Access Bank’s credit expansion and increase in assets strengthens industry dominance

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

Customer deposits grew to N7.49 trillion during the reporting period from N6.95 trillion in the previous quarter (Q4 2021), representing growth of N540 billion or 7.8% In a Against the backdrop of unyielding economic headwinds, the mirrors boosted customer confidence in the 33-year-old bank that transferred to a holding company earlier this year.

Loans and advances to the bank’s customers, a critical success factor in asset building, stood at N4.28 trillion in the first quarter of 2022. This figure, which represents facilities extended mainly to the real sector, increased by 125 billion naira from 4.16 trillion naira in the previous period. (Q4 2021), reflecting an increase of 4.2%. This helped spur the increase in the asset base to N12.08 trillion during the reporting period. From 11.68 trillion naira in the previous quarter and 10.68 trillion naira in the corresponding period of 2021, this is an increase of 1.4 trillion naira or a growth of 12% one year to the next.

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

“That means they take advantage of the environment. They act strategically. In business, you will continue to study the environment and enjoy it. You invest in areas that thrive. For a bank, there is no time when people will not need money. It is either for food or for health. So once they continue to invest in these areas, they will get returns. So, once a company focuses and invests in areas that people always need, it won’t lose anything. This explains the continued growth despite difficult circumstances,” Mainoma, outgoing president of the Association of National Accountants of Nigeria (ANAN), told THEWILL in a note.

The bank’s market leadership is reflected in the significant jump in fee and commission income from N38.95 billion in Q1 2021 to N56.30 billion in Q1 2022, or 44.5%, while income net of fees and commissions also recorded growth of 40% year-on-year. -year to 42.89 billion naira from 30.73 billion naira. The growth trajectory was also reflected in the profit after tax which increased from N52.54 billion to N57.73 billion, showing an increase of 10%. Basic earnings per share were 163,000 in Q1 2022 compared to 149,000 in the corresponding quarter, representing a growth of 10%.

The determination of sustained market dominance explains the increase in operating expenses from 62.49 billion naira in the first quarter of 2021 to 77.25 billion naira in the first quarter of 2022, or 23.6%, containing an increase expenditure in two major areas – personnel expenditure and IT and e-business expenditure which increased from N20.06 billion to N29.25 billion and from N5.19 billion to N7.51 billion of naira respectively.

Commenting on the performance for the first quarter of 2022, Managing Director of Access Bank Holding Company, Mr. Herbert Wigwe, said: “The results reflect the sustainable business model coupled with the effective execution of the strategy of the currently operational banking group. , while we have made solid gains towards realisation. of our strategic objectives.

“We achieved 33% year-on-year growth in gross revenue to N295.7 billion (Q1 2021: N222.1 billion), resulting in improved after-tax profit to N57.4 billion (Q1 2021: N52.5 billion). As a result, our return on average equity (ROAE) was 21.4%, in line with our commitment to our stakeholders.

Asset quality remained stable at 4.0% thanks to a strong risk management approach. This is expected to decline in the future as we strive to meet and exceed the standard we set in the industry prior to the business combination in 2019,” Wigwe said.

Access Bank is Nigeria’s largest banking group, accounting for 19% of banking system assets at the end of fiscal 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 (IDR) rating at ‘B’ with a stable outlook. Access Bank’s viability rating (VR) is also affirmed at ‘b’ and the national long-term rating at ‘A+ (nga)’, indicating a solid credit profile without sovereign support in the event of significant risks. The rating noted that Access Bank’s long-term IDR is driven by its stand-alone solvency, while the bank’s RV was supported by sound lending quality and strong revenue diversification, profitability and liquidity coverage.

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

Access Bank’s long-term domestic rating balances its top-tier franchise and strong financial profile against a lower capitalization than its higher-rated peers, noting that the bank’s declining operating conditions include global risks increasing which should weaken national operating conditions.

Aiming to become the gateway to the global financial system, Access Bank has in recent years acquired several banks in other Sub-Saharan African countries, in line with its strategy of expanding into Africa.

Fitch analysts expect these acquisitions to continue, bolstering Access Bank’s franchise and geographic diversification. He said Access Bank is used to integrating domestic acquisitions, but a large number of cross-border acquisitions creates execution risks and can put pressure on capital.

Access Bank has invested heavily in the cutting-edge technological evolution of the African banking sector through its strategic partnership with Africa Fintech Foundry to nurture the next generation of innovative fintech startups. The Bank has also used technology to help achieve its sustainability goals. It has developed a portal that tracks its environmental footprint, including its carbon emissions.

For its continued investment in digital innovation, Access Bank has been recognized as the “Best Digital Bank in Africa” by Asian Banker during the virtual Asian Banker Middle East and Africa Regional 2020 Awards ceremony. Over the years, the bank has leveraged technologies such as advanced analytics, cloud computing, artificial intelligence, machine learning, and robotic process automation to reform its business operations and improve performance.

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

Wigwe revealed that the transition to a holding company structure will enable Access Bank Plc to generate more revenue from other non-core banking activities, expand its business, remain competitive in an ever-changing business environment and deliver more value to shareholders. The banking model should also help Access Bank to diversify its income and remain competitive in the financial market.

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