In the first quarter of 2025, Access Holdings Plc appeared to maintain its dominance in Nigeria’s financial services space, reporting a staggering 39.0% year-on-year surge in gross earnings to NGN980.68 billion—buoyed by its impressive NGN39.09 trillion asset portfolio. On the surface, the numbers told a story of resilience. But beneath the topline growth lies a sobering reality: rising interest rates have become a double-edged sword.
Access Holdings, long regarded as a formidable Tier-1 institution, recorded a 36.3% year-on-year jump in interest income—a direct result of the elevated interest rate environment. Yet, the same environment triggered an alarming 71.3% rise in funding costs, decimating net interest income by 20.1% in Q1-25.
This sharp decline has forced analysts to revise their earnings projections. The 2025 estimated Earnings Per Share (EPS) was slashed from NGN15.59 to NGN14.42—a 7.5% cut—while the target price dropped 8.4% to NGN35.28 per share. While the stock retains a “BUY” rating, the optimism now comes with a heavy caveat: profitability is under increasing pressure.
The flashback to 2024 paints a more radiant picture. That year, Access Holdings delivered an industry-leading 88.0% growth in gross earnings and boasted the highest earnings yield (18.3%) among peers. A one-off gain from the disposal of economic interests helped buoy non-interest income. But that cushion is no longer available. In 2025, non-interest income is projected to drop 9.9%, and even a diversified portfolio spanning payments, pensions, and insurance may not be enough to offset the drag from the absence of windfall income.
Cost pressures are mounting. Operating expenses are expected to rise by 16.9% amid an inflationary squeeze, while the group’s net interest margin (NIM) took a beating—crashing from 6.5% in Q1-24 to 3.6% in Q1-25. Though risk management remains strong, with non-performing loans held steady at 2.8%, the Group faces an uphill task in sustaining profitability.
Looking ahead, Access Holdings is expected to grow profit before tax by just 7.2% in 2025E, while EPS could decline 13.7%, weighed down by an additional 17.77 billion shares from recent allotments. The Group’s forecast dividend of NGN3.00 per share may provide some comfort to investors, offering a yield of 13.9% based on recent prices. Yet, this is small solace against the backdrop of squeezed margins and shrinking earnings quality.
Access Holdings has weathered many storms and delivered consistently strong performance over the years. But as 2025 unfolds, the Group faces a new kind of challenge: balancing growth with profitability in an era of costly capital and declining margins. Investors and stakeholders alike will be watching closely to see whether the Holdco’s diversification strategy can shield it from the persistent macro headwinds.
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