26 August 2014, Lagos – Access Bank Plc’s second quarter 2014 results released by the Nigerian Stock Exchange (NSE) yesterday has revealed that the bank’s net interest income and non-interest income went up strongly by 30 per cent y/y and 19 per cent y/y to N27.3 billion and N13.7 billion respectively. As such, the bank’s profit before provisions increased 26 per cent y/y to N41billion.
However, both profit before tax and profit after tax declined by 8 per cent y/y and 11 per cent y/y to N13.7 billion and N10.9 billion respectively because of tough comparable. In Q2 2013, Access bank had booked a net recovery figure on the provisions line of N9.7 billion. In Q2 2014, it expensed to N2.0 billion in provisions.
Analysts at FBN Capital noted that there were other contributing factors such as those on the discontinued operations and other comprehensive income lines
“But the impact of these was modest compared with the change on the provisions line. A slight fall (5.6per cent y/y) in opex and the tax charge (29per cent y/y) provided slight relief but the impact of the negative y/y trends on earnings was significant. Sequentially, both PBT and PAT saw single digit changes relative to their corresponding Q1 figures.
“Net interest income was again the stronger performer of the two income lines. Non-interest income actually declined 34 per cent q/q, slightly overshadowing a 28 per cent q/q increase in net interest income to leave profit before provisions down 2.6 per cent y/y. Offsetting movements in the provisions and opex lines led to PBT growing 2.0 per cent, “they stated.
The results, FBN Capital said, were in line with their expectations, with both PBT and PAT coming in within 2 per cent of its estimates.
They added: “Positive surprises on the net interest income and opex lines were offset by negative surprises in loan loss provisions and non-interest income. To our minds, the most important point to take away from these results is that they confirm our expectations that Access Bank is likely to expand its ROAE by over 400bps to just over 18 per cent in 2014. “Within our coverage universe, Stanbic IBTC is the only other bank which we expect to show an ROAE expansion higher than Access.
“Management’s guidance is to deliver an ROE of 20 per cent in 2014 (our 2014E ROAE forecast of 18.0 per cent is equivalent to 19.1per cent in ROE terms). “We believe consensus is around 17.5 per cent ROE. We should add that H2 2013 provides easy comparables for Access as we look into H2 2014. Recall that the quarterly average PBT in H2 2013 was N9.4bn compared with N13.0bn in H1 2013 (the H1 2013 average was inflated by the recovery the bank reported in Q2 2013).”
– This Day