Access Holdings Plc is Nigeria’s biggest bank by assets, however it has the lowest valuation among the 5 tier-one banks in terms of market capitalization and Price to Book ratio (see chart).
The data shows that all the tier-one Nigerian banks (Access, FBN Holdings, GTCO, UBA and Zenith) are trading at a steep discount to reported book values. Access Holdings trades at the lowest multiple of 0.28x book value.
Given the uncertainties and challenges facing Nigerian banks, returns on reported equity expectations are weak – and typically materially beneath investors’ required returns (or cost of equity).
Therefore, bank market valuations have adjusted lower to a level that can preserve the required return requirements associated with a fresh equity investment in bank stocks.
Access will be hoping existing investors it is selling shares to will buy into its rosy growth outlook. Access Holdings is currently in the market to raise N350 billion via a Rights Issue through the issuance of 17.7 billion new shares at N19.75 per share.
It plans to raise about $1.8 billion to expand its operations over the next four years as it targets becoming one of the top 5 banks in Africa by 2027.
Roosevelt Ogbonna, CEO of the banking unit says Access is close to finishing its growth and investment phase and by the first quarter (Q1) 2025, it will be consolidating for the future and there will be more dividend payout for shareholders.
The lender is also targeting an expansion into new markets such as Morocco, Egypt and the US as part of a strategy to double the share of assets outside its home market by 2027 and rank among Africa’s five biggest banks.
It currently has operations in 22 countries including the United Arab Emirates and the UK.
Access following the money with Southern Africa expansion
Access Holdings is just following the money with its string of acquisitions and expansion into the South and East African markets, Ogbonna, CEO of the banking unit Access Bank Plc said.
“We are very selective about the markets we are going to, and we are chasing the money. We are focused on where the money is. If you split the African continent from an economic power and banking profit basis, it’s in Southern Africa, followed by East Africa, then North Africa, West Africa, then Central Africa,” Roosevelt said at a fact behind the Rights Issue Presentation yesterday in Lagos seen by MoneyCentral.
“With the capital we have in this part of the world, if we move it to South or East Africa, we will be a lot more profitable.”
Access Bank is in every market in Southern Africa region, ex-Zimbabwe and Lesotho. The lender is also in all East Africa markets except South Sudan and Ethiopia.
Access is today the third largest bank in Zambia, fifth largest in Botswana and number 6 in Mozambique.
Access Zambia will achieve $76 million in profit in 2024, according to Roosevelt.
“We are driven by the principles of creating value. Our vision is to be the first African champion playing in the global stage. We want to power trade across the African continent,” Roosevelt said.
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