April 25, 2018/FBNQuest Research
Event: Access Bank reports Q1 2018 results
Implications: Limited revisions to consensus 2018 PBT forecasts
Positives: Non-interest income grew 15% y/y
Negatives: Provisions spiked by 55% y/y; PAT fell by 24% y/y due to a negative result of N5.3bn in OCI
Access Bank’s (Access) Q1 2018 results which were published this afternoon showed that PBT came in flat y//y to N27.4bn. The flattish earnings y/y was mainly driven by a 55% y/y spike in loan impairment charges. Moving up the P&L, pre-provision profit advanced by 9% y/y. Although both revenue lines contributed to the y/y growth in revenue, the non-interest income line which was up by 15% y/y was the key driver.
This revenue line was boosted by a remarkable growth of 407% y/y to N27.7bn in income from fx swaps, which completely offset a net fx loss of -N6.8bn. Funding income grew by around 5% y/y. Further down the P&L, PAT declined by 24% y/y because of a negative result of –N5.3bn in other comprehensive income.
Sequentially, PBT grew by 283% q/q. Again, non-interest income which was up by 106% q/q was the key driver. A 77% q/q reduction in loan loss provision also contributed to the sequential growth in earnings. Despite the negative result on the OCI line, PAT grew by 19% q/q.
Compared with our forecasts, PBT beat by 11%, mainly because of the positive surprise in non-interest income. However, PAT missed by 22% due to the negative surprise in OCI.
Access Bank’s loan book was flattish y/y, in contrast to the q/q decline in loan growth showed by other banks that have reported Q1 2018 results. Management had guided to a 10% y/y growth in loans for 2018E in other to compensate for declining yields on T-bills and supported by improving macro-fundamentals. When annualised, Access Bank’s PAT implies a ROAE of around 13%, well short of management’s 20% guidance. Consequently, we would be looking to see if this ROE guidance will be revised on the bank’s conference call which is billed to take place later this week.
Access Bank’s Q1 PBT tracks broadly in line with consensus 2018E PBT forecasts. Consequently, we expect to see limited revisions to consensus 2018E PBT forecast and a subdued reaction from the market.
We rate Access shares Neutral. Our estimates are under review.
Access Bank Q1 2018 results: actual vs. FBNQuest Capital Research estimates (N millions)
