Access Bank Plc: Lower profit but still competitive




Our analysis of Access Bank Plc’s newly released 2017 results shows that it did not enjoy as good a level of profitability during the course of the year as it did in the preceding year. While it was able to step up the level of turnover, it recorded a lower profit and therefore lower profitability ratios than it did in the erstwhile years.

It is however worthy of note that despite the lower profit and profitability ratios, the bank was still able to hold its own against industry standards for the year under review. Most of its profitability ratios were higher than what most other banks recorded for the same period under review.

Also, Access Bank investors are however still benefiting from the bank’s profits. While the 63 kobo dividend they received in 2017 was a little lower than thе 65 kobo the received in 2016, this is still to be commended because not all Nigerian companies were able to pay their shareholders dividend in the review year.


Core operations

The 2017 FY was a mixed year for Access Bank. While it was able to record a higher turnover in the year than it did in the prior year, it was not able to record any better profit. It recorded a higher gross earnings of N459.1 billion in 2017, 20.4 per cent up from N381.3 billion in 2016.

Profit before tax for the year, at N80.1 billion, was however about 11.3 per cent less than the N90.3 billion profit recorded in the preceding year. After its tax obligations were done, the bank had an after tax profit of N62 billion, 13.2 per cent down from the N71.4 billion recorded in the erstwhile year.

Earnings per share, was thus predictably lower than that of the prior year, closing at 218 kobo, as compared to 253 kobo before. Dividend per share dipped slightly to 63 kobo in 2017 from the 65 kobo that it was in 2016.

The bank also had a lower interest margin of 51.1 per cent, lower than 56.3 per cent in the prior year, and this was not indicative of a better efficiency in the core business of lending and borrowing. This lower net interest margin was perpetuated despite a wider gap between average lending rate and average interest rate. Average lending rate increased over the preceding year’s (to 15.4 per cent from 13.3 per cent) while average deposit interest rate also increased to 5.8 per cent from 4.8 per cent. This means that the bank charged its lenders a higher interest rate, and paid its depositors a higher interest as well.

It is worth noting that during the course of the year, the bank gave out a higher level of loans and advances, and also received slightly more deposits from customers.


Profitability ratios

The bank recorded mostly lower results in respect to profitability in 2017. With a higher revenue intersecting with a lower profit, the bank was definitely not able to record a profit margin that was better than that of 2016. At 17.4 per cent, the bank’s profit margin was lower than the 23.7 per cent recorded in the prior year. What this means is that for every N100 earned by the bank in the course of the year, N17.40 made it to the profit position, as compared to a higher N23.70 for the year preceding 2017.

The bank was also unable to squeeze as much profit as was possible from assets, as assets deployed earned less in 2017 than it did in 2016. Return on assets (ROA) for the year stood at two per cent in 2017, as compared to 2.6 per cent in 2016.

For the 2016 financial year, Access Bank deployed equity valued at N515.4 billion and for every N100 equity deployed, the bank made an after-tax profit of N12.00, a regression over the profit of N15.70 made in 2015.

Employing more employees in 2017 than in the previous year, earnings per employee increased to N110.84 million on the average, up from N92.91 million in 2016. This is indicative of employee productivity and company efficiency.


Other ratios

The bank had a better capital adequacy standing in 2017 than it did in 2016, meaning that the bank is doing better in its primary business of giving out loans. Access Bank’s capital adequacy improved in 2017 to 22.5 per cent, higher than 21.1 per cent in the prior year, and also higher and better than the 16 per cent rate mandated for Systemically Important Banks.

For the 2017 financial year, the bank recorded a higher proportion of loans classified as non-performing when compared to the prior year’s. The 4.8 per cent result was higher than 2.1 per cent result recorded in the preceding year, and overshot (and therefore worse than) the Central Bank’s regulatory threshold of 3.66 per cent.

The bank had a debt to equity ratio of 7.0, meaning that it is using N7.00 of liabilities in addition to each N1.00 of stockholders equity. In other words, the bank is using N8.00 of total capital for every N1.00 of equity capital, higher than the N7.60 it did in the erstwhile year.


Sustainable growth

Access Bank paid shareholders a slightly lower level of dividend in 2017 than it did in 2016. Shareholders received a total dividend of 63 kobo, lower than 65 kobo in the prior year. Because profit for the year was significantly lower than that of 2016, retention ratio in 2017 was also lower than that of 2016.  Retention ratio was 0.73 times, as compared with 0.84 times in the prior year.

Assets/equity ratio was higher than that of the prior year while asset turnover was the same as that of the preceding year. Analysis shows that sustainable growth for 2017 was 11.3 per cent, lower than 16.7 per cent before, and this translates to mean that the bank’s growth ceiling, utilizing only its own source of funding for growth, shrunk. Meanwhile, actual growth was 20.4 per cent, higher than the 13.0 per cent actual growth rate of the preceding year. For the review year, the actual growth was higher the sustainable growth, meaning that Access Bank overshot its growth ceiling.


Unique strategies

In recent years, Access Bank’s commitment to innovation and sustainable banking practices has distinguished it amongst other banks. The bank continues to reinvent itself with a view to delivering superlative services that exceed customers’ expectations. Its ambition is to become the World’s Most Respected African Bank.



Our analysis shows that the Access Bank stock is a stock that pays dividend, so it is an ideal stock for the investor who is interested in a regular dividend income.


*Source: Access Bank’s 2017 financial report

*The Nigerian Stock Exchange

Nbillion 2017 Percentage change 2016 Percentage change 2015 Percentage change 2014
Turnover 459.1 20.4 381.3 13.0 337.4 37.5 245.4
Profit pre tax 80.1 -11.3 90.3 20.4 75 44.2 52
After tax profit 62.0 -13.2 71.4 8.3 65.9 53.3 43
Total assets 4102.2 17.7 3483.9 34.4 2591.3 23.1 2104.4
Equity 515.4 13.4 454.5 23.6 367.8 32.6 277.4
Liabilities 3586.8 18.4 3029.4 36.2 2223.5 21.7 1826.9
Deposits 2695.1 19.4 2256.6 25.7 1795.2 14.1 1573.4
Loans and advances 2064.0 11.3 1854.6 31.7 1408.5 25.4 1122.9
Earnings per share 218 -12.8 250 -5.7 265 40.2 189
Dividend per share 63 -3.1 65 18.2 55 57.1 35
Core operations 2017 2016 2015 2014
Turnover growth rate 20.4 13.0 37.5 5.1
Profit growth rate -11.3 20.4 44.2 -10.2
Average lending rate (%) 15.4 13.3 14.8 15.8
Average interest rate 5.8 4.8 5.7 4.9
Net interest margin (%) 51.1 56.3 50.7 56.5
Profitability ratios
Profit margin (%) 17.4 23.7 22.2 21.2
Return on assets (%) 2.0 2.6 2.9 2.5
Return on equity (%) 12.0 15.7 17.9 15.5
Earnings per employee (Nm) N110.84m N92.91m N87.0m N66.3m
Other important ratios
% of classified loans 4.8 2.1 1.7 2.2
Capital adequacy 22.5 21.1 20.0 18.4
Debt to equity ratio 7.0 6.7 6.0 6.6
Actual Vs sustainable growth
Profit margin (%) 17.4 23.7 22.2 21.2
Retention ratio 0.73 0.84            0.76           0.87
Asset turnover (times) 0.11 0.11 0.13 0.12
Assets/Equity (times) 8.0 7.7 7.0 7.6
Sustainable growth 11.3 16.7 15.5 16.3
Actual growth 20.4 13.0            37.5           18.6


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