Equity Analysis /
Nigeria

Access Bank: ACCESS BANK: Results call fails to reassure on capital, HOLD

    Tellimer Research
    30 April 2018
    Published byTellimer Research
    Management held its Q1 18 result call on Friday, leaving us with more questions than answers on capital. The group capital adequacy ratio decreased by 320bp to 19.3%, reflecting the inclusion of IFRS 9-related provisions, which led to a NGN78bn reduction in equity. But of more concern and relevance is the bank capital ratio, which management says is down 300-350bp from 18.2% at YE 17. This implies that at 14.7-15.2%, bank CAR is now around the regulatory minimum of 15%. In our view, there is a need to recapitalise to provide growth capital for the bank. However, management believes its internally generated capital will be sufficient. We have a HOLD recommendation on Access Bank as we consider current valuations (0.61x FY18f P/B and 5.3x FY18f P/E) to be fair on a risk-return basis.