Q3 20 11

ISSN 1597 - 8842 Vol. 1 No. 85

Access Bank Plc

Q3, 2011 Results Review

Issued on December 12, 2011

Contents

Executive Summary Fundamental Analysis

o Q3, 2011 Financial Year End Results - Analysis & Review

03 05 14 16

Technical Analysis
o The Stock Price Performance at the NSE

The Analyst Opinion

ISSN 1597 8842 Vol.1 No. 85

Access Plc Equity Snapshot as at Q3 2011

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Access Equity Snapshot @ November 2011 ISSN 1597 - 8842 Vol. 1 No. 85

Executive SUMMARY
Access Bank Plc presented its Q311 figures with an impressive performance as both headline and bottom-line sustained positive positions. Specifically, the PAT came in more stronger with 34% (YoY) performance growth against 21% (YoY) recorded in Q211 while the gross earnings closed with continued uptrend performance an insignificant weakness observed as its 5% (YoY) performance growth appeared weak compared to the 6% (YoY) recorded in Q211. More so, the gross earnings closed below sector average performance of 10.00% as against above the average performance recorded in the previous quarter. The impressive active posture of interest income of the bank continued to drive the performance of the earnings profile of the bank as net interest income closed with 27% positive growth while non-interest income came alive with 5% growth as against a decline of -15% observed in the previous quarter http://www.proshareng.com/reports/4064 The improved outlook observed in non-interest income components stands as a true reflection of increased transaction volume largely driven by retail segments of the business as claimed by the management http://www.proshareng.com/reports/4288 Meanwhile, the performance observed in the interest income stream could be attributed to the impressive 27% YTD growth in Loans and Advances by the bank - a better outlook when compared with 19% YTD loan growth observed in the previous quarter, which indicates a healthy posture of the core income stream of the bank.
http://www.proshareng.com/reports/4288

On the other hand, we call attention of the management to a quarterly weak performance observed in both top-line and bottom-line results of the bank when compared the Q311 performance growth of 56.60% and 58.58% which delivered 115.37% and 93.09% in Q211 as recorded by gross earnings and PAT respectively. In addition, we observed that the banks deposit closed weaker with 20% growth (YoY) against 47% (YoY) and 41% (YoY) growth recorded in Q2 and Q111 respectively while YTD deposit growth stands at 32.80%. A similar trend was observed in the quarterly trend as the deposit growth closed lower at 1.18% (QoQ) against 8.51% (QoQ) recorded in the previous quarter. This could be attributed to the slight weakness the loan growth experienced in the quarter to close lower at 6.97%(QoQ) against 9.42% (QoQ) recorded in the Q211 while the weakness also reflected in the deposit to assets ratio which closed lower at 63.05% as against 64.94%. More so, the sustained bloated posture of LDR at 84.76% as against 80.18% recorded in the previous quarter is not pleasant as this continued to give us more concerns in the face of low deposit growth while this is likely to reduce the elbow room for potential growth in the near term.

Access Plc Equity Snapshot as at Q3 2011

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In our opinion, this is likely to pose liquidity challenges as regards to desirable business expansion and emerging opportunities in the industry. We therefore, call attention of the management to this trend as this threatens the possibility of growing loan book considerably as we have observed in the quarter. On the brighter side, we commend the continued improvement witnessed in cost to income ratio. The outlook is not too far away from our expectation given the concerns shown in our previous reports. This also justifies the cost-cutting initiatives put in place by the management as stated in their Q111 presentation http://proshareng.com/reports/4064. The operating profit appeared more robust with 30.35% performance growth against comparable period in the previous year. This has been one of the contributory factors for improved bottom-line position recorded in the quarter as buttressed by improved and stronger EPS, PAT margin and ROE of the bank- a true reflection of improved operating efficiency of the bank. The PAT came in stronger to close at N12.81billion against N8.07billion recorded in the previous quarter, a stronger position against N9.56billion recorded comparable period in the previous year. On the final note, the technical analysis revealed as at November 25th 2011, Access bank plc traded below its 20days, 50days and 200days moving averages of N5.12, N5.19, N7.17 respectively.

Access Plc Equity Snapshot as at Q3 2011

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2.

Fundamental ANALYSIS

The banking sector metrics below show the portraits of the sector based on the results announced so far.

Peer Assessment Q3 Period Ended - September 30, 2011

Banks Market Price at Nov 16 EPS PE Ratio Earnings Yield Div Yield PAT Margin Shares in issue (M)

Access Bank Plc Diamond Bank Plc Ecobank Nig Plc FCMB Fidelity Bank Plc First Bank Nig Plc Guaranty Trust Bank Plc Skye Bank Plc Sterling Bank Plc Stanbic IBTC Plc UBA Plc Unity Bank Plc Wema Bank Plc Zenith Bank Plc

4.7 3.12 2.04 4.05 1.59 9.76 14.8 4.91 1.09 8.00 2.79 0.62 0.6 12.3

0.72 (0.05) 0.23 0.49 0.21 1.31 1.63 0.81 0.63 0.20 0.39 0.06 0.12 1.37

6.56 -64.2 9.0 8.3 7.64 7.4 9.10 6.07 1.74 40.77 7.14 9.84 5.00 8.99

15.24% -1.56% 11.12% 12.00% 13.09% 13.47% 10.99% 16.47% 57.56% 2.45% 14.00% 10.16% 20.02% 11.12%

0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

15.6% -1.0% 7.2% 14.4% 12.8% 20.3% 30.1% 12.8% 15.9% 13.1% 7.6% 6.5% 7.6% 23.5%

17,888.25 14,475.24 13,879.95 16,271.19 28,974.80 32,632.08 23,317.19 11,584.97 12,563.09 18,750.00 25,867.75 32,071.98 12,821.25 31,396.49

Source: Proshare Research/Company Financials

04-Jan-10 Company ACCESS 7.55

31-Dec-10 9.50

% Change Jan 10 - Dec 10 25.83%

17-Nov-11 4.75

% Change Jan10 -17Nov 11 -37.09%

% Change Dec10 - 17Nov 11 -50.00%

DIAMONDBNK ECOBANK FCMB FIDELITYBK FIRSTBANK GUARANTY SKYEBANK STANBIC IBTC STERLNBANK UBA UNITYBNK WEMABANK ZENITHBANK

7.19 10.10 7.01 2.52 14.00 15.78 5.48 7.16 1.26 10.81 0.87 0.97 13.50

7.50 3.60 7.50 2.69 13.73 17.76 8.80 9.20 2.31 9.15 1.20 1.29 15.01

4.31% -64.36% 6.99% 6.75% -1.93% 12.55% 60.58% 28.49% 83.33% -15.36% 37.93% 32.99% 11.19%

3.1 2.14 4.12 1.6 9.8 14.8 4.91 8 1.1 2.85 0.59 0.58 12.25

-56.88% -78.81% -41.23% -36.51% -30.00% -6.21% -10.40% 11.73% -12.70% -73.64% -32.18% -40.21% -9.26%

-58.67% -40.56% -45.07% -40.52% -28.62% -16.67% -44.20% -13.04% -52.38% -68.85% -50.83% -55.04% -18.39%

Source: Proshare/NSE/Access Bank Plc

Access Plc Equity Snapshot as at Q3 2011

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ACCESS BANK PLC

BALANCE SHEET As 30 Sept 2011

SEPT 2011 N'000

24,553 36,576 182,015 548,121 28,344 2,763 130,152 12,437 33,487 678.844 23,704 1,282 1,431 1,025,548

Dec 2010 N'000

25,395 35,857 103,182 429,782 22,685 3,084 119,665 12,943 23,287 557.050 25,390 1,561 1,431 804,823

Variance

Assets
Cash and balances with CBN Treasury bills Due from other banks Loans and advances to customers On-lending facilities Advances under finance lease Investment securities Investment properties Other assets Deferred tax asset Property and equipment Equipment on lease Goodwill TOTAL ASSETS LIABILITIES Customer deposits Due to other banks On-lending facilities Taxation payable Other liabilities Deferred taxation TOTAL LIABILITIES NET ASSETS CAPITAL AND RESERVES Share capital Capital reserve Share premium Other reserves Attributable to equity holders of the Bank Non-controlling interest SHAREHOLDERS' FUND 8,944 3,489 146,160 16,626 175,220 1,246 176,466 8,944 3,489 146,160 16,077 174,671 699,332 175,370 0.00% 0.00% 0.00% 3.41% 0.31% -99.82% 0.62% 646,641 91,107 36,830 4,616 69,530 355.197 849,082 176,466 486,925 64,039 22,685 3,492 51,889 419.945 629,453 175,370 32.80% 42.27% 62.35% 32.19% 34.00% -15.42% 34.89% 0.62% -3.32% 2.01% 76.40% 27.53% 24.95% -10.41% 8.76% -3.91% 43.80% 21.86% -6.64% -17.87% 0.00% 27.43%

Acceptance ,bonds ,guarantees and other obligations for the account of customers TOTAL ASSETS AND CONTINGENTS
Source: Proshare Research/Company Financials

283,203 1,308,752

238,881 1,043,705

18.55% 25.39%

Access Plc Equity Snapshot as at Q3 2011

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Peer Gross Earnings & PAT Growth, Period Ended - Sept 30, 2011 (In Millions)
Third Quarter Peer Results Comparison Banks Access Bank Plc Diamond Bank Plc Ecobank Plc FCMB Plc Fidelity Bank Plc First Bank Plc GTBank Plc Skye Bank Plc Stanbic IBTC Bank Plc Sterling Bank Plc UBA Plc Unity Bank Plc Wema Bank Plc Zenith Bank Plc Proshare Research Current Gross Earnings 82,165 68,326 43,537 54,995 47,000 211,166 126,143 73,290 49,592 28,037 132,814 30,850 20,328 182,955 Previous Gross Earnings 77,954 67,033 36,872 44,549 40,900 177,065 107,177 66,166 41,114 23,145 136,366 41,626 24,085 139,601 % Change 5.4% 1.9% 18.1% 23.4% 14.91% 19.3% 17.7% 10.8% 20.6% 21.1% -2.6% -25.9% -15.6% 31.1% Current PAT 12,812 (703.368) 3,149 7,907 6,030 42,890 37,919 9,366 7,882 3,679 10,105 2,020 1,540 42,950 Previous PAT 9,564 4,878 869.000 4,575 5,800 32,562 28,820 8,552 7,181 5,343 6,648 10,661 1,791 31,131 % Change 34.0% -114.4% 262.4% 72.8% 3.97% 31.7% 31.6% 9.5% 9.8% -31.1% 52.0% -81.1% -14.0% 38.0%

ACCESS BANK PLC

Profit & Loss Accounts As 30 SEPT 2011 Gross Earnings Interest & Discount Income Interest Expense Net Interest and Discount Income Other Income Operating Income Operating Expenses Provision for Risk Assets (Net) Share of profit/(loss) in associates Net Profit before Tax Taxation Profit (loss) after Tax Non-Controlling Interest Profit after tax and non-controlling interest Total non-performing loans and advances (N'000) Total non-performing loans to total loans and advances (%) Earnings/(loss) per share: Basic Adjusted Source: Proshare Research/Company Financials

SEPT 2011 N'000

82,165 61,643 -20,186 41,456 20,521 61,978 -36,808 -8,743 16,426 -3,613 12,812 -77.311 12,889 51,973 8% 96k 96k

SEPT 2010 N'000

77,954 57,545 -24,821 32,724 20,408 53,132 -33,823 -5,201 -14.209 14,065 -4,501 9,564 -9.095 9,555 37,673 8% 71k 71k

Variance
5.40% 7.12% -18.67% 26.68% 0.55% 16.65% 8.83% 68.10% 16.79% -19.73% 33.96% 750.04% 34.89% 37.96% 0.00% 0.00% 0.00%

KEY OBSERVATIONS

Profitability and Efficiency

Access Plc Equity Snapshot as at Q3 2011

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Access Bank Plc closed with sustained strong profitability base which was boosted by sustained impressive net interest income and operating income while improved performance witnessed in the non-interest income also contributed to the outlook which confirms the increase in volume of transaction of the bank as claimed in the presentation
http://www.proshareng.com/reports/4288

The improved operating efficiency contributed immensely to the profitability posture as reflected in the EPS of the bank which closed higher at N0.96kobo as against N0.45kobo recorded in the Q211.

Access Plc Equity Snapshot as at Q3 2011

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Similarly, the PAT margin and ROE came in more stronger at the end of the period due to improved cost management observed during the period under review as revealed by cost to income ratio which sustained improved outlook to close lower at 59% against 61% and 62% recorded in Q211 and Q111 respectively.

This, in our opinion, reflects the cost-cutting initiative put in place by the management to address the bloated cost to income ratio of 70% recorded in the last financial year as discussed in our previous report- http://www.proshareng.com/reports/3265

Access Plc Equity Snapshot as at Q3 2011

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Assets Quality Review

The net assets of the bank recorded improved outlook as it closed stronger with 2.85% (YoY) performance growth as against 0.55% (YoY) recorded in half year. Though, this appear weak to 4.20% (YoY) growth experienced in Q111.

The improved profitability and cost management of the bank contributed to this better posture while the year on year growth of 36% of loan growth gave support to the trend. Similarly, the total assets closed more robust, showing 25% (YoY) growth with sustained growth in the liquid and earning assets. On the other, the 1.18% (QoQ) deposit growth recorded in the quarter was considered weak to 8.51% (QoQ) growth recorded in the half year.

Access Plc Equity Snapshot as at Q3 2011

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In our opinion, we believe the bank needs to mobilise more deposit by reinvigorating strategies towards improving the low deposit posture. Nevertheless, we commend the banks efforts in deploying cheap retail deposit for margin expansion. In addition, we also like the improved posture of the NPL of the bank which closed lower at 8.00% against 11.30% recorded in the previous year comparable period.

Also, a better outlook when compared with 8.79% recorded in the half year 2011. This shows improved assets quality while the bank hoped to closed for the financial year with improved NPL posture. The NPL is more concentrated in the Oil & Gas sector.http://www.proshareng.com/reports/4288

Access Plc Equity Snapshot as at Q3 2011

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More so, the banks loans and advances remained active, though slight weakness observed on quarterly outlook. The bloated LDR of 84.76% and the low deposit posture could be a contributory factor to this weakness observed in loans and advances.

Further analysis revealed a falling trend in the deposit posture of the bank in the last two quarters. the deposit growth performance closed lower at 8.51% in half year 2011 a better outlook to 1.18% growth recorded in Q311. This is far lower to performance growth of 20.96% recorded in Q111.

Access Plc Equity Snapshot as at Q3 2011

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The lower posture of deposit to assets ratio of 63.05% as against 64.92% also buttressed our above position on deposit posture of the bank We call attention of the management to the falling trend as low and weak deposit growth could signify weak customers confidence in the bank- this further confirms that the bank needs to reinvigorate the strategies towards mobilising deposit as noted above.

Access Plc Equity Snapshot as at Q3 2011

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3.

Technical ANALYSIS

THE MOST RECENT STOCK PERFORMANCE OF ACCESS BANK SHARES

Access Bank Plc in the last twenty-three (23) months January 4th, 2010 to November 24, 2011, the bank share price recorded -36.42% depreciations to close at N4.80 from N7.55 it closed at the end of January 4th, 2010 trading session. With this trend, Access Bank Plc has dropped in value considerably. In the year 2010 alone, the share price of the bank closed with +25.83% appreciations, as against +18.87% appreciations recorded in the entire market in the period. This positive performance showed a level of resilience in the banks stock in the period under review notwithstanding the general bearish trend of the market coupled with the shake up in the banking sector from August 14th, 2009. However, the year to date performance as at November 24, 2011 stood at -36.42% while market performance also closed negative significantly at -20.48% The trend so far in the price movement of the shares of the bank in the current year 2011 shows that the share of Access Bank Plc is one of the low performing stocks in the sector.

THE ASI AND ACCESS BANK PLC The All-Share Index and Access Bank Plc share price experienced series of volatility as they traded sideways. However, Access bank share outperformed ASI as the trends suggest. In the year 2010 alone, the share price of the bank closed with +25.83% appreciations, above the +18.87% appreciations recorded in the entire market in the period.

Access Plc Equity Snapshot as at Q3 2011

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In the year 2011, Access Bank Plc share price depreciated by -36.42% which was below the market performance as indicated by the -20.48% depreciation recorded for the AllShare Index.

As illustrated from the graph below, Access bank plc traded below its 20days, 50days and 200days moving averages of N5.12, N5.19, N7.17 respectively.

Technically, Access Bank Plc share is trading below its 50 and 200 days moving averages seems to suggest bearish outlook in both mid and long term. Access bank plc traded below its 20days, 50days and 200days moving averages of N5.12, N5.19, N7.17 respectively, indicating bearish trend in both mid-long term and long term.

Access Plc Equity Snapshot as at Q3 2011

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4.

Analyst OPINION

A better cost mangement and sustained improved operating efficiency was observed when compared with the posture recorded so far before this quarter. In our opinion, this has impacted on the strong profitability recorded in the quarter. This should however not take anything away from the need to address the bloated posture of LDR which seems to pose a challenge to loan book growth as the current posture is likely to constrict the elbow room for expansions and emerging opportunities in the industry. More so, the consistent falling trend observed in the deposit growth of the bank gives us concern(s) as it serves as a pointer towards a sustained weakness in deposit mobilisation. This should receive some attention from the bank as it moves into its business combination phase where the effect and impact of their new subsidiary touted as a retail market imperative becomes key. Having said that, we commend the vibrant nature of the banks interest income outlook and the reinvigorating of non-interest income component of the banks earnings which contributed to the profitability outlook recorded. Finally, we remain optimistic that the bank is able to achieve a seamless intergration of its newly acquired Interconental Bank Plc widely expected to create a unique and robust leverage for the bank to tap into the retail sphere for which it hopes to accelerate its growth potentials and vibrancy as a top banking brand.

End.

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Plot 590b, Pat Ojebuoboh Close, Omole Phase II, Isheri LGA, P.O.Box 18782, Ikeja, Lagos, NG DL: +234 1 7624131 E-mail: info@proshareng.com Website: www.proshareng.com