….Proposes N0.65 dividend in FY16
Access Bank Plc, the fourth largest lender by assets, reported full year profit that beat analysts’ estimates as it benefited from income from investment assets.
Pretax profit rose 20.23 percent to N90.34 billion in December 2016 from N75.03 billion a year earlier, according to a statement by the Nigerian Stock Exchange (NSE).
That compares with the N89.41 billion average estimate of eight analysts surveyed by BusinessDay. A 25.71 percent increase interest on loans and advances to customers buoyed Group’s gross earnings in the period under review.
The banks numbers were helped by a N16.2 billion income from sale of other investments which represents a gain on the divestment of the bank’s 17.7% equity stake in StanbicIBTC Pension Managers (Stanbic).
“All in all, we find Access Bank’s results healthy. The underlying results were broadly in line with our expectations, even after tax,” said Olubunmi Asaolu, equity research analyst at FBN Quest in a note to BusinessDay.
“The capital adequacy of the bank is sound at 21.2%. Although we have not seen the December NPL ratio figure, we expect it to be below 5% (it was 2.1% in Q3 2016),” said Asaolu.
The Nigerian lender has proposed a dividend of 40 kobo, in addition to the interim dividend of 25kobo.
This brings to a total dividend of N0.65 and a yield of 10.66 percent, which is in line with analysts’ expectations.
While the banking sector is hard hit by a credit crunch caused by a severe dollar scarcity and an economic downturn, analysts are of the view that Access Bank surmounted the headwinds as valuations remained favorable.
Also, the bank has one of the best year to date performances as investors are buying into its stocks because a stellar performance throughout 2016. Analysts expect to see more gains in 2017.
Year to date (YTD) was 5.11 percent as of 2:00 pm, outperforming the NSE All share Index (ASI) of 1.52 percent. Its share price closed dropped by 4.32 percent, valuing it at N176.46 billion.
A survey of 5 analysts by BusinessDay have rated the shares of Access Bank outperform because of its strong earnings, unperturbed capital adequacy ratio, good assets quality and solid assets base.
“We have a Buy recommendation on Access Bank and a price target of N9.1/s (current price: N6.7/s),” said analysts at CSL Research.
“Capital Adequacy Ratio (CAR) of 19.55% for the bank was reported for 2016. This, relative to the regulatory minimum of 16% due to take effect from July 2017, appears relatively comfortable in our view,” said analysts at CSL Securities.
Due to a sharp drop in price of oil that stoked exposure to the oil and gas and a currency depreciation, Access Bank expects its non-performing loans (NPL) to climb to 3 percent from 2.1 percent as at September last year, according to Chief Executive Officer Herbert Wigwe.
BALA AUGIE
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
