2012: Analyst forecasts significant growth on Access Bank’s equity
By Laz IBEABUCHI
LAGOS-Following the conclusion of the acquisition of Intercontinental Bank, a significant improvement is expected in Access Bank Plc’s bottom line and return to investors in the 2012 financial year, according to a report by Vetiva Capital Management.
Vetiva, in its analysis of banks’ performance for the 2011 financial year, said Access Bank’s N8.994 billion dividend payout for 2011, is a pointer to the fact that the bank’s shareholders are already reaping the benefits of the recent industry reform, adding that the shareholders should expect greater benefits in the years ahead.
According to the report, this trend of generous reward to shareholders is bound to improve consistently judging by the bank’s superlative earning capacity which has placed it in a strategic position among its peers.
This trend of generous reward to shareholders is bound to improve consistently judging by the Bank’s superlative earning capacity which has placed it ahead of industry peers, the report said.
According to the report, which recently analysed the performance of the 4 leading banks in Nigeria namely; Access Bank, First Bank, GT Bank and Zenith Bank, it posited in 2011 Access Bank delivered strong results that entrenched it amongst Nigeria’s Tier 1 Banks.
The analysis showed that Access Bank’s impressive earnings capacity was driven significantly by the Bank’s pricing which is the best amongst the leading Banks. Specifically, the report stated that “Access Bank with an estimated asset yield of 11.2% dwarfs GTBank and Zenith which post 10.7% and 9% yields on their respective interest earning assets”.
Details of the report which focussed on the 2011 financial scorecards of the leading banks revealed that Access Bank earned N11.2 on every N100 interest earning asset booked on its balance sheet, which represents a distant gap to GT Bank and Zenith Bank’s feat of N10.7 and N9.0 respectively. The report showed that beyond the core income source, Access Bank is renowned for its treasury operations, whilst refocusing its commercial banking business to build a sustainable annuity income base, which is expected to impact its profitability.
Further on the performance of the Banks and future prospects, the analysts submitted that Access Bank’s enlarged balance sheet and increased customer base as a result of its acquisition of Intercontinental Bank would further strengthen its treasury business. Similarly, in their cross-sectional review of the banking sector and the two rounds of reforms in 2005 and 2009 which resulted in consolidation and Mergers & Acquisitions, the three Banks – Access, GT Bank and Zenith have demonstrated agility and resilience to shocks.
“These banks did not only survive the 2009 cyclone, they waxed stronger and; given their resilience and flexibility, it would not be out of place to conclude that they are banks are built to last as they posses the key attributes; right people, focus on unique goals and discipline keep them consistently ahead of the industry,
“This view is further strengthened by the fact that the capital buffer of these Banks under review should take them through the downturn in the market. With risk weighted Capital Adequacy Ratio (CAR) of 25%, Access, GT Bank and Zenith can comfortably grow their risk assets by 20% under our base case scenario over the next couple of years, without seasoned equity.
” Interestingly, Access Bank and GT Bank are rapidly growing their brands outside Nigeria thus lending credence to the postulations that these names will be in the top echelon of Africa’s banking institutions over the next decade.
It has been posited also that these Banks will dwarf regional peers to rank in the top-10 percentile of African Banks as they grow their regional footprints by replicating their success stories in Ghana across other impact economies on the continent,” the report stated.