Tayo Busayo, Abuja

The half year performance of Access Holdings Plc indicates that the top-ranked financial services institution is headed to cross a historic N15 trillion assets mark at the end of 2022.

Presently, Access Bank is the largest deposit money bank by assets (N11.73 trillion as of December 31, 2021).

The bank’s audited earnings report for half year ended June 2022 shows a significant assets growth of 31.3 percent year-on-year to N13.2 trillion from N10 trillion. Compared to the then historic N11.73 trillion at FY 2021, the12.5 percent assets rise at 2022 half year represents a cheering news for the stakeholders. Using an average combined percent growth of 22 percent for the two periods, the bank’s assets growth shows prospects of hitting about N16 trillion by the end of 2022, all things being equal.

Aside from robust assets performance, the group recorded impressive results in other key parameters at the end of business in the first half ending June 30, 2022. This signals a strong move to hit and surpass the N15 trillion assets mark, thus placing it further ahead of industry peers in an increasingly challenging environment.

It closed the half year operations with gross earnings of N591.80 billion, representing 31.4 percent of the closing revenue figure in the equivalent period of 2021. With prospects for higher revenue figures in the second half going by the bank’s earnings pattern, Access Holco will likely garner a gross revenue of over N1 trillion at the end of 2022. It recorded 145 percent gross revenue in FY 2021 year-on-year.

Key balance sheet elements – deposit from customers, and loan and advances to customers – recorded an upward trend during the review period. Deposit from customers jumped from N5.97 trillion in HY 2021 to N7.83 trillion in HY 2022, reflecting a rise of 31.2 percent. Similarly, loans and advances to customers rose to N4.61 trillion in HY 2022 from N3.99 trillion in the corresponding period, which is a growth of 15.6 percent.

The Tier-1 bank’s revenue haul came under cost-pressure during the period resulting in a drag in post-tax profit which recorded a marginal increase of 2.2 percent to N88.73 billion from N86.9 billion in the corresponding period. The major challenging factors include interest expenses which rose about three times higher than interest earnings during the period.

Interest expenses grew to about N175 billion during the period, representing a 46 percent rise year-on-year. On the other hand, interest income recorded a 16 percent increase to close at N372 billion for the period. Compared with the first quarter performance, both interest income and interest expenses dragged by 21 percent and 73 percent respectively.

The profit also suffered pressure from personnel expenses, which rose by 34 percent to N58 billion in the corresponding period. Net loan impairment charge is also another key expenses line that impacted on the profit window: It recorded a 28.6 percent to almost N37 billion, claiming 18.7 percent of net interest income in the review period, compared to 14.3 percent in HY 2021. Consequently, the bank’s income net of impairment charge declined to N160.6 billion, representing a 6 percent drop during the period under review.

Further analysis of the Holco’s HY 2022 result revealed that total operating cost which rose to N257 billion dimmed gross earnings at 35 percent compared to 31 percent impact in the preceding period. The operating cost margin rose to 43.4 percent from 42 percent in the preceding period of 2021.

An improvement in net gains on financial instruments brought succour to the cost pains that the Holco suffered. This revenue line which increased from a net loss of over N23 billion in HY 2021 to over N64 billion in the 2022 half year was a soothing relief. The same goes for net gains on hedging which recorded over N11 billion in the review period from a net loss of over N4 billion in the preceding period.

The bank’s Rest of Africa business also helped in changing the narrative as it grew profit before tax (PBT) by 175.1 percent compared to last year and contributed 64.2 percent to the group’s PBT in the first half of 2022. That’s up from a contribution of 23.4 percent in the first half of 2021.

Some analysts expressed mixed feelings over the inaugural financial results of Access Bank after it introduced a holding structure in May 2022. “The Q2 results were unimpressive, in our view, with earnings falling to a six-quarter low. We expected the market to react negatively to the decreased dividend,” Ope Ani, a senior analyst at Coronation Merchant Bank, said in a note to clients. Despite the share price dip however, most investment banks have retained their BUY rating on the bank, citing high prospects for future growth.

Analysts also say that the unexpected cut in the interim dividend may be due to the group’s need to conserve capital in order to fund its upcoming acquisitions and the expansion of its Holdco operations. They believe that the solid performance in Q1 2022 made up for the below expectation outing in Q2, which suggests that the HY 2022 earnings exceeded market expectations.

Commenting on the 2022 half year results, the Group CEO, Herbert Wigwe said “the Holding Company’s inaugural financial results showed a strong performance, in the first half of the year despite the strong macroeconomic headwinds locally and internationally.

“The Holding Company became fully operational in May 2022 and the other verticals: Payment Company (PayCo), Asset Management Company (AmCo), Insurance Brokerage Company (InsureCo) are expected to be fully consolidated from the second half of the year. These results reflect a sustainable business model coupled with an effective strategy execution from the Banking Group, amidst a challenging macroeconomic environment with significant headwinds.

“This reflects deliberate steps to optimize our balance sheet and ensure the Group can support its customers across various markets, in addition to executing our expansion strategy. 2022 marks the final year of our five-year strategy to become Africa’s gateway to the world.

“In the five-year period we have seen enormous growth in our value proposition and international presence as we have expanded our operations across Africa. As Access Corporation enters a new chapter, we are realigning our objectives to create a globally connected ecosystem, offering new interconnected services across customer needs.”

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.

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.

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.

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 deployed technology to help achieve its sustainability targets. It has developed a portal that helps to monitor its environmental footprint, especially its carbon emissions.