In this episode of Market Watch, host Frank Fagbo is joined by analysts Muktar Mohammed and Idika Aja to examine the potential impact of Access Holdings’ N40 billion capital raise on the Nigerian market.
The discussion opens with the analysts noting that as of September, Access Holdings had already met the new capital requirements, with its capital base standing at approximately N594 billion, and went ahead to explain that the additional N40 billion raise is therefore not driven by regulatory pressure but is instead a strategic decision aimed at improving liquidity and strengthening the holding company’s structure.
Moreover, the analysts point out that the capital raise involves issuing about 1.98 billion new shares, which results in an estimated dilution of around 3.7% to 4% for existing shareholders.
However, Idika Aja explains that if the bank can grow its earnings by more than 4%, it can effectively absorb the increase in equity, which could ultimately lead to an improvement in Return on Equity (ROE).
Furthermore, they outline a clear roadmap for Access Holdings’ growth and highlight that the bank’s aggressive acquisition strategy is expected to conclude in 2025, after which a consolidation phase will begin in 2026. According to the analyst, this phase will focus on ensuring that all newly acquired branches and subsidiaries are fully integrated and profitable.
Watch the latest episode of Market Watch to get insights into how they could shape investment strategies and market performance in the coming months.
In my understanding, Access Bank may be aiming at lunching new commercial products that need specialised skills and equipment that will be used to make all the new and old branches fully integrated and more profitable. In this digital age, there are several products and services available to traditional commercial banks that could yield better returns based on the ubiquity and financial strength of these bigger banks.
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