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.
| Domestic Economy:
The Central Bank of Nigeria (CBN) has issued a directive instructing all banks and payment service providers to implement a 0.5% levy on the electronic payments on transactions of select industries for cybersecurity funding purposes. According to the Cybercrimes Act 2004, section 44(2), the businesses affected include GSM service providers as well as telcos, Internet Service Providers, Banks and other Financial Institutions, Insurance Companies, and the Nigeria Stock Exchange. However, certain transaction types are exempt from this deduction. This initiative aims to bolster government revenue and enhance cybersecurity measures within the country. According to data released by the Nigerian Interbank Settlement System (NIBSS), electronic payment transactions totaled ₦600 trillion in 2023. Overall, while this initiative has the potential to raise government revenue and address cybersecurity risks, its implementation may also have implications for electronic payment adoption and the revenue streams of financial institutions.
Global: The global stock markets experienced a week of gains mainly shaped by earnings and economic reports. In Europe, markets closed higher on Thursday, as positive momentum was maintained throughout the week. The Stoxx 600 index was up 0.2% by the close of day. Also, the Bank of England announced it would hold interest rates steady, which was in line with expectations. As a result, the U.K.’s FTSE 100 hit a fresh record high, going up 0.3% on the day. Meanwhile, the dollar weakened against most major currencies on Thursday after economic data showed more signs of softening in the U.S. labour market. In light of this, the S&P 500 was up 0.5% at the time of print. In Asia, Hong Kong led Asia-Pacific stocks higher on Friday as markets tracked Wall Street gains, with renewed hopes for rate cuts by the U.S. Federal Reserve bolstering market sentiment. Japan’s Nikkei 225 rose 0.41% to end at 38,229.11.
What will shape markets in the coming week?
Equity market: The next trading session may start with profit-taking, possibly leading to a negative close. However, key names retaining buy-side interest could support a positive close, amid bargain-hunting activity.
Fixed Income: Going into the new week, we expect the market to continue to trade in a similar pattern even as market participants look forward to the May MPC meeting for further market direction. |
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