Access Bank’s first quarter of 2017 results has shown a high performance with very strong financial indices. The bank’s profit before tax PBT inched up to N31 billion a growth of 38 per cent, while Profit After Tax PAT, grew much by 66 per cent to N25billion.
Afrinvest in a note to investors said that all the bank revenue lines contributed to the PBT growth. Funding income grew 23 per cent while non-interest income grew 48 per cent, such that pre-provision profits increased by 34 per cent. Although both loan loss provisions and operating expenditure were also up by more than 30 per cent, the magnitude of the growth in revenues proved significant.
As a result the changes stood out even more. PBT grew by 70 per cent quarter on quarter while PAT was up by 108 per cent q/q. The main driver behind the strong q/q earnings growth was a significant reduction in loan loss provisions (-67% q/q). This reduction more than offset a -10% q/q fall in non-interest income.
According to Afrinvest “Compared with our estimates, the results were well ahead of expectations; PBT and PAT beat by 78 per cent and 72 per cent respectively. Again, the revenue lines were the main drivers. Funding income beat by 21 per cent while non-interest income was ahead by 32 per cent. As such profit before provisions came in 26 per cent ahead of our forecast. Slight positive and negative surprises on the loan loss provisions and opex lines offset each other.
“After a subdued last quarter 2016, once one-off gains are stripped out, the first quarter 2017 results are very encouraging, especially with both revenue lines contributing. Similar to the results of other banks which have reported first quarter results, margin expansion has been a key driver behind the positive surprises we are seeing in banks’ results, and mainly from the fixed income portfolio. Note that Access Bank’s loan book also declined slightly on quarter by quarter basis.
“On the back of these results, we would expect consensus forecasts for 2017 (PBT of N88 billion to move up such that consensus estimates start to move towards management’s guidance of 20 per cent ROAE for 2017. The shares are up 12.4 per cent year to date, 16.7 per cent ahead of the All Share Index ASI. Our estimates are under review. We rate Access shares Outperform.”
