion, the feat which analysts noted was supported by impressive growth in income from investment in securities, loans and advances.

The bank’s financial statement shows that income from investment securities jumped 78.6% N132.19 billion from N74 billion last year. Similarly, income generated from loans & advances to banks increased 18.3% year on year to N7.95 billion from N6.72 billion.

In addition, the bank earned interest income from its loans & advances to customers, up 8.6% year on year to N174.43 billion) from N160.61 billion in the comparable period in 2020.

The expansions in these lines were enough to offset the decline in income from cash and balances with banks, down 4.1% year on year to N5.17 billion from N5.39 billion, analysts at Codros Capital said.

Also, analysts added that lender’s first half performance was driven by a combination of rising yields on fixed income securities and strong growth in risk assets creation, up by 11.3% to N3.58 trillion in the period.

The bank’s interest expense declined marginally by 0.7% year on year to N119.67 billion, supported mainly by the moderation in interest expense on deposits from customers, slope downward by 11.1% to N56.77 billion compared with N68.83 billion last year.

Analysts at Cordros said the reduced expense on deposits from customers neutered the impact of the 72.3% increase in borrowings to N21.61 billion and a 7.2% jump in debt securities issued to N10.14 billion.

Due to the low interest rate environment, the bank cost of funds moderated to 2.9% from 3.7% in the first half of 2020, despite the 6.9% year-to-date increase in interest-bearing liabilities.

Meanwhile, non-interest income declined by 16.5% to N115.90 billion from N138.85 billion last year, driven by losses on investment securities, particularly non-hedging derivatives and a decline in other operating income.

Despite the weaker non-funded income growth, analysts at Cordros Capital said funded income growth was substantial enough to lead to a growth in operating income (+15.6% y/y).

Access bank operating expenses increased by 8.9% to N189.80 billion during the period, following higher regulatory costs and inflationary pressures.

Save for other operating expenses which slowdown 3.9% to N74.64 billion, all other lines recorded spikes, driven overall expense northward. The breakdown shows that NDIC premium jumped 32.2% to N9.96 billion, personnel expenses increased 20.3% to N43.60 billion, AMCON levy surged 17.1% to N41.51 billion and non-cash charges jumped 15.7% to N20.08 billion.

Nonetheless, the bank’s cost-to-income ratio improved to 66.1% from 70.1%, given the higher year-on-year expansion in operating income relative to total operating expenses.

The bank’s performance remains impressive in the recovering economic environment. For the rest of the year, Cordros Capital indicates an expectation that the growth momentum will be sustained as risk asset acceleration continues in light of the sub-regulatory limit on loan to funding ratio (LFR).

“We also see room for improvements in FX trading gains despite persisting weaker debt recoveries”, analysts said.

Access Bank Raises Interim Dividend as Profit Jumps 42%