Access Bank Nets N94.98bn, Impairment Charge Drop 57.5%, Offers N0.25 Div

Access Bank Plc, Thursday presented its audited financials for the year ended December 31, 2018, after close of trading on the Nigerian Stock Exchange (NSE). Highlights of the result included a 15.17% rise in gross earnings; while profit before tax was up faster at 31.99% after credit impairment charge dropped 57.47%; and net profit grew by 58.07% on the back of a decline in income tax expenses. The directors have recommended a final dividend of 25 kobo, bringing total payout for the year to 50 kobo per share. Qualification date is April 11, 2019, while payment is billed for April 25 when shareholders are expected to give their approval at the annual general meeting.

It is noteworthy that the board restated the financials for the 2017 financial year, just as interest income increased, just as interest expenses as well as fee and commission income and expenses. There was also N96.324bn net gain on investment securities, compared to the previous N33.403bn loss in 2017, whose impact was blighted by the net foreign exchange loss of N23.768bn, as against the N107.932bn in 2017.

Gross earnings for the period rose N69.665bn to N528.744bn from N459.075bn, with the corporate & investment banking segment contributing N196.655bn or 37.2% of total; followed by the N155.691bn or 29.44% from commercial banking; ahead of the N95.176bn or 18% by personal banking, while business banking accounted for N81.221bn or 15.36%.
The bulk of earning was the interest income of N380.914bn, up from N319.854bn, mainly the N164.443bn or 42.9% from commercial banking; while corporate & investment bank followed with N149.238bn or 39.18%. A further review of the numbers showed that interest on customer loans and advances stood at N259.837bn, up from N230.824bn.

Interest expense climbed from N156.402bn in 2017 to N207.336bn, the lion’s share of which came also from corporate/investment banking and commercial banking at N98.396bn, or 47.46% and N83.499bn or 40.27% respectively. Net interest income stood at N173.578bn from N163.451bn. The bank incurred N125.109bn in expenses on customer deposits, up from N91.365bn, followed by the N39.104bn on deposit from financial institutions, compared to N16.715bn in 2017
Net impairment charge dropped to N14.656bn from N34.466bn, out of which N8.054bn or 54.95% was derived from the commercial banking segment; followed by N3.486bn or 23.79% from corporate/investment banking. This resulting in net interest income after impairment charges of N158.921bn as against N128.984bn.

Fee and commission income increased to N62.095bn from N56.674bn, boosted by N31.688bn credit related fees and commissions, up from N24.453bn; with account maintenance charge and handling commission amounting to N6.426bn, as against N6.454bn in 2017. Commissions on bills and letters of credit fell from N3.499bn to N2.248bn; commissions on other financial services dipped from N10.043bn to N4.756bn; just as channels and e-business income rose to N8.382bn from N5.79bn; while virtual products rose to N5.782bn from N2.155bn; expense inched from N7.254bn to N9.6bn; leaving net fee and commission income at N52.494bn, up from N49.419bn.
Other operating income climbed from N8.018bn to N13.178bn, personnel expenses rose marginally to N57.144bn from N54.806bn; rent expenses notched N4.334bn from N2.484bn; depreciation increased to N13.535bn from N11.237bn and amortization, N2.799bn from N2.407bn.

Other operating expenses increased slightly also to N116.149bn from N111.845bn, driven mainly by the N20.289bn administrative expenses, which rose from N18.086bn; followed by the N20.035bn contribution to the Asset Management Corporation of Nigeria (AMCON) sinking fund for the year, up from N17.378bn in 2017
This resulted in profit before tax of N103.187bn, up by N25.014bn or 31.99% from the N78.169bn reported in 2017; mainly from the N86.306bn or 83.64% contributed by the corporate & investment banking business; which was followed by commercial banking’s N27.873bn or 27.01%.

The N9.875bn or 54.62% drop in income tax expense, N6.465bn of which came from corporate & investment banking, left profit after tax at N94.981bn, as against N60.087bn in 2017, translating to basic earnings per share of N3.31, compared to N2.11 in prior year.
A further breakdown of the numbers shows that N435.743bn of gross earnings for the period, representing 82.41% was derived from Nigeria; followed by N62.417bn or 11.8% came from the rest of Africa, while Europe pooled N32.777bn or 6.2%.
Also N75.248bn or 72.92% of total PBT came from its Nigerian operations; followed by N15.141bn or 14.67% from Europe; while the rest of Africa added N12.797bn or 12.4% to its PBT.

On the balance sheet, total asset climbed to N4.954tr, from N4.102tr, representing N849.153bn or 20.74% increase, helped by the N501.072bn investment securities, compared to N278.167bn; even as customer loans and advances growth was flat at N1.993tr, from N1.995tr. Total liabilities improved by N872.598bn or 24.3% from N3.591tr to N4.463tr; mainly due to the increase in customer deposits from N2.244tr in 2017, to N2.564tr, representing N320.029bn or 14.26%; while deposits from financial institutions soared to N994.572bn, up by N544.376bn or 120.92%. Shareholders’ fund however dropped to N490.511bn from N511.195bn in 2017.
Meanwhile, Access Bank hopes to finalize its business combination with Diamond Bank Plc by April 1, 2019, a marriage expected to Africa’s largest retail bank by customer base.

According to the deal, Access Bank is acquiring the entire issued share capital of Diamond Bank in exchange for a combination of cash and shares in the emergent Access Bank via a Scheme of Merger that will see the latter’s shareholders receiving N3.13 per share, representing 260% of its closing price on Friday, December 15, 2018.
According to Investdata Research Findings, Diamond Bank’s has a 52-week high of N3.73 per share.
The N3.13 per share would however comprise of N1.00 cash consideration per Diamond Bank share, representing total cash amount of N23.16bn, or $75.588m; and allotment of 6,617,253,991 new shares of Access Bank, representing two new Access Bank shares for every seven Diamond Bank units.

https://investdata.com.ng/2019/03/access-bank-nets-n94-98bn-impairment-charge-drop-57-5-offers-n0-25-div/