ACCESS BANK 2020H1: Time To Match Growth, Efficiency For Juicier Returns

Rating: BUY
Current Market Price: N6.75
LOAN to DEBT Ratio:%56.64
Year High: N12.00
Year Low: N5.30
Fair Value: N9.98
Equity Analyst: Tunde Segun Jeariogbe


  • In this report, we observed the financials of Access Bank Plc for the half-year ended 30thJune, 2020 and compared to those of the corresponding period of 2019, thereby establishing growth, and projecting the expected earnings, even as we performed valuation analysis using full-year numbers accordingly.
  • A close look at the numbers shows that the financial institution built its top line appreciably, while the bottom line was about same with that of the comparable year.
  • At the end of the period, the management of Access Bank proposed a 25 kobo interim cash dividend, same as was paid in the corresponding quarter.
  • Closure date for the said interim dividend is Friday, 18th September, 2020, following which qualification date is 17th September, while the payment is scheduled for 28th September, 2020.
BourseNigerian Stock Exchange
Market ClassificationPremium Board
Nature of BusinessCommercial Banking
Date of IncorporationFebruary 8th 1989
Date ListedNovember 18th 1998
End of Accounting Year31st December
RegistrarUnited Securities Limited
Share Price@Relsd (N)                                                         6.40
Earnings per Share                                                         1.72
Intrinsic Value(N)                                                         9.98
Share Outstanding35,545,225,622
Market Capitalisation                                     227,489,443,981

Company figures

  • As at the end of the period, a total of N396.75 billion was reported as Gross Earnings, 22.31% better than the N324.37 billion achieved through the first six months of the 2019 financial year.
  • Of this, Interest Income was N211.99 billion, same as 6.25% below N226.12 billion reported at the end of 2019 half year business session.
  • Interest Expense was estimated at N120.51 billion, slightly above the N117.75 billion stated in the prior half-year.
  • Thus, Net Interest Income is estimated at N91.47 billion, 15.59% below the N108.37 billion achieved in the corresponding period.
  • Operating Expenses stood at N156.92 billion, a significant improvement over the N111.82 billion reported in the comparable quarter.
  • Thus, the amount achieved as Profit after Tax is N74.30 billion, which is fairly above the N72.96 billion posted in its similar result of 2019.
  • Having provided for the Tax Expenses during the period, a total of N61.03 billion was reported as Profit for the Period, a marginal 1.36% drop from the N61.87 billion posted in its 2019 half-year financial report.
  • Helped by unrealised profit during the period, and net changes in fair value of financial assets, Access Bank posted a Total Comprehensive Income of N78.84 billion, same as 22.60% above the N64.31 billion in the corresponding period.
Statement of Comprehensive Income
GROSS EARNINGS               396,757           324,37522.31
INTEREST INCOME               211,990           226,1246.25
INTEREST EXPENSES               120,515     117,7502.35
NET INTEREST INCOME                 91,475           108,37415.59
OPEX               156,926           111,82540.33
DEPRECIATION                 12,531                9,31134.57
AMORTISATION                   4,829                3,31445.69
PBT                 74,306              72,9641.84
TAX13,271              11,09119.66
PAT                 61,034              61,8731.36
TOTAL COMP INCOME                 78,848              64,31422.60
Statement of Financial Position
Total Assets           7,766,507        6,488,60419.69
Total Liabilities           7,096,145        5,904,81320.18
Net Assets               670,361           583,79014.83
Property Plan & Equipment               208,365           190,3549.46
Retained Earnings               254,183           204,40224.35
Total Deposits         5,985,202        4,959,14720.69
Total Loans and Advances           3,390,254        2,853,00218.83
  • Access Bank’s Total Assets Valuation improved by 19.69% to N7.76 trillion, compared to the N6.48 trillion stated in the 2019 half-year.
  • Total Liabilities equally grew by 20.18% from the previously stated N5.90 trillion to N7.09 trillion.
  • Net Assets also appreciated to N670.36 billion from N583.79 billion in the comparable quarter.
  • Retained Earnings improved in the same trend to N254.18 billion, as against N204.40 billion at the end of 2019 half year business session.
  • Total Deposits received through the first six months of the year is valued at N5.98 trillion, as against the N4.95 trillion posted in the comparable quarter of 2019.
  • Total Loans and Advances through the first six months of 2020 stood at N3.39 trillion, higher than the N2.85 trillion given out through 2019 half-year period.

Dividend Details

  • As noted above, the management of Access Bank announced a 25 kobo interim cash dividend for the period ended 30th June, 2020. This is same as the amount paid in the similar period of 2019.
  • The said interim dividend is same as 14.56% of the total amount earned through the first six months of 2020.
  • Meanwhile, it is 3.91% yield, when considered in relation to the unit price of Access Bank on the Nigerian Stock Exchange at the time the result was released to investors.
Latest Final Dividend                                       0.40                                   0.2560.00
Latest Interim Dividend0.250.250.00
Interim Dividend Pay-Out Ratio14.56%14.36%1.37
Final Dividend Pay-Out Ratio14.58%7.61%91.50
Interim Dividend Yield3.91%3.79%3.13
Final Dividend Yield4.71%4.31%9.18

Financial Strength/Solvency Ratios

  • Just like other financial institutions, Access Bank’s Debt Ratio remained high at 91.37% mildly, as against the prior half-year’s estimated 91.00%, meaning that more debt than equity was used through the period. It is noteworthy that Total Deposits was added to the Liabilities figure used in the estimate.
  • We also ascertained that the Total Debt for the period can replicate Equity 10.59 times, an improvement in comparison to the 10.11 times replicate estimated from in the 2019 half-year. It is also important to note that such high ratio is typical of financial institutions.
  • Total Equity was estimated at 8.63% of the Total Asset Value at the end of the quarter, which is below the 9.00% estimated at the end of 2019 half year session.
  • We have currently estimated a Beta value above the market Beta for Access Bank Plc shares. Note too that at 1.10 Beta value, it is slightly below the industry average of 1.15.
Financial Strength/Solvency Ratio
Debt Ratio91.37%91.00%0.40
Total Debt to Equity Ratio (MRQ)1058.55%1011.46%4.66
Equity Ratio8.63%9.00%4.06
Beta Value                                       1.10                                   1.154.35

Profitability Ratios

  • Pre-Tax Margin is estimated at 18.73% down by 16.74% from the last estimate of 22.49% at the end of 2019 half-year.
  • Interest Expense figure posted for the year is same as 30.38% of the Estimated Gross Earnings figure; this is same as 16.32% reduction from the 2019 estimate of 36.30%.
  • Return Achieved on Average Equity used through the quarter was estimated at 9.10%, which is below the 10.60% return achieved in 2019 numbers.
  • See the table below for detailed profitability ratios and comparisons.
PRE-TAX MARGIN18.73%22.49%16.74
EFFECTIVE TAX RATE17.86%15.20%17.50
IE TO GE30.38%36.30%16.32

Efficiency Ratios

  • Operating Expenses is estimated to be 39.55% of the Gross Earnings Value estimate for the quarter, this is a 14.73% drop in efficiency when compared to the 34.47% estimated from 2019 half year numbers.
  • Similarly, Gross Earnings was estimated to be 5.11%of Total Assets, this is a marginal 2.19% drop in efficiency when compared to estimate from the corresponding quarter.
  • Total Loan to Deposit Ratio achieved at the end of the quarter stood at 56.64%, down from the 57.53% achieved in 2019.
OPEX TO GE39.55%34.47%14.73
GE TO TA5.11%5.00%2.19

Investment/Valuation Ratios

  • At the end of the bank’s operations for the 2020 half-year, it earned N1.72 per share, a marginal drop of 1.36% from the N1.74 earned in the similar quarter.
  • Nevertheless, Total Comprehensive Income per share improved by 22.60% to N2.22, as against the previous N1.81 each.
  • Our adjusted half year P/E-Ratio dropped to 0.93x versus 0.95x in the corresponding quarter.
  • The current Earnings per Share is same as 26.83% of the share price of Access Bank on the exchange as of the time the result was made available to the public.
  • The estimated value of each unit of Access Bank on its book is currently N18.86, an appreciable improvement over that of the corresponding quarter.
  • Confirming an under-priced status of Access Bank’s shares is the Price to Book Value estimate at below unity.
  • See below for details 
Investment/Valuation Ratios
Earnings Yield26.83%26.37%1.73


While valuing Access Bank’s shares, we choose a highly conservative method, seeking to present a very secure price to our users. Thus, we have valued each unit of Access Bank’s shares at N9.98, which is clearly below the Book Value but above the current market price of Access Bank on the floor of the exchange. Hence, we Rated Access Bank a Buy.