Access Holdings’ vision is to create a globally connected eco-system, inspired by Africa and the world. The financial services holding company is today an African champion playing on the global stage.
Access Holdings’ growth strategy is guided by 3 principles, being Africa’s gateway to the world, the world’s most respected African bank, and the world’s first truly African global brand in the financial services sector.
This means it is powering trade across Africa, with Access Holdings being very selective in the markets it operates in, and guided strictly by the principles of creating value.
Access Holdings’ verticals include: Banking, Payments, Pensions and Consumer lending. In banking, Access Bank is the largest Bank in Nigeria, Access Pension is the fourth largest pension funds administrator or PFA in Nigeria, Access Hydrogen its payment and fintech offering is one of the largest switching companies in the Nigerian financial services ecosystem.
Access Holdings is the fastest growing bank in Africa and largest lender and deposit taker in Nigeria. Across the 14 markets in the African continent, Access is a top-5 player in ten of them. In the others, ex-South Africa, Access will be a top – 5 bank by 2027.
The bank is a leader in risk management, as risk from core operations as well as Mergers and Acquisitions (M&A) undertaken over the years have been navigated expertly, by growing scale in an efficient manner.
Access is a value play, given its shares are trading at 0.28 times book value and a price to earnings ratio of 0.96.
The institution has delivered on every commitment it has made to shareholders from 2002 till date, and today Access is bigger than the biggest institutions that were around in 2002.
Access Holdings Plc (Accesscorp) is a compelling business to invest in given its huge African opportunity, benign positive rating credit outlook, valuable franchise, strong financial performance, solid liquidity position, attractive pricing/valuation that underscores the attractiveness of the lender’s rights issue and increased dividend payout to shareholders as project funding reduces in the coming years.
The largest lender by total assets and customer base in Africa’s most populous nation 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 also 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) of 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. Of course, the Bank’s investment case is strong, with a well-diversified income stream as 55 percent of its book value is not in Nigeria.
For instance, N1.61 trillion of Access Holdings book value is in the United Kingdom and the Rest of Africa segment, according to a recent report by Chapel Hill Denham.
Analysis by Chapel Hill Denham shows the Bank’s +60m customer base is about 27 percent of Nigeria’s population and about 4 percent of Africa’s current population as at 2024. This means that for every 100 Africans and 27 Nigerians are customers of Access Holdings.
In an optimistic tone, the management of the Bank said it plans to more than double the number of customers to 125 million by 2027 to achieve the aspiration of becoming a top five bank in Africa.
UK and international business
Access is the largest African bank in the United Kingdom (U.K) and Access U.K is the first African bank in Hong Kong.
It is the first African bank in Malta, where it will have its booking office for trade. Access international business means it can clear itself across any platform, both cash and instruments.
The Paris and Malta branches means Access Holdings can clear itself in Euros both in cash and instruments. Access will also soon open a branch in the United States (U.S).
With international banks pulling out of the African continent and not operating in several countries, Access Bank U.K is now one of the largest correspondence banks in Africa.
Access Holdings dominates banking industry
Analysis of the balance sheets of eight banks by MoneyCentral shows that Access Holdings accounts for 24.23 percent of the aggregate total assets of the eight banks.
The breakdown of total loans also shows that Access Holdings accounts for 25.52 percent of the total loans. Access Holdings total deposit makes up 23.93 percent of the total amount of the combined firms under coverage.
With a shareholders’ fund of N2.18 trillion, the lender has the ability to withstand losses and deliver returns to shareholders.
Access Holdings reported pre-tax profits of N729.0 billion in Full Year (FY) 2023, with a forecast for it to increase to N864.3 billion in FY 2024. This reflects a strong earnings trajectory, projected to continue growing to N1.176 trillion by FY 2026.
Similarly, net profits were recorded at N619.3 billion in FY2023, with an expectation to rise to N734.6 billion in FY2024 and N1.003 trillion by FY2026.
Such figures indicate a healthy return on equity (RoE), which has surged from 13 percent in 2022 to an impressive 36 percent in 2023.
The company maintained a low non-performing loans (NPL) ratio of 3.1 percent as of FY2023, underscoring its effective risk management and credit policies. The cost of risk is also low at 1.2 percent, ensuring that even in challenging scenarios, it can absorb losses without significant impact on its overall financial health.
Clear and Focused Growth Strategy
Access Holdings growth strategy is multifaceted, focused on expanding its retail banking business, enhancing digital channels, and increasing its presence across Africa. The Group aims to leverage its already substantial footprint in the continent, which includes operations in 13 African countries, and a strong presence in the UK through The Access Bank UK.
The company’s retail banking business has shown significant growth, particularly in digital channels. The volume of transactions through mobile and internet banking saw a compound annual growth rate (CAGR) of 52 percent from 2020, while USSD transactions grew by 24.4 percent.
With a goal of becoming a top-3 bank in each of its markets (excluding South Africa), Access Holdings’ strategy includes both organic growth and acquisitions. The company’s subsidiaries are primarily profitable, reducing the overall strain on group capital while supporting expansion efforts.
Attractive Pricing and Valuation
The rights issue is offered at N19.75, making it an attractive opportunity for investors to acquire additional shares. As noted, Access Holdings (NGX: ACCESSCORP) trades at 0.28x its book value, a valuation notably lower than its Nigerian peers such as Zenith Bank (0.43x) and Guaranty Trust Holding Company (0.68x).
A Coronation Research report suggests an intrinsic valuation of N48.20 per share for Access Holdings, significantly higher than the current trading price. This valuation takes into account the company’s growth prospects and the market’s likely re-rating as it continues to grow and diversify its revenue streams.
The rights issue price is set to provide immediate value, with a one-year price target set at N27.73 per share, offering a potential upside of 41.5 percent from the recent market price of N19.60 per share (as at Friday August 9th, 2024).
This current valuation of Access Holdings is at a sharp discount to its book value, making the rights offer a compelling investment.
Sustainability
In today’s world, sustainability is vital for driving performance and Access Holdings is a leader in that. Access Holdings saw a 7.8 percent reduction in operational emissions across scope 1, 2 and 3 emissions in 2023.
It invested over $23.6 million on low carbon transportation and recycled waste in 75 locations it operates in. It also had over 896 offsite ATM locations which were powered by solar at the end of 2023, while 22,000 trees were planted for biodiversity conservation.
Access Following the Money with Strategic Acquisitions
Access Holdings is following the money with its string of acquisitions and expansion into the South and East African markets, Ogbonna, CEO of 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 at the NGX.
“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 of the 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.
At the end of 2023, Access Holdings had 2,859 ATMs, 18.5 million unique internet and mobile banking users, over 54,000 point of sale (POS) machines deployed, and over 300,000 agents.
Gross earnings at Full Year 2023 was N2.6 trillion, profit before tax of N729 billion, return on average equity (ROAE) of 36.2%, 19.01 capital adequacy ratio (CAR) and 7,610 professional staff.
Today Access Holdings is the largest bank in the Nigerian market by far. It’s the top-10 on the African continent and the largest bank in Africa in terms of retail customer base.
Access has over 60 million customers, across 3 continents spanning over 22 countries, including the UAE, UK and 3 representative offices in China, India and Lebanon.
By 2027, Access growth projection is to have 125 million customers, 42 million active monthly users on its platforms, one in every three transaction processed through the Access platform or partners such as Mpesa or MasterCard, N10 trillion ($7 billion) in revenues, return on equity between 18% – 27% and capital adequacy ratio above 20%.
Conclusion
Access Holdings rights issue offers a unique and compelling opportunity for investors. The company’s strong financial performance, clear growth strategy, attractive pricing, global focus contributes to making this rights issue an enticing value proposition.
For existing shareholders, it provides a chance to increase their investment, while for new investors, it represents a cheap entry point into a leading financial institution poised for significant growth.
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