Goddy Egene with steady growth in financial performance, rapid expansion and drive, Access Bank Plc is moving to dominate and deliver better value to all stakeholders
When Access Bank Plc merged with Diamond Bank Plc in 2019, it was in line with its vision “to be the world’s most respected African bank.” After the merging Access Bank became one of Africa’s largest retail banks by retail customer base. With over 900,000 shareholders (including several Nigerian and International Institutional Investors), the bank has enjoyed what is arguably Africa’s most successful banking growth trajectory in the last 12 years and going by its latest financial performance and strategies, Access Bank Plc is on its way to dominate the African continent in the very near term.
For the year ended December 31, 2020, posted gross earnings of N764.7 billion, showing a growth of 15 per cent from N666.8 billion in 2019. Interest and non-interest income contributing 64 per cent and 36 per cent respectively. Profit before tax (PBT) grew by 13 per cent to N125.9 billion, from N111.9 billion in 2019, while profit after tax (PAT) rose from N94.1 billion to N106 billion on the back of on the back of a 32 per cent growth in operating income which offset the rise in impairment charges and operating expenses. Impairment chargers stood at N62.893 billion, compared with N20.189 billion in 2019. According to the bank, net impairment charge of near N43 billion arose principally from a Structured Trade Finance(STF) portfolio in the Access Bank UK. It explained that the STF impairment is one-off/COVID related and recoverable over the next 12-18 months against insurance cover from world class insurers. Given the improved bottom-line, the board has recommended a final dividend of 55 kobo per share bringing the total dividend to 80 kobo per share for the year.
The CEO explained that Access Bank Plc recorded a consistent growth in its retail banking business, reporting a 5.8 million growth in customer sign-on during the year through its financial inclusion efforts.
“This increase in customer base led to a retail revenue of N177.2 billion, a 64.4 per cent increase from its 2019 figures of N107.8 billion. The bank’s customer deposits also grew by 31 per cent to N5.59 trillion in December 2020 with savings account deposits standing at N1.31trillion. Similarly, net loans and advances grew by 18 per cent to N3.61 trillion in comparison to 2019 figures of N3.06 trillion,” Wigwe said.
He disclosed that as the bank intensified recovery efforts, undertook significant write off and leveraged its robust risk management practices, its asset quality improved to 4.3 per cent compared to its 2019 report of 5.8 per cent, noting that this is expected to continue to trend downwards as it strives to surpass the standard it had built in the industry prior to the merger with Diamond Bank
Commenting on the results, the Group Chief Executive Officer of Access Bank Plc, Mr. Herbert Wigwe, said the institution’s resilient performance was testament to the effectiveness of their our strategy and capacity to generate sustainable revenue.
“The strategic actions that the bank has taken over the past 12 months evidence a strong focus on retail banking and financial inclusion, an African expansion strategy and a drive for scale for sustainable value creation. In 2020, Access Bank proudly opened its doors for business in Kenya and Mozambique, further increasing our footprints across the African Continent. Access Bank Zambia also concluded the acquisition of Cavmont Bank Limited in January 2021 and the group recently announced the approval by relevant regulatory authorities for the acquisition of Grobank Limited, creating an inroad into the South African market in realisation of the group’s strategic ambitions,” he said.
Wigwe had said that going into the fourth year of their 5-year cyclical strategy, their focus remained on consolidating their retail momentum and expanding their African footprint in a sustainable manner.
The CEO explained that Access Bank Plc recorded a consistent growth in its retail banking business, reporting a 5.8 million growth in customer sign-on during the year through its financial inclusion efforts.
“This increase in customer base led to a retail revenue of N177.2 billion, a 64.4 per cent increase from its 2019 figures of N107.8 billion. The bank’s customer deposits also grew by 31 per cent to N5.59 trillion in December 2020 with savings account deposits standing at N1.31trillion. Similarly, net loans and advances grew by 18 per cent to N3.61 trillion in comparison to 2019 figures of N3.06 trillion,” Wigwe said.
He disclosed that as the bank intensified recovery efforts, undertook significant write off and leveraged its robust risk management practices, its asset quality improved to 4.3 per cent compared to its 2019 report of 5.8 per cent, noting that this is expected to continue to trend downwards as it strives to surpass the standard it had built in the industry prior to the merger with Diamond Bank.
Despite the challenging operating environment, Access Bank delivered strong results in the first quarter (Q1) ended March 31, 2021 with the gross earnings printing at N222.1 billion was recorded, up by six per cent above the figures posted in the corresponding period of 2020. PBT rose by 30 per cent to N60.1 billion, from N46.2 billion, while Profit After Tax (PAT) grew by 28 per cent to N52.6 billion compared with N40.9 billion in 2020 on the back of a 13 per cent growth in operating Income and a 16 per cent reduction in interest expense.
According to Wigwe, the performance showed the strong capacity of their business to generate sustainable earnings on the strength of their balance sheet, diverse revenue streams and their dedicated people.
“As a result of effective implementation of our cost reduction strategy, operating expenses remained flat, despite the inflationary environment and increased regulatory cost. Our retail banking business also showed steady growth with a 112 per cent increase in revenue to N57.5 billion and a 941,631 new customer sign-on via our financial inclusion drive during the quarter. This improvement is evidenced by the consistent and robust savings account growth to N1.3 trillion , leading to a significant reduction in our cost of funds,” he said.
He said the increased adoption of digital channels and the growing customer base, the bank recorded a 29 per cent growth in USSD transaction value and 40 per cent increase in mobile and internet banking transaction value.
“In line with our risk appetite and efficient risk management, our asset quality continued to improve as guided with NPL Ratio of4.0 per cent (Dec. 2020 4.3 per cent), as we intensified our recovery efforts. Likewise, we expanded our loan portfolio cautiously as reflected by the marginal growth in our net loans and advances to N3.65 trillion year-to-date (Dec 2020: N3.61trillion).Furthermore, we maintained robust capital and liquidity positions, well above regulatory levels with a Capital Adequacy Ratio of 22.2 per cent and a liquidity ratio of 48.3 per cent, positioning us to support our customers across various markets and adequately execute our expansion strategy,” he added.
Wigwe stated that in furtherance of their vision to be the World’s most respected African bank and Africa’s payment gateway, they remain committed to a disciplined and thoughtful expansion strategy.
Considering the growth the bank is witnessing and Wigwe, at the annual general meeting (AGM) held recently, assured shareholders of sustained healthy dividend payout saying the bank is well positioned to achieve significant growth in profitability and pay higher dividend.
He said the shareholders should expect better dividend that would be sustain given the various strategies put to grow the business.
According to him, Access Bank is best positioned to maximize the identified opportunities in Africa on the back of a growing customer base and the move to a cashless economy.
“We have identified Africa to be a vast pool of opportunities with over 370 million unbanked adults, US$9.2 billion in remittances and cross border payments, 89 cities of over 1.3 billion inhabitants by 2025 and the overall African financial ecosystem. We also see opportunities coming from the new African Continental Free Trade Area (AfCFTA), as it is expected to expand intra-Africa trade to 53 per cent by 2022, eliminate tariff on qualifying trade and increase financial flows,” he said.
Wigwe said that on the domestic front, Nigeria presents several opportunities due to its large population, huge payments and remittance flows, and an emerging insurance market. “To capture these opportunities, Access Bank will transition into a holding company structure that will enable it tap into the market opportunities that are available in the regulated banking and consumer lending market, electronic payments industry and retail insurance market. Through the restructuring, we will create new product revenues without taking incremental risks for the enterprise, ensure diversification of earnings, and support outside of Africa,” he said.
The CEO noted that the series of mergers and acquisition they had undertaken since 2005 have all been value accretive, adding they had commenced green field operations in Mozambique and completed the acquisition of Transnational Bank and Cavmont Bank in Kenya and Zambia respectively to strengthen and increase their market presence.
Last week, Access Bank formally acquired Grobank Limited of South Africa and renamed the bank Access Bank South Africa Limited. The deal was finalised after Access Bank’s acquisition of controlling shares in the former Grobank Limited, South Africa.
With this new development, Access Bank South Africa Limited is positioned to deliver a robust banking operation that connects key African markets.
The CEO of Grobank, Bennie van Rooy, had said the acquisition was an extremely exciting day for the South African banking industry.
“Our corporate customers will now have increased access to trade finance, treasury, international payments and loans through the wider distribution network offered by Access Bank’s presence in the key trade corridors that connect Africa to the rest of the world. Banking with Access Bank South Africa means greater security as well as access to more products and services through a best-in-class digital platform, and a full retail banking suite will soon be on offer,” Rooy said.
On his part, Wigwe said the acquisition in South Africa sealed their commitment to delivering their strategic aspirations of becoming Africa’s Gateway to the World, in line with their vision to be the World’s most respected African Bank.
“We look forward to the many opportunities our collective experience and deep understanding of the African market brings to our valued clients, and the journey ahead being one of great promise for our institution and the continent,” he said.
The Chairman of Access Bank Plc, Dr. Ajoritsedere Awosika, at the AGM had disclosed that in 2020, the bank made several investments to strengthen relationships with its customers in the year.
“By redefining our approach to customer service through streamlining our internal processes, and digitizing about 30 per cent of customer journeys, we were able to improve on our customer experience. Also, we were able to manage our expenses in line with the target for 2020 despite double digit inflation and overall cost of running the enlarged enterprise. As a result, we achieved a Cost-to-Income Ratio (CIR) of 63.4 per cent from 66.1 per cent in 2019. We worked hard to recover and dispose of a significant portion of our non-performing assets. With a decline in the portfolio of overdue loans, our asset quality improved across our retail and wholesale segments. Our capital and liquidity ratios were also well above regulatory limits with our capital adequacy ratio remaining strong at 20.6 per cent,” he said.
Looking ahead, Awosika said Access Bank would grow its businesses and continue to invest in IT capacity until it becomes an incredibly strong bank for retail and wholesale customers around the world.
“As we continue to consolidate the gains from our decisive approach to pushing our retail franchise, we have identified several opportunities within Africa and beyond, for Access Bank to deepen its financial services offerings to banked customers as well as extend financial services to the unbanked,” she stated.
In all, shareholders have commended the board and management for their efficient running of the bank. Mr. Eric Akinduro of Ibadan Zone Shareholders Association, commended the bank for sailing through the Covid-19 pandemic and delivered improved results that led to the declaration of 80 kobo dividend.
He said the various acquisitions by Access Bank across Africa, showed that the institution is very strong and pledged support of the shareholders.
Speaking in the same vein, Sir Sunny Nwosu of Independent Shareholders Association of Nigeria said given the expansion drive, the bank was really aiming to play a leading role on the African continent.
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