| In Q1’24, ACCESSCORP showed robust topline growth, with Gross Earnings rising 140% y/y to ₦974 trillion. This increase was primarily fueled by a substantial 183% y/y growth in Interest Income, reaching ₦720 billion (Vetiva: ₦701 billion), driven by effective asset repricing in response to the elevated interest rate environment. Conversely, Interest Expenses rose by 189% to ₦443 billion (Vetiva: ₦439 billion), owing to higher interest rates on customers’ deposits.
Balance sheet size to drive Gross Earnings to new highs In Q1, ACCESSCORP’s balance sheet grew by 22% q/q to ₦32 trillion, driven majorly by the expansion of the bank’s loan book and investment securities, reaching ₦9.6 trillion (+20% q/q), and ₦10 trillion (+35% q/q), respectively. Of note, the banks’ balance sheet size has currently surpassed the average obtainable for its tier 1 peers (₦25 trillion). We project ACCESSCORP’s Gross Earnings to expand by 74% y/y to ₦4.5 trillion (Previous: ₦3.5 trillion) in FY’24.
TP revised to ₦27.30 Following our updated earnings forecasts, we have revised our FY’24 Profit Before Tax (PBT) and Profit After Tax (PAT) projections slightly upward to ₦1.1 trillion (+45% y/y), and ₦901 billion (+46% y/y), respectively. We forecast an Earnings Per Share (EPS) of ₦16.90 for FY’24 and consequently, a 12-month target price of ₦27.30. We uphold our BUY recommendation on the stock and note that currently, the bank’s share price trades at a Price-to-Book (P/B) ratio of 0.39x, below the industry average of 0.8x for Tier-I peers.
What shaped the past week?
Equities: This week, the local equity market traded in a bearish manner, shedding 1.36% w/w to settle at 98,234.24 pts. Leading the sectoral losses was the consumer goods space (-1.18% w/w). Sell-offs in PZ (-26.97% w/w), MCNICHOLS (-20.18% w/w), and INTBREW (-15.27% w/w) helped dragged the sector lower. Similarly, the Insurance sector closed in the red (-1.01% w/w), led by losses in MANSARD (-12.90% w/w). Also, the Oil and Gas sector fell by 0.33% w/w, while the banking index lost 0.18% w/w. On the other hand, only the Industrial Goods sector closed in the green (+0.07% w/w), due to gains in JAPAULGOLD (+12.11% w/w).
Fixed Income: This week, system liquidity was mostly positive as it opened on Monday at c.₦296 billion positive and opened on Friday at c.₦81 billion positive. However, OPR rose 175bps to 28.00% w/w., due to increased funding needs. Meanwhile, earlier in the week, the CBN held an OMO auction where ₦500 billion worth of bills across the three tenors was on offer. At the end of the auction, subscriptions totalled ₦296 billion (prev: ₦1.2 trillion). Stop rates closed at 18.99%, 19.48% and 21.50% on the 99-day, 183-day and 365-day bills, respectively. Also, the DMO through the CBN held an NTBs auction where it offered ₦179 billion worth of papers across three tenors. At the end of the auction, the DMO allotted ₦275 billion worth of papers across the three tenors. Meanwhile the DMO held stop rates on the 91-Day, 182-Day, and 364-Day papers constant at 16.24%, 17.00%, and 20.70% respectively. At the end of the week, the secondary market closed on a mixed note with a bullish bias seen on the 90-day paper and on the 20-year bond while other benchmark instrument closed on a bearish note.
Currency: At the NAFEM, the Naira depreciated by ₦231.31 w/w to close the week at ₦1466.31 per dollar.
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