Access Holdings gets Buy rating as CardinalStone raises target price

Analysts at CardinalStone have maintained a Buy rating on Access Holdings Plc shares on the Nigerian Exchange (NGX), revising their 12-month target price upward to N52.14 from N45.12, implying a potential upside of 106.1% from a reference price of N25.30.

This view was contained in their equity research report titled “Upward Revision in TP on Improved Funding Outlook,” which flagged a strategic pivot at the Group from aggressive expansion toward earnings quality and capital optimisation.

At the current reference price, the new target price represents an exit Price-to-Book (P/B) of 0.6x, above the stock’s 10-year mean P/B of 0.4x, though still below the Middle East and Africa peer average of 1.4x, according to analysts at the research firm.

What the analysts are saying

According to CardinalStone analysts, FY’25 marked a transition year for Access Holdings, with management now entering what it describes as a more execution-focused phase centered on sustainable value creation.

• A central focus of the Group’s strategy is the deliberate restructuring of its foreign currency (FCY) funding mix — moving away from costly corporate treasury deposits toward lower-cost transactional balances, collection mandates from International Oil Companies (IOCs), and government-related flows.
• In pursuit of this strategy, the Group repaid approximately $500 million (about N692.6 billion at Q1’26 average exchange rates) to depositors, a move analysts believe drove a 26.9% year-on-year decline in interest expense to N556.2 billion in Q1 2026.
• “The ratio of funding costs to interest income has averaged 61.1% over the last three years, well above the circa 32.8% of Tier-1 peers,” the analysts noted, pointing to significant room for improvement.

As a result, CardinalStone now expects Cost of Funds to moderate to 5.0% in FY’26, down from 5.7% in their previous estimate and 6.1% recorded in FY’25. They project Net Interest Income to grow by 32.6% year-on-year to N1.8 trillion in FY’26, with Net Interest Margin (NIM) rising above the management target of 5.0%, compared to 4.5% in FY’25.

More insights

The Group’s gross loan book expanded by 16.4% year-on-year in FY’25 to N13.7 trillion and further by 23.4% year-on-year in Q1’26 to N13.9 trillion.

• However, analysts noted that this growth has been driven disproportionately by the international business — particularly The Access Bank UK — which now accounts for 35.1% of banking subsidiary loans, up from 22.7% in FY’24.
• This shift in loan mix came at a margin cost, contributing to a 5.6 percentage point decline in asset yields to 11.8% in FY’25, as international lending commands lower margins than the Nigerian market.
• Nigeria’s share of the overall loan book has shrunk from 57.7% in FY’24 to 43.4% as of Q1’26.

For FY’26, CardinalStone projects gross loans to reach N15.7 trillion, a 15.0% year-on-year expansion, supported by an anticipated ramp-up in Nigerian lending activity as recently capitalised earnings provide greater room to absorb credit risk.

Cautious dividend outlook

CardinalStone has toed the lender’s conservative outlook to assume no dividend distribution for FY’26 in their base case, but noted that an accelerated resolution could unlock a payout of around 30.0%.

• Subsidiaries in the Republic of Congo, Gambia, Ghana, the UK, and Zambia were flagged as potential candidates for a partial reduction in ownership stake to between 75.0% and 80.0%, subject to regulatory approval.
• Re-echoing the bank, the analysts noted that Access Holdings had recommended dividend payments for both the half-year and full-year periods in FY’25, but failed to obtain the required regulatory approvals in both instances.
• For the interim dividend, the issue stemmed from the Holdco’s paid-up capital falling below the combined minimum paid-up capital of its subsidiaries — a breach of CBN Guidelines for Financial Holding Companies.
• This was subsequently resolved through a private placement capital raise at the Holdco level.
• For the final dividend, a separate concern arose under BOFIA Section 19.8(c), which caps investments in foreign banking subsidiaries at 10.0% of shareholders’ funds.

Access Holdings currently stands at 19.4%, and has been given a 12-month window to remediate the breach.

What you should know

Access Holdings’ Holdco Capital Adequacy Ratio stood at 18.3% as of the latest period, while Access Bank Plc’s standalone CAR stood at 21.0%.

• The Group’s slowdown in Nigerian lending in FY’25 helped to preserve capital buffers, with a recovery in domestic loan growth now expected in FY’26.
• Nigeria remains strategically important to the Group’s earnings outlook, given higher margins achievable in the domestic market relative to international operations.

CardinalStone’s revised target price of N52.14 represents a 15.6% increase from their previous estimate of N45.12, reflecting improved confidence in the Group’s funding cost trajectory.