The management and boards of directors of Access Bank Nigeria Plc has meet the expectations of shareholders and investors as the lender recorded double digit growth in revenues and profits.
Investors have reacted positively to lender’s stellar performances as stocks continued to rally.
Its share price gained 0.96 percent to N7.35 as of Friday, valuing the Bank at N212.61 billion.
The lender’s first quarter financial results showed improved improvement in key ratios while maintaining its capital and liquidity position in an unpredictable macroeconomic environment.
Access Bank has 8 million customers as at December 2016 and 381 branches across the country.
It has 1564 Automated Teller Machines, 9622 Point of Sale (POS) and debit cards of 3.3 million as at December 2016.
The Bank has N467 billion shareholders fund as at March 2017 and share outstanding of 28.92 billion.
Shareholders are to receive a final dividend of 40 Kobo per share bringing the total dividend for the year to 65 Kobo per share.
Access Bank Plc is a full service commercial bank operating through a network of 371 branches and service outlets located in major centres across Nigeria, sub-Saharan Africa, and the United Kingdom with representative offices in China.
Access Bank’s gross earnings increased by 44 percent to N116.0 billion in March 2017 as against N80.30 billion as at March 2016; driven by strong interest income (+68 percent and +31 percent on the Bank’s earning assets.
Interest Income grew by 43 percent year on year (y/y) to N79.3 billion in the first quarter 2017 from N55.4 billion in Q1 2016.
Non-Interest Income was up 67 percent to N41.40 billion in March 2017 from N24.80 billion as at March 2016, underlined by strong net gains on the trading portfolio.
Net interest expense and similar charges was up 22.71 percent to N39.54 billion in the period under review as against N32.22 billion the corresponding period of 2016.
Strong profit driven by foreign exchange gains.
Access Banks’ profit after tax (PAT) increased by 34 percent to N26.0 billion in March 2017 from N19.4 billion in the previous year.
The growth in profit was supported by a 178.58 percent surge in foreign exchange gains to N17.05 billion and net gains on investment securities of N5.54 billion.
The Bank’s operating income increased by 38 percent N79.2 billion compared with N59.3 billion in the corresponding period in 2016.
Profit before tax (PBT) for the period rose by 38 percent to N31.2 billion, when compared to N22.6 billion in Q1 2016.
Access Bank has utilized the resources of its owners in generating higher profit as return on average equity (ROAE) jumped to 22.60 percent in March 2017 against 20.70 percent the previous year.
Similarly, Return on Average Assets (ROAA) jumped to 3.0 percent in March 2017 from 2.9 percent as at March 2016.
Improved efficient amid tough operating environment
Cost of Funds (CoF) increased to 5.1 percent in March 2017 from 4.70 percent as at December 2016, despite higher interest rate environment reflecting the bank’s strategy to optimize the deposit mix (CASA: 56 percent, Term: 44 percent).
Net Interest Margin (NIM) increased by 150bps q/q to 6.7 percent from 5.2 percent as at December 2016 on the back of lower costs of fund.
Yield on Assets jumped to 12.50 percent in the period under review from 11.10 percent as at March 2016 despite larger loan book and currency devaluation.
Cost-to-Income Ratio (CIR) was down 140bps to 56.5 percent in March 2017 from in 57.9 percent as at March 2016; driven by stronger income growth and improved cost control.
Operating Expenses up 30 percent y/y to N44.7 billion in the period under review compared with N34.40 billion as at March 2016.
Higher costs in the first quarter was driven by investment in technology, branding, innovation and period.
Projected cost savings in the period under review was offset by the currency devaluation and heightened inflation.
Inflation for the month of April was 17.28 percent, below the central bank’s range of 6 to 9 percent.
Stable asset quality validates risk management strategy
Access Bank’s total assets increased by 2 percent to N3.54 trillion during the period from N3.48 trillion in December 2016.
Loans and Advances dropped 1 percent to N1.85 trillion as at March 2017 as against N1.86 trillion as at December 2016.
Deposit to customers increased by 4 percent to N2.01 trillion in March 2017 from N2.08 trillion as at December 2016. Loans to Deposit increased to 73.50 percent in March 2017 from 69.50 percent as at December 2016.
Access Bank’s risk management strategy has paid off as asset quality remained stable amid an environment plague a myriad of economic turbulence.
Non Performing Loans (NPLs) increased to 2.20 percent in March 2017 from 1.70 percent as at December 2016, higher than the 1.50 percent regulatory threshold.
Impact of the Naira depreciation on existing FCY NPLs – Impaired loans in the oil and gas services and construction sectors are responsible for rising NPLs.
As a result of rising impairment charge on asset, cost of risk increased to 0.70 percent in the period under review from 0.60 percent as at March 2016.
Access Bank’s capital adequacy ratio (CAR) of 21 percent as at March 2017 compared to (Dec’15: 19.6 percent) is well in excess of regulatory minimum for SIFIs
Liquidity ratio in the period remained well in excess of the regulatory minimum, up 8.70 percent to 46.3 percent as against 37.60 percent as at March 2017.
“Our statement of financial position at the end of the quarter is reflective of our cautious approach to growth resulting in stable asset quality of 2.2%. The Group‘s capital and liquidity ratios of 21.0% and 46.3% respectively, remain in excess of the minimum regulatory requirement, adequate to support our business. 2017 marks the end of our third five-year transformation journey and in the coming months, we will focus our priorities on the delivery of our strategic objectives,” said Herbert Wigwe, managing director and Chief Executive Officer of the Bank
“We will continue to improve on profitability and shareholder value by maintaining our capital and liquidity positions, assiduously implementing our cost management strategy, and exploiting retail business opportunities using our digital platforms and deepening market share of the wholesale business.” said Wigwe.
BALA AUGIE
