Event : Access Bank reports Q2 2018 results
Implications : Access Bank’s Q2 2018 PBT of N18.4bn tracks behind ours and consensus 2018 PBT forecast N88.0bn and N89.0bn respectively. Historically, the final quarter of the year is usually its weakest. Consequently, we expect to see marked downward revisions to consensus 2018 PBT forecasts and a negative reaction from the market. In terms of balance sheet trends, Access Bank’s loan book fell by -5% q/q. However, management disclosed that this was mainly due to write-offs related to the implementation of IFRS 9 (adjusting for the write-offs, the loan book actually grew marginally).
Positives : Provisions fell by 67% y/y implying an annualised cost-of-risk of 0.8%, well below guidance of 1.5%. Also, opex was down 22% y/y and surprised positively relative to our forecast.
Negatives: PBT and PAT both declined by 23% y/y to N18.4bn and N18.9bn respectively, driven by a 42% y/y reduction in non-interest income due to fx losses related to its swaps / derivative book. The reduction in non-interest income completely offset positives in opex and loan loss provisions. Funding income was flat y/y, reflecting the downward pressure on yields on government securities and a -5% q/q decline in the loan book.
We rate Access Bank Underperform. Our estimates are under review.
Access Bank Q2 2018 results: actual vs. FBNQuest Capital Research estimates (N millions) Source: NSE; FBNQuest Capital Estimates Proshare Nigeria Pvt. Ltd. 1. Access Bank Declares N39.63bn PAT in Q2 2018 Results; Propose 25k Interim Dividend,(SP:N9.50k)
10. Access Bank Plc – 2018 ROE Guidance a Stretch