Access Bank Nigeria Plc full year 2014 profit climbed 18 percent on improved interest and non interest income, as the Nigerian lender continues to record impressive results amid a tough operating environment.
The audited financial statement of the bank showed profit after tax increased by 20 percent to N43.10 billion compared with N36.30 billion the same period of the corresponding year (FY) 2013.
Earnings per share increased to 188k in FY 2014 as against 158k as at December 2013.
The growth in profitability can be attributed to rise in interest income of 21 percent to N176.90 billion in 2014 from N145.96 billion last year. The growth in interest income was driven by loan growth and improved yield on fixed income securities.
“The group recorded a Profit Before Tax (PBT) of N52bn (2013: N43.5bn) in spite of the macro, regulatory and banking industry specific headwinds”, said Herbert Wigwe, Group Managing Director of bank while commenting on the bank’s 2014 audited financial statement.
“We remain committed to sustaining this improved financial performance in 2015 and we have taken decisive steps to enhance our capacity to deliver on our objective of maximizing shareholder value, said Wigwe.
Access Bank’s Non-interest income grew by 12% to N68 billion in 2014 as against N60.82 billion as a result of increased net gains in financial instruments classified as held for trading.
Return on equity (ROE) increased by 170 basis point to 16.46 percent in 2014 from 14.80 percent in 2013 on the back of loan growth, margin improvements and continued focus on operational efficiency.
Also, the improved top and bottom line earnings was driven by deposit and loan growth, operating efficiency and other operating income as the Nigeria lender continues to seek high interest yielding assets.
“The boost to the bottom line was driven purely by a N5.3bn positive result on the other comprehensive income line,” Olubunmi Asaolu, equity research analyst with FBN Capital in a March 16 note.
“Compared with the results of its larger rivals, Access Bank’s underlying numbers are not that strong,” said Asaolu.
Access Bank was efficient as cost of income ratio reduced to 62.2 percent in FY 2014 from 73.1 percent as at December 2013 on the back of revenue uplift and cost efficiency
Operating expenses jumped by 3 percent to N104.60 billion in 2014 as against N101.18 billion the preceding year while interest expense increased by 13 percent to N76.90 billion from N68.23 billion last year as Central Bank Nigeria (CBN) tightening policy and regulatory induced costs continues to weigh on banks profit.
The CBN has increased the MPR to 13 percent while the CRR on public sector deposits still remains at 75 percent in order to defend the naira and stabilize the economy.
Also the higher contribution to the resolution cost fund (AMCON levy) and reduced COT charges, all pressured the earnings generation of Nigerian banks.
All banks in Nigeria are mandated to pay to the sinking fund, 0.5 percent of their total assets on annual basis; a policy analysts say is bleeding profit of banks.
Access bank’s loan to deposit ratio increased to 71.1 percent in 2013 from 57.8 billion the preceding year as the lender sought to replace profits lost to higher cash reserve requirements (CRR), tighter monetary policy and regulation aimed at lowering fees and increasing competition.
Loans and advances grew by 39% to N1.1 trillion in December 2014 from N786.0 largely driven by the increase in FCY loan book, utilizing its US$400m subordinated notes.
Loan growth was driven by lending to high quality obligors with dollar receivables, thus mitigating exchange rate risk as well as revaluation of FCY portion of the loan book. There was also a sustained reduction in NPL ratio to 2.2% driven by strong loan growth to quality obligors and enhanced monitoring of facility performance.
The key sectors accounting for the growth include: Construction, General Commerce and Oil & gas upstream.
Deposit from customers moved by 9 percent to N1.45 trillion in 2014 compared with N1.33 trillion in 2013.
Total assets spiked by 15 percent to N2.10 trillion in December 2014 as against N1.83 trillion the preceding year.
Capital Adequacy Ratio (CAR) reduced to 18.4% in December 2014 compared with 19.2 percent as at December 2013. The 18.4 percent CAR is well above the minimum requirement, the bank has taken necessary steps to enhance its capital in order to exploit market opportunities in key sectors of the economy despite the full implementation of Basel II reporting.
Access Bank has proposed a final dividend of 35kobo, implying a total dividend for the year of 60kobo representing a payout ratio of 30 percent and a dividend yield of 9.81 percent.
Recently the bank secured approval of the Securities and Exchange Commission (SEC) to proceed with plans to raise N52.6 billion in a share sale as it pursues expansion and a stronger cash reserve.
The Nigeria lender’s share price closed at N5.98 on the floor of the exchange while market capitalization was at N136.84 billion.
Access Bank Plc is a full service commercial Bank operating through a network of 366 branches and service outlets located in major centres across Nigeria, Sub Saharan Africa and the United Kingdom. Listed on the Nigerian Stock Exchange in 1998, the Bank serves its various markets through 4 business segments: Personal, Business, Commercial and Corporate & Investment banking.
The Bank has over 830,000 shareholders including several Nigerian and International Institutional Investors and has enjoyed what is arguably Africa’s most successful banking growth trajectory in the last twelve years ranking amongst Africa’s top 20 banks by total assets and capital in 2014. As part of its continued growth strategy, Access Bank is focused on mainstreaming sustainable business practices into its operations. The Bank strives to deliver sustainable economic growth that is profitable, environmentally responsible and socially relevant.
“We would expect the market to be looking for comments from management as to how it sees the outlook for 2015 given how surprisingly bullish the other two banks have been (since the macro environment is weaker), especially on risk asset growth and asset quality,” said Asaolu.
BALA AUGIE
