Proshare Analyst Snapshot on Access Bank Plc Q3 2011

8/3/2019 Proshare Analyst Snapshot on Access Bank Plc Q3 2011

1/17

Access Bank Plc

Q3, 2011 Results ReviewIssued on December 12, 2011

Q3Q3Q3Q32011

201120112011

ISSN 1597 - 8842 Vol. 1 No. 85


2/17

Access Plc Equity Snapshot as at Q3 2011 www.proshareng.com Page 2

ContentsContentsContentsContents

Executive Summary 03

Fundamental Analysis 05o Q3, 2011 Financial Year End Results - Analysis & Review

Technical Analysis 14o The Stock Price Performance at the NSE

The Analyst Opinion 16

ISSN 1597 8842 Vol.1 No. 85


3/17


Access Equity Snapshot @ November 2011ISSN 1597 - 8842 Vol. 1 No. 85

Executive SUMMARY

Access Bank Plc presented its Q311 figures with an impressive performance as both

headline and bottom-line sustained positive positions.

Specifically, the PAT came in more stronger with 34% (YoY) performance growth against

21% (YoY) recorded in Q211 while the gross earnings closed with continued uptrend

performance an insignificant weakness observed as its 5% (YoY) performance growth

appeared weak compared to the 6% (YoY) recorded in Q211.

More so, the gross earnings closed below sector average performance of 10.00% as

against above the average performance recorded in the previous quarter.

The impressive active posture of interest income of the bank continued to drive the

performance of the earnings profile of the bank as net interest income closed with 27%

positive growth while non-interest income came alive with 5% growth as against a decline

of -15% observed in the previous quarter http://www.proshareng.com/reports/4064

The improved outlook observed in non-interest income components stands as a true

reflection of increased transaction volume largely driven by retail segments of the

business as claimed by the management http://www.proshareng.com/reports/4288

Meanwhile, the performance observed in the interest income stream could be attributed to

the impressive 27% YTD growth in Loans and Advances by the bank - a better outlook

when compared with 19% YTD loan growth observed in the previous quarter, whichindicates a healthy posture of the core income stream of the bank.http://www.proshareng.com/reports/4288

On the other hand, we call attention of the management to a quarterly weak performance

observed in both top-line and bottom-line results of the bank when compared the Q311

performance growth of 56.60% and 58.58% which delivered 115.37% and 93.09% in

Q211 as recorded by gross earnings and PAT respectively.

In addition, we observed that the banks deposit closed weaker with 20% growth (YoY)

against 47% (YoY) and 41% (YoY) growth recorded in Q2 and Q111 respectively while

YTD deposit growth stands at 32.80%.

A similar trend was observed in the quarterly trend as the deposit growth closed lower at

1.18% (QoQ) against 8.51% (QoQ) recorded in the previous quarter. This could be

attributed to the slight weakness the loan growth experienced in the quarter to close lower

at 6.97%(QoQ) against 9.42% (QoQ) recorded in the Q211 while the weakness also

reflected in the deposit to assets ratio which closed lower at 63.05% as against 64.94%.

More so, the sustained bloated posture of LDR at 84.76% as against 80.18% recorded in

the previous quarter is not pleasant as this continued to give us more concerns in the face

of low deposit growth while this is likely to reduce the elbow room for potential growth in

the near term.


4/17


In our opinion, this is likely to pose liquidity challenges as regards to desirable business

expansion and emerging opportunities in the industry. We therefore, call attention of the

management to this trend as this threatens the possibility of growing loan book

considerably as we have observed in the quarter.

On the brighter side, we commend the continued improvement witnessed in cost to

income ratio. The outlook is not too far away from our expectation given the concerns

shown in our previous reports. This also justifies the cost-cutting initiatives put in place by

the management as stated in their Q111 presentation http://proshareng.com/reports/4064.

The operating profit appeared more robust with 30.35% performance growth against

comparable period in the previous year. This has been one of the contributory factors for

improved bottom-line position recorded in the quarter as buttressed by improved and

stronger EPS, PAT margin and ROE of the bank- a true reflection of improved operating

efficiency of the bank.

The PAT came in stronger to close at N12.81billion against N8.07billion recorded in the

previous quarter, a stronger position against N9.56billion recorded comparable period in

the previous year.

On the final note, the technical analysis revealed as at November 25th 2011, Access bank

plc traded below its 20days, 50days and 200days moving averages of N5.12, N5.19,

N7.17 respectively.


5/17


2. Fundamental ANALYSIS

The banking sector metrics below show the portraits of the sector based on the results

announced so far.

Peer Assessment Q3 Period Ended - September 30, 2011

BanksMarketPrice atNov 16

EPSPE

RatioEarnings

YieldDiv

YieldPAT

MarginShares inissue (M)

Access Bank Plc 4.7 0.72 6.56 15.24% 0.00% 15.6% 17,888.25

Diamond Bank Plc 3.12 (0.05) -64.2 -1.56% 0.00% -1.0% 14,475.24

Ecobank Nig Plc 2.04 0.23 9.0 11.12% 0.00% 7.2% 13,879.95

FCMB 4.05 0.49 8.3 12.00% 0.00% 14.4% 16,271.19

Fidelity Bank Plc 1.59 0.21 7.64 13.09% 0.00% 12.8% 28,974.80

First Bank Nig Plc 9.76 1.31 7.4 13.47% 0.00% 20.3% 32,632.08

Guaranty Trust Bank Plc 14.8 1.63 9.10 10.99% 0.00% 30.1% 23,317.19

Skye Bank Plc 4.91 0.81 6.07 16.47% 0.00% 12.8% 11,584.97

Sterling Bank Plc 1.09 0.63 1.74 57.56% 0.00% 15.9% 12,563.09

Stanbic IBTC Plc 8.00 0.20 40.77 2.45% 0.00% 13.1% 18,750.00

UBA Plc 2.79 0.39 7.14 14.00% 0.00% 7.6% 25,867.75

Unity Bank Plc 0.62 0.06 9.84 10.16% 0.00% 6.5% 32,071.98

Wema Bank Plc 0.6 0.12 5.00 20.02% 0.00% 7.6% 12,821.25Zenith Bank Plc 12.3 1.37 8.99 11.12% 0.00% 23.5% 31,396.49

Source: Proshare Research/Company Financials

Company04-Jan-10 31-Dec-10

% ChangeJan 10 - Dec 10

17-Nov-11% Change

Jan10 -17Nov 11% Change

Dec10 - 17Nov 11

ACCESS 7.55 9.50 25.83% 4.75 -37.09% -50.00%

DIAMONDBNK 7.19 7.50 4.31% 3.1 -56.88% -58.67%

ECOBANK 10.10 3.60 -64.36% 2.14 -78.81% -40.56%

FCMB 7.01 7.50 6.99% 4.12 -41.23% -45.07%

FIDELITYBK 2.52 2.69 6.75% 1.6 -36.51% -40.52%

FIRSTBANK 14.00 13.73 -1.93% 9.8 -30.00% -28.62%

GUARANTY 15.78 17.76 12.55% 14.8 -6.21% -16.67%

SKYEBANK 5.48 8.80 60.58% 4.91 -10.40% -44.20%

STANBICIBTC 7.16 9.20 28.49% 8 11.73% -13.04%

STERLNBANK 1.26 2.31 83.33% 1.1 -12.70% -52.38%

UBA 10.81 9.15 -15.36% 2.85 -73.64% -68.85%

UNITYBNK 0.87 1.20 37.93% 0.59 -32.18% -50.83%

WEMABANK 0.97 1.29 32.99% 0.58 -40.21% -55.04%

ZENITHBANK 13.50 15.01 11.19% 12.25 -9.26% -18.39%

Source: Proshare/NSE/Access Bank Plc


6/17


ACCESS BANK PLCBALANCE SHEETAs 30 Sept 2011

SEPT2011N'000

Dec2010N'000

Variance

Assets

Cash and balances with CBN 24,553 25,395 -3.32%

Treasury bills 36,576 35,857 2.01%

Due from other banks 182,015 103,182 76.40%

Loans and advances to customers 548,121 429,782 27.53%

On-lending facilities 28,344 22,685 24.95%

Advances under finance lease 2,763 3,084 -10.41%

Investment securities 130,152 119,665 8.76%

Investment properties 12,437 12,943 -3.91%

Other assets 33,487 23,287 43.80%

Deferred tax asset 678.844 557.050 21.86%

Property and equipment 23,704 25,390 -6.64%

Equipment on lease 1,282 1,561 -17.87%

Goodwill 1,431 1,431 0.00%

TOTAL ASSETS 1,025,548 804,823 27.43%

LIABILITIES

Customer deposits 646,641 486,925 32.80%

Due to other banks 91,107 64,039 42.27%

On-lending facilities 36,830 22,685 62.35%

Taxation payable 4,616 3,492 32.19%

Other liabilities 69,530 51,889 34.00%

Deferred taxation 355.197 419.945 -15.42%

TOTAL LIABILITIES 849,082 629,453 34.89%

NET ASSETS 176,466 175,370 0.62%

CAPITAL AND RESERVES

Share capital 8,944 8,944 0.00%

Capital reserve 3,489 3,489 0.00%

Share premium 146,160 146,160 0.00%

Other reserves 16,626 16,077 3.41%

Attributable to equity holders of the Bank 175,220 174,671 0.31%

Non-controlling interest 1,246 699,332 -99.82%

SHAREHOLDERS' FUND 176,466 175,370 0.62%

Acceptance ,bonds ,guarantees and otherobligations for the account of customers 283,203 238,881 18.55%

TOTAL ASSETS AND CONTINGENTS 1,308,752 1,043,705 25.39%



7/17


Peer Gross Earnings & PAT Growth, Period Ended - Sept 30, 2011 (In Millions)

Third Quarter Peer Results Comparison

BanksCurrentGross

Earnings

PreviousGross

Earnings

%Change

CurrentPAT

PreviousPAT

%Change

Access Bank Plc 82,165 77,954 5.4% 12,812 9,564 34.0%

Diamond Bank Plc 68,326 67,033 1.9% (703.368) 4,878 -114.4%

Ecobank Plc 43,537 36,872 18.1% 3,149 869.000 262.4%

FCMB Plc 54,995 44,549 23.4% 7,907 4,575 72.8%

Fidelity Bank Plc 47,000 40,900 14.91% 6,030 5,800 3.97%

First Bank Plc 211,166 177,065 19.3% 42,890 32,562 31.7%

GTBank Plc 126,143 107,177 17.7% 37,919 28,820 31.6%

Skye Bank Plc 73,290 66,166 10.8% 9,366 8,552 9.5%

Stanbic IBTC Bank Plc 49,592 41,114 20.6% 7,882 7,181 9.8%

Sterling Bank Plc 28,037 23,145 21.1% 3,679 5,343 -31.1%

UBA Plc 132,814 136,366 -2.6% 10,105 6,648 52.0%

Unity Bank Plc 30,850 41,626 -25.9% 2,020 10,661 -81.1%Wema Bank Plc 20,328 24,085 -15.6% 1,540 1,791 -14.0%

Zenith Bank Plc 182,955 139,601 31.1% 42,950 31,131 38.0%

Proshare Research

ACCESS BANK PLCProfit & Loss Accounts

As 30 SEPT 2011

SEPT 2011N'000

SEPT 2010N'000

Variance

Gross Earnings 82,165 77,954 5.40%

Interest & Discount Income 61,643 57,545 7.12%Interest Expense -20,186 -24,821 -18.67%

Net Interest and Discount Income 41,456 32,724 26.68%

Other Income 20,521 20,408 0.55%

Operating Income 61,978 53,132 16.65%

Operating Expenses -36,808 -33,823 8.83%

Provision for Risk Assets (Net) -8,743 -5,201 68.10%

Share of profit/(loss) in associates -14.209

Net Profit before Tax 16,426 14,065 16.79%

Taxation -3,613 -4,501 -19.73%

Profit (loss) after Tax 12,812 9,564 33.96%

Non-Controlling Interest -77.311 -9.095 750.04%

Profit after tax and non-controlling interest 12,889 9,555 34.89%

Total non-performing loans and advances (N'000) 51,973 37,673 37.96%

Total non-performing loans to total loans andadvances (%) 8% 8% 0.00%

Earnings/(loss) per share:

Basic 96k 71k 0.00%

Adjusted 96k 71k 0.00%


KEY OBSERVATIONS

Profitability and Efficiency


8/17


Access Bank Plc closed with sustained strong profitability base which was boosted by

sustained impressive net interest income and operating income while improved

performance witnessed in the non-interest income also contributed to the outlook which

confirms the increase in volume of transaction of the bank as claimed in the presentationhttp://www.proshareng.com/reports/4288

The improved operating efficiency contributed immensely to the profitability posture as

reflected in the EPS of the bank which closed higher at N0.96kobo as against N0.45kobo

recorded in the Q211.


9/17


Similarly, the PAT margin and ROE came in more stronger at the end of the period due to

improved cost management observed during the period under review as revealed by cost

to income ratio which sustained improved outlook to close lower at 59% against 61% and

62% recorded in Q211 and Q111 respectively.

This, in our opinion, reflects the cost-cutting initiative put in place by the management to

address the bloated cost to income ratio of 70% recorded in the last financial year asdiscussed in our previous report- http://www.proshareng.com/reports/3265


10/17


Assets Quality Review

The net assets of the bank recorded improved outlook as it closed stronger with 2.85%

(YoY) performance growth as against 0.55% (YoY) recorded in half year. Though, this

appear weak to 4.20% (YoY) growth experienced in Q111.

The improved profitability and cost management of the bank contributed to this better

posture while the year on year growth of 36% of loan growth gave support to the trend.

Similarly, the total assets closed more robust, showing 25% (YoY) growth with sustained

growth in the liquid and earning assets. On the other, the 1.18% (QoQ) deposit growthrecorded in the quarter was considered weak to 8.51% (QoQ) growth recorded in the half

year.


11/17


In our opinion, we believe the bank needs to mobilise more deposit by reinvigorating

strategies towards improving the low deposit posture. Nevertheless, we commend the

banks efforts in deploying cheap retail deposit for margin expansion.

In addition, we also like the improved posture of the NPL of the bank which closed lower

at 8.00% against 11.30% recorded in the previous year comparable period.

Also, a better outlook when compared with 8.79% recorded in the half year 2011. This

shows improved assets quality while the bank hoped to closed for the financial year with

improved NPL posture. The NPL is more concentrated in the Oil & Gas sector.-http://www.proshareng.com/reports/4288


12/17


13/17


The lower posture of deposit to assets ratio of 63.05% as against 64.92% also buttressed

our above position on deposit posture of the bank

We call attention of the management to the falling trend as low and weak deposit growth

could signify weak customers confidence in the bank- this further confirms that the bank

needs to reinvigorate the strategies towards mobilising deposit as noted above.


14/17


3. Technical ANALYSIS

THE MOST RECENT STOCK PERFORMANCE OF ACCESS BANK SHARES

Access Bank Plc in the last twenty-three (23) months January 4th, 2010 to November 24,

2011, the bank share price recorded -36.42% depreciations to close at N4.80 from N7.55

it closed at the end of January 4th, 2010 trading session. With this trend, Access Bank Plc

has dropped in value considerably.

In the year 2010 alone, the share price of the bank closed with +25.83% appreciations, as

against +18.87% appreciations recorded in the entire market in the period. This

positive performance showed a level of resilience in the banks stock in the period under

review notwithstanding the general bearish trend of the market coupled with the shake up

in the banking sector from August 14th, 2009.

However, the year to date performance as at November 24, 2011 stood at -36.42% while

market performance also closed negative significantly at -20.48%

The trend so far in the price movement of the shares of the bank in the current year 2011

shows that the share of Access Bank Plc is one of the low performing stocks in the sector.

THE ASI AND ACCESS BANK PLC

The All-Share Index and Access Bank Plc share price experienced series of volatility as

they traded sideways. However, Access bank share outperformed ASI as the trends

suggest. In the year 2010 alone, the share price of the bank closed with +25.83%

appreciations, above the +18.87% appreciations recorded in the entire market in the

period.


15/17


In the year 2011, Access Bank Plc share price depreciated by -36.42% which was below

the market performance as indicated by the -20.48% depreciation recorded for the All-

Share Index.

As illustrated from the graph below, Access bank plc traded below its 20days, 50days and

200days moving averages of N5.12, N5.19, N7.17 respectively.

Technically, Access Bank Plc share is trading below its 50 and 200 days moving averages

seems to suggest bearish outlook in both mid and long term.

Access bank plc traded below its 20days, 50days and 200days moving averages of N5.12,

N5.19, N7.17 respectively, indicating bearish trend in both mid-long term and long term.


16/17


4. Analyst OPINION

A better cost mangement and sustained improved operating efficiency was observed when

compared with the posture recorded so far before this quarter. In our opinion, this has

impacted on the strong profitability recorded in the quarter.

This should however not take anything away from the need to address the bloated

posture of LDR which seems to pose a challenge to loan book growth as the current

posture is likely to constrict the elbow room for expansions and emerging opportunities in

the industry.

More so, the consistent falling trend observed in the deposit growth of the bank gives us

concern(s) as it serves as a pointer towards a sustained weakness in deposit mobilisation.

This should receive some attention from the bank as it moves into its business

combination phase where the effect and impact of their new subsidiary touted as a retail

market imperative becomes key.

Having said that, we commend the vibrant nature of the banks interest income outlook

and the reinvigorating of non-interest income component of the banks earnings which

contributed to the profitability outlook recorded.

Finally, we remain optimistic that the bank is able to achieve a seamless intergration of its

newly acquired Interconental Bank Plc widely expected to create a unique and robust

leverage for the bank to tap into the retail sphere for which it hopes to accelerate its

growth potentials and vibrancy as a top banking brand.

End.


17/17

Plot 590b, Pat Ojebuoboh Close, Omole Phase II,Isheri LGA, P.O.Box 18782, Ikeja, Lagos, NG

DL: +234 1 7624131 E-mail: [email protected]: www.proshareng.com

Date post:	06-Apr-2018
Category:	Documents
Upload:	proshareng
View:	222 times
Download:	2 times

Proshare Analyst Snapshot on Access Bank Plc Q3 2011

Documents