Financial Market

Access Bank’s Credit Expansion, Assets Surge Reinforce Industry Dominance

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June 26, (THEWILL) – Nigeria’s foremost financial services institution, Access Bank, has maintained the tempo in credit expansion as a priority to stimulate the economy while its assets base soars. Data from the first quarter (Q1) 2022 interim report of the parent company, Access Holdings Plc, showed that the Tier-1 lender, which presently is Nigeria’s largest bank by assets, recorded a significant increase in customer deposits.

Deposits from Customers rose to N7.49 trillion in the review period from N6.95 trillion in the preceding quarter (Q4 2021), representing a growth of N540 billion or 7.8 percent Coming amid unyielding economic headwinds, mirrors increased customer confidence in the 33-year-old bank which transited to a Holding Company earlier this year.

The bank’s Loans & Advances to Customers, a critical success factor in assets building, was N4.28 trillion in Q1 2022. This figure which represents facilities extended mainly to the real sector, rose by N125 billion from N4.16 trillion in the preceding period (Q4 2021), reflecting a 4.2 percent increase. It contributed to spur the boost in assets base to N12.08 trillion in the review period. From N11.68 trillion in the preceding quarter and N10.68 trillion in the corresponding period of 2021, this was N1.4 trillion increase or 12 percent growth year-on-year.

Commenting on the importance of robust assets base, Professor of Finance and Accounts at the Nasarawa State University, Keffi, Muhammad Mainoma, noted that assets base is an indication of how efficient a business organization is in its investment strategy and a measure of growth prospects. According to him, companies with robust assets will easily withstand tough economic environments.

“It signifies that they take advantage of the environment. They act strategically. In business you will continue to study the environment and take advantage. You invest in areas that thrive. For a bank there is no period that people will not need money. It is either for food or health. So once they continue to invest in those areas they will get returns. So once a business is focused and invests in areas that people always need, it will not lose at all. This explains the continuous growth despite difficult circumstances”, Mainoma, immediate past President, Association of National Accountants of Nigeria (ANAN), told THEWILL in a note.

The bank’s market leadership reflects in the significant jump in Fee & Commission Income from N38.95 billion in Q1 2021 to N56.30 billion in Q1 2022, reflecting 44.5 percent while Net Fee & Commission Income also recorded a growth of 40 percent year-on-year to N42.89 billion from N30.73 billion. The growth trajectory also reflected in the Profit After Tax which rose from N52.54 billion to N57.73 billion, showing a 10 percent increase. Basic Earnings Per Share was 163K in Q12022 against 149K in the corresponding quarter, a growth of 10 percent.

The determination for sustained market dominance accounts for the increase in Operating Expenses from N62.49 billion in Q1 2021 to N77.25 billion in Q1 2022 or 23.6 percent containing increased expenditure in two major areas – Personnel Expenses and IT & E-Business Expenses which rose from N20.06 billion to N29.25 billion and N5.19 billion to N7.51 billion respectively.

Commenting on the Q1 2022 performance, the Chief Executive Officer, Access Bank Holding Company, Mr Herbert Wigwe, said, “The results reflect the sustainable business model coupled with effective strategy execution of the Banking Group currently operational as we made solid gains towards the achievement of our strategic goals.”

“We achieved a 33 per cent y/y growth in gross earnings to N295.7bn (Q1 2021: N222.1bn), leading to an improvement in the Profit After Tax to N57.4bn (Q1 2021: N52.5bn). Consequently, our Return on Average Equity (ROAE) stood at 21.4%, tracking in line with our commitment to our stakeholders.

Assets quality remained flat at 4.0 percent on the back of a robust risk management approach. This is expected to trend downwards in the future as we strive to hit and surpass the standard we had built in the industry prior to the business combination in 2019,” Wigwe said.

Access Bank is Nigeria’s largest banking group, accounting for 19 percent of banking system assets at the end of the financial year 2021, according to Fitch Rating which applauded the bank’s acquisition strategy. In the latest rating, the global rating agency affirmed the bank’s Long-Term Issuer Default Rating (IDR) at ‘B’ with a stable outlook. Access Bank’s Viability Rating (VR) is also affirmed at ‘b’ and National Long-Term Rating at ‘A+ (nga)’, indicating a strong credit profile with no support from the sovereign in case of material risks.The rating note indicated that Access Bank’s Long-Term IDR is driven by its standalone creditworthiness, while the bank’s VR was supported by healthy loan quality and strong revenue diversification, profitability and liquidity coverage.

Fitch explained further that the Group VR also reflects the constraint of a challenging operating environment, aggressive cross-border growth and moderate capitalisation in the context of its risk profile.

Access Bank’s National Long-Term Rating balances its leading franchise and strong financial profile against weaker capitalisation than higher-rated peers, noting that the downside to operating conditions of the bank includes rising global risks which are projected to weaken domestic operating conditions.

In a mission to become the gateway to the global financial system, Access Bank has acquired several banks in other Sub-Saharan African countries in recent years in line with its African expansion strategy.

Fitch analysts expect such acquisitions to continue, strengthening Access Bank’s franchise and geographical diversification. It said Access Bank has a record of integrating domestic acquisitions but a large number of cross-border acquisitions creates execution risks and may pressure capital.

Access Bank has invested heavily in leading technological evolution in the African banking sector through its strategic partnership with the Africa Fintech Foundry to nurture the next generation of innovative fintech startups. The Bank has also employed the use of technology to help achieve its sustainability targets. It has developed a portal that helps to monitor its environmental footprint, especially its carbon emissions.

For its continued investment in digital innovation, Access Bank was recognized as the ‘Best Digital Bank in Africa’ by Asian Banker at the Asian Banker Middle East and Africa Regional 2020 Awards virtual ceremony. The bank, over the years, has leveraged technology including advanced analytics, cloud computing, artificial intelligence, machine learning and robotics process automation to reform its business operations and drive performance.

A leading full-service commercial Bank operating through a network of more than 600 branches and service outlets, spanning three continents, 12 countries and 31 million customers, Access Bank adopted a holding company structure in the first quarter of 2021.

Wigwe had disclosed that transiting to a holding company structure will enable Access Bank Plc to generate more revenue from other non-core banking business, expand its operation, remain competitive in the ever-changing business environment and deliver more value to shareholders. The banking model is expected to also help Access Bank to diversify its revenue and remain competitive in the financial market.

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