How Higher Core & Non Core Income Supports Access Holding Plc 2023 Half Year Audited Profitability Growth

Access Holdings Plc (ACCESSCORP) released its audited half year financials for the period ended June 30, 2023, reporting an EPS growth of 48.4% to N3.74/s which is above N2.52/s, that was reported same period in 2022.

The financial report shows that performance was supported by growth across its core (+63.4% y/y) and non-core (+53.0% y/y) income lines. The board has proposed an interim dividend of 30/ kobo which is above 20 kobo that was paid same period in 2022. This equates to a dividend yield of 1.9% based on the last closing price of N15.55/ as at September 25, 2023. .

The holdco recorded a 63.0% y/y increase in its interest income to N606.84 billion, driven majorly by the combined impact of (1) elevated yields in the fixed-income market and (2) the growth in the group’s earnings assets (+38.5% YTD to N14.24 trillion) in the period.

In nominal terms, the holdco recorded increased income from loans & advances to customers (+33.8% y/y to N318.53 billion), investment securities (+113.8% y/y to N259.33 billion), loans & advances to banks (+178.2% y/y to N22.51 billion) and cash and balances with banks (+33.9% y/y to N6.47 billion).

Interest expenses grew faster by 118.9% y/y to N382.60 billion, triggered by the higher cost of deposits from customers (+91.1% y/y to N207.57 billion) and financial institutions (+245.3% y/y to N115.55 billion), following the elevated interest rate in the environment amid the deteriorating CASA mix (H1-23: 60.7% | 2022FY: 62.6%).

Likewise, the group recorded higher costs on debt securities (+77.4% y/y to N20.06 billion) and interest-bearing borrowings (+67.5% y/y to N38.64 billion). After accounting for credit impairment charges (+0.8% y/y to N37.18 billion), net interest income (ex-LLE) settled higher by 16.4% y/y to N187.06 billion.

Furthermore, non-interest income (NII) expanded by 53.0% y/y to N296.48 billion, spurred by gains in fees and commission (+58.8% y/y to N88.03 billion) and FX revaluation (+362.4% y/y to NGN244.34 billion). The preceding was sufficient to offset the losses incurred on its trading books investment securities (N37.06 billion) and FX (N15.22 billion).

Elsewhere, operating expenses increased by 23.1% y/y to N315.94 billion, reflecting the heightened inflationary pressures and rise in regulatory costs. In terms of contributory items, the group recorded an increment in NDIC premium (+45.5% y/y to N16.16 billion), AMCON levy (+30.5% y/y to N68.81 billion), depreciation & amortization (+20.7% y/y to N26.18 billion) and personnel expenses (+11.8% y/y to N65.13 billion).

Following the faster operating income growth (+36.4% y/y) relative to OPEX, the cost-to-income ratio (ex-LLE) improved at 65.3% in H1-23 (vs 72.4% in H1-22). To sum up, profit before tax grew by 71.4% y/y to N167.60 billion. Meanwhile, following a surge in income tax expense (+255.3% y/y), profit after tax settled 52.6% y/y higher at N135.44 billion.