Access Holdings Posts N1 Trillion Profit But No Dividend - Taofeek Subair

Added: 2026-05-08

[00:00:04]We have Tofiq Subair who is an investment research analyst with Pathway Asset Management. How are you doing, sir?

[00:00:11]>> Hello. Good to meet you. Happy New Year.

[00:00:12]Which I should be saying that in May. I should not be saying it in May. Do you have a seat? Thanks for for joining us.

[00:00:18]So, Tofiq, it's great to have you.

[00:00:21]I guess the the first question we start with with of course with Access Holdings and the impairments just to jump in there. And we've been seeing a whole lot of balance sheet clean up, if you will.

[00:00:32]Sorry with UBA, we've you know, seen it here. What what do you make of of Access as far as their their the impairment there? Okay, so the impairment came in at over 500 billion naira. It's a lot.

[00:00:42]So, that's is a trend across the industry just to clean up the balance sheet.

[00:00:47]>> Yeah. So, coming from the CBN policy that was passed earlier last year.

[00:00:53]>> Mhm. So, all banks are given that money to clean up their books. So, that's the reason why they had to make such a huge amount of provision to account for the non-performing loan.

[00:01:04]Just to ensure that the balance sheet is solid and de-risk the balance sheet. Got you.

[00:01:09]No mention of a dividend in the results. I guess that I mean, we saw what with UBA when they didn't come out with their declared dividend for full year. We spoke with the group managing director CEO the for hell of risk also mentioned it as well. They they addressed it. With with Access, I guess does it make sense looking at you know, the balance sheet clean up and where things are with the hits they took to the to the financials or how you seeing it?

[00:01:35]>> Okay, the way the way we see it is the provision they had to retain the earnings just to support the uh the clean up of the balance sheet.

[00:01:43]>> Yeah. So, that's going to increase the capital adequacy ratio in such a way that the risk-weighted assets now is going to be moderated. They are not taking more risk looking at the increments we saw with the what was it called the loan books.

[00:01:57]>> Yeah. So, they had to ensure that the balance sheet is solid enough just so that it doesn't get fragile. Got you.

[00:02:02]Got you. Okay, so you know, I guess you know, risk management there you know, balance sheet review there.

[00:02:08]As far as because comprehensive income I saw that fell by about what you know, 58% or so from a trillion to you know, 400 and something billion. Despite all that and impairments I guess the FX losses as well still manages to come out with a trillion naira.

[00:02:25]Um Profit before tax. Exactly. What do you make of the ability to absorb that everything that they absorbed and still come out with a PBT of So, looking at the profit before tax of over a trillion naira. So, there is a part that has not been accounted for which is the the FX exposure. So, if you look at the fair value of their um FX exposure based on the balance sheet.

[00:02:47]>> Yeah. So, if you account for it looking at the comprehensive income, you will see that it fell. Yeah.

[00:02:52]So, if you now check the core profit now, it is not up to the one trillion.

[00:02:57]So, that's taking back to the retained earnings that I mentioned earlier that this just to support the balance sheet.

[00:03:03]So, that's they don't allow things to get fragile. So, that's the core reason why they didn't even intend to And dividend. And I'm very sure the regulators will also want to ensure that the balance sheet is solid enough and they don't get That's of course the Central Bank of Nigeria. Yeah, they're really taking an eye to that to making sure all those things are cleaned up.

[00:03:23]How do you think it's a public holiday?

[00:03:25]You know, should be said this result was released around 2:00 a.m. in the morning on a public holiday. So, the markets are closed.

[00:03:33]But how do you think markets going to investors will respond on on Monday? And actually sorry, before you begin I should point this out that after UBA released their earnings UBA, First Hold Co, Access all fell their stock price. So, So, that's the major majority part of it has been pricing. So, if you look at the current price of assets in the markets it's trading on the it closed at 27 naira. Yeah, that's right.

[00:03:56]>> So, that's is not too far from what it was doing somewhere around November when it fell from 26 down to 25.

[00:04:02]>> Yeah. So, most of this has been accounted for and if you look at the 20 Q1 2026 reports you can see a significant growth in what? In the customer deposit which jumped up by over 50% meaning they now have a cheap capital that they are going to use to generate more income. So, if you look at the cost to income ratio, it fell sharply. It fell sharply. So, it means with that customer confidence that they have that increased their what was it called their customer deposit by customers. So, it means going forward they can make more money with cheap capital. So, are you So, I guess looking at the we still have First Hold Co to you know, as far as the tier one banks are concerned.

[00:04:48]Just looking ahead, I guess this is just a period of a balance sheet clean up for a lot of these banks. Do you foresee a recovery you know, going forward for a number of these banks like a like an Access and the rest after you know, we get past this period of of acknowledging these impairments and so on?

[00:05:05]So, I feel like the impairment is not something that is going to occur in the near future because the one part of the discussion is will impairments occur. Another part of this is that most of these impairments is not as if they won't go back to get all the They all they will always go after the customers. Yeah. And by the time they recover this loan, they are going to write it back.

[00:05:25]>> Right.

[00:05:26]>> Which is going to support the margin going forward.

[00:05:29]So, Makes sense. Makes sense. Let's quickly jump to Dangote Cement. Going from banking now to the industrial sector.

[00:05:38]What what do you make of their I guess for the first three months of of the year? So, the revenues particularly the drivers for Dangote.

[00:05:46]So, looking at Dangote Cement and the industrial sector generally what is driving the up line is the volume. Mhm. So, we can [clears throat] see from their core business that most of this money is coming from government spending. Government infrastructure, there is a lot of road that is being constructed and now what they use majorly in road construction now is concrete. Right. So, a lot of cement is needed.

[00:06:10]Okay. So, that is what is driving the what was it called the revenue line.

[00:06:14]Fantastic. Now, going cost of production though, I mean, you know, it's it I should be said revenue grew at 20% clip.

[00:06:21]Cost of production of 10% but 448 billion still a sizable amount of money for cost of production. What what do you look at the drivers in cost?

[00:06:27]>> you if you if you own um if you try to take the cost of production as a fraction of the revenue >> Yeah. you will see that it is less than 50% just roughly around 42% which is okay. Meaning they they have a gross profit margin of 58%. And if you take it down to the bottom line, it's over it's double digit over 20%. Mhm. That's significant and that is trailing the same what was it called magnitude that they reported in 2024.

[00:06:55]Mhm. So, the base year they still try to match and surpass the base year. Yeah.

[00:07:00]Coming from a very strong base base year to be precise.

[00:07:04]Okay, but I guess in terms of what makes up their costs. Are we looking at what energy haulage and things like that?

[00:07:12]>> Yes, majorly majorly energy. So, if you look at the the production part Yeah.

[00:07:16]majority of what they need to get the product out is energy driven. Got you.

[00:07:21]So, what Dangote has done and most player in the industry, they try to diversify their energy mix.

[00:07:28]So, if you go to the haulage part we have seen different initiative from diesel now to CNG. So, that's what they are using to manage the cost just so that they can save enough of money in order not to potentially increase the price that is going to affect the volume. Makes sense. And now of course you talked about that gross profit margin translating to the PBT and the bottom line. But you know, 35% growth there for profit before tax and then profit after tax of like 53%. What was your assessment of the of all the bottom the bottom line So, so looking at the bottom line, it is so solid. It is. It it looks sustainable Yeah. with a kind of caution. Okay.

[00:08:10]Because if you look at the environment now, we understand that the business is energy driven.

[00:08:15]>> Right. And we have been seeing the interplay with oil and fuel prices.

[00:08:20]Exactly. So, it means if for a sector like this, if the continue for so long, it can have effect Effect on the bottom line. Yeah. But looking at what the company has done like they already they already have a good strategy.

[00:08:35]They are trying they are increasing their production. They are increasing their what was it called footprints beyond Nigeria. Yeah, but in in Africa, right? Côte d'Ivoire, Ethiopia.

[00:08:47]>> Collectively it's about 11 countries.

[00:08:49]>> Right.

[00:08:50]You know, but it's interesting. I'm glad you mentioned that. I think Nigeria revenue still was about 800 billion out of that one trillion and the rest of it Yeah, yeah. expected because if you look at the production capacity, it's majorly concentrated in Nigeria.

[00:09:05]>> Yeah. So, other region they are just trying to diversify just so that they try to you know um create a kind of comfortable zone for them in case there's any kind of issue.

[00:09:17]>> in Africa. Because I think the rest of Africa the rest of their footprint, I think their revenues was up about 14%.

[00:09:22]You know, in the >> Volume was up as well. As well. The volume game behind that too, right?

[00:09:27]Tofiq, we're going to have you back on the show. Thank you so much for the very insightful analysis here on on Access Holdings and Dangote Cement. Tofiq Subair, investment research analyst of Pathway Asset Management Limited. And thank you for coming on a public holiday. Happy Workers' Day to you.

[00:09:42]Appreciate it.