Access Bank Unbound…The Herbert and Aig show rolls on…
It’s now over two decades since Herbert Wigwe and Aig Imoukhuede forged their partnership in the precincts of Guaranty Trust Bank. It is a union which Herbert once confided in an associate that is a perpetual partnership. It has birthed one of the leading banks in Africa, a financial power house and an innovative financial services provider with cutting edge technology powered by tomorrow’s people.
Indeed, the story of how these two swashbuckling, ruthlessly ambitious and driven young men ; hitherto considered as mere upstarts not long ago, transformed themselves and built Access into a trillion naira empire, has become a broad street legend.
These are odd times for banks to boast of strong profitability. The year 2016 was an exceptionally difficult year for several corporate institutions right across the board. A grinding recession dogged by crippling inflation sent several corporate books spiralling into losses. Indeed, to push against the consequences of these hard times required more than plain luck, grit, and brawn; it required fancy marketing footwork and clever strategic positioning to drive balance sheets forward, skill sets managers at Access Bank Plc seem to have had in good measure judging by the banks yearend 2016 financials.
Taking tack from the earlier management style of Aig-Imoukhuede, Herbert Wigwe, the banks new chief visionary, has pushed on with an aggression and street smartness reminiscent of the banks previous chief executive. This is not surprising as both Aig-Imoukhuede and Wigwe (then Deputy Managing Director and Chief Operating Officer) started the new Access Bank together after both resigned as directors of Guaranty Trust Bank (GT Bank) to take over what, at the time was a distraught Access Bank under relatively weak but profligate management. The new boys on the block deconstructed the old institution and rebuilt it from bottom up. The eerily telepathic collaboration between Imoukhuede and Wigwe gave rise to a smooth top leadership transition, and a steady progression towards clearly mapped out corporate milestones. So as much as things have changed in Access Bank under Wigwe, so they have stayed the same, with underlying corporate philosophy enduring, and service quality staying consistent.
Imoukhuede, a lawyer, was chief points man of the institution for about ten years before Wigwe eased into the top spot in 2013. Under the Imoukhuede-Wige combination the bank evolved a corporate ethos that underlined hard work (staff got to the head office as early as 6am when they would hold day plan meetings till 7am and spend half an hour for morning devotion and setting up back office operations prior to the 8am resumption to customers). In the earlier days of the duo it was not unknown for strategy and marketing meetings to hold till 12 am to ensure that service delivery targets and pre-agreed asset and liability goals (ALCO) were being met. The early days of the Imoukhuede-Wigwe management were gruelling, fierce but successful. Says one former staff, ‘there were casualties, but with the benefit of hindsight, perhaps the end did justify the means’.
Since 2012 when Wigwe took over headship of the bank, the institution has been on a corporate upward swing showing stability, creativity and, some would say, brazenness in the face of growing economic uncertainty which started from 2014 when the economy stumbled into a slow cycle of recessionary and inflationary pressures.
Amidst storm clouds in 2005 when a Central Bank of Nigeria, under Professor Chuwkuma Soludo insisted that all banks be recapitalized to a new capital base of N25billion, Access Bank was one of the very few later day millennial banks that met the target. Several others either got absorbed by bigger entities or simply vanished. By 2008 when the global financial meltdown had started putting pressure on the local markets and a second round of consolidation was advocated by the CBN, this time under CBN Governor, Sanusi Lamido Sanusi, Access Bank did what many considered unthinkable or well neigh impossible, it took over one of the most iconic public sector and church-supported institutions in the banking market at the time, Intercontinental Bank. Unlike subsequent similar takeovers (except that of STB’s takeover of UBA), Access Bank has successfully integrated the operations of the new entity, managed menu costs and contained the challenges of inherited toxic loan assets. Both Imoukhuede and Wigwe have handled the acquisition of Intercontinental Bank brilliantly.
A review of the banks most recent financial statement for 2016 showcases a final dividend payment of 40 Kobo per share bringing the total dividend for the year to 65 Kobo.
The Bank reported strong growth across its four major business lines despite a weak and volatile macro-economic landscape.
During the period of the report the banking group posted total revenue of ₦381.3 billion and profit before tax of ₦90.3 billion, accounting for 13 per cent and 20 per cent increase respectively over the contemporary period of 2015.
Key drivers of the growth included a 20 basis points margin expansion on the back of a 32 per cent year-on-year growth in net interest income of ₦139.1 billion.
Non-interest income, the bank claimed, accounted for 49 per cent of growth in operating income of ₦272.6 billion compared to ₦234.8 billion in 2015.
“The full year 2016 results demonstrate the effective execution of our strategy underpinned by a robust risk management framework. With strong business fundamentals, our position in the top tier was further consolidated in the industry.” Said Herbert Wigwe, Group Managing Director of the bank, said
Access Bank, CEO noted the robust and proactive risk management practices and focus on high quality corporates ensured that the bank maintained an NPL ratio of 2.1 per cent; well below the industry average, whilst retaining a healthy balance sheet growth.
“We remain cautiously optimistic about the macroeconomic environment in 2017, nonetheless, our objective of delivering sustainable shareholder value remains unchanged,” Mr. Wigwe said.
“We will also continue to maintain our proactive and disciplined risk management practices and leadership in sustainability initiatives, whilst positioning ourselves strategically to take the lead in the
markets we play,” he added.
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 and the UAE, Access Bank proves to drive and increase its share of the retail market.
Listed on the Nigerian Stock Exchange in 1998, the bank serves its various markets through numerous business segments including personal, commercial, and corporate and investment banking.
Looking back 13 years, Access bank has become a front runner in the turbulent industry.
It is intriguing for many how one of the weakest banks in 2003 is today competing to be one the best and strongest in a turbulent industry.
Many industry experts have said that good strategies are recipe for success.
Although the bank might have struggled with strategy as it unsuccessfully bided to acquire Union Bank of Nigeria Plc and Afribank plc, it, however, successfully acquired Intercontinental Bank at the third attempt. Dramatically, Godwin T. Oboh, then Managing Director of Union Bank had described Imoukhuede and Wigwe as small boys who wanted to play a big boys game.
‘’We are the big boys and they are the small boys. How can they swallow the big boys?’’, Oboh had asked dismissively.
Market observers reckon that the bank had then become more experienced in the corporate acquisition business when it succeeded with Intercontinental.
In fact, the Intercontinental venture is still considered the most historic acquisition in the history of Nigerian financial system because of its controversy and the size of the bank it swallowed.
Interestingly, Access Bank has since achieved a smooth and almost seamless union and moved on to achieve loftier short and medium term goals.
Over the years, Access Bank has evolved into a financial powerhouse with consistent record of impressive performance and history of creating value for its shareholders.
Analysts believe, the Bank’s performance during the period clearly highlighted the efficacy of the Sustainable Banking Model evolved to nurture the Bank to continental leadership; as shareholders’ have begun to reap the benefits of adoption of this model following the growth recorded in the Bank’s earnings.
They also described its performance as a valid testament to its capacity for sustainable growth, adding that this performance has shown that Access Bank is already delivering value of enlarged operations to stakeholders and banking industry through its series initiatives.
The bank is reputed for promoting the ideals of responsible business practices and sustainable social agenda.
Access Bank recently disclosed its target to achieve a pre-tax profit of N130bn in 2017. With a shareholder’s funds of N443billion, the bank has listed a far-reaching measure to maintain and advance its current momentum focusing on five strategic priorities. These include; De-listing the business, building a consolidated retail franchise, optimizing its international network Driving efficiencies through enhanced technology and ensuring sustainable cost reduction.
The bank had explained that Customer deposits up 58% to N2.10 trillion by 9 months 2016 (Dec.’15: N1.68trillion), reflecting the bank’s effort to maintain robust funding base despite headwinds. Its management also disclosed that subsidiaries contributions to Group deposits has significantly improved from 2013 levels to close 9m 2016 at 16% of total deposits. Access UK and Ghana continue to thrive contributing 8% and 6% in the period.
‘’The bank is stable. It is getting stronger’’, said Managing Director/ Chief Executive of HighCap Securities Limited, Mr. David Adonri.
Adonri added, ‘’The bank is doing very well. Its quarterly result is improving by the day. In fact, if you are rating banks in Nigeria now, Access Bank appears to be the number 3, in terms of assets, credibility , performance, reward to investors and market value and other indices for rating banks’’,
‘’They are giving us dividend and we are grateful to them. With the challenge in the economy not every firm can muster the courage to reward its shareholders. But Access Bank is one of the few that has made shareholders happy’’, says President of the NSSA, Chief Timothy Adesiyan.
On factors limiting the capacity of financial institutions to lend to the oil sector, the Access Bank boss Wigwe had noted not long ago,
“There are limits to how much you can lend as a financial institution, and it is not just tied to Nigeria alone, it is worldwide. Those limits are tied to how much capital you have.
“We also have issues around the depth of our financial markets. It does not all have to be done with bank borrowing, you can raise equity, you can go to the stock exchange, even at that, it is still very far from being as deep as it should be. Your capacity to raise equity will determine how much debt you can get from the banks.
“If you are not able to generate enough equity from the capital market, then you are also going to have issues getting bank borrowings’’,
Access Bank’s stock closed at N6.19 last Wednesday, the same price it opened the market in January 4, 2016.
However, the bank recently successfully raised US$300 million via a Eurobond from the international bond market.
The international market bond has a maturity date of October 2021 and at a coupon of 10.5 per cent.
This makes Access Bank the first Nigerian bank to raise a bond from the international market this year despite the country’s macroeconomic headwinds.
The bank’s management enthused that the successful outcome of the bond demonstrated the strength, resilience and international endorsement of Access Bank Plc.
Access Bank currently has two series of Eurobonds in issue – the $350 million maturing in July 2017, at a coupon of 7.25 per cent, and the $400 million (9.25%) maturing in June 2021 – as part of a US$1 billion global medium-term note programme. The bank plans to deploy the bond to rave up its operational activities.
“The bond will be for working capital, for lending to investment-grade names, including Nigerian companies seeking to expand their exports”, Wigwe said
He emphasised that the process signified a significant moment in the bank’s journey to entrench itself as one of Nigeria’s top three banks by 2017.
Looking at its performance over the years, Aig Imoukhuede and Herbert Wigwe have grown the bank’s total assets 12,066 per cent from N28,959billion 2003 to N3.48trillion in 2016. Specifically, Imoukhuede who ran its operations for about 10 years advanced the bank’s total assets by 5,943 per cent from N28.9billion in 2003 to N1.75 trillion in 2012. In the same vein, its revenues also jerked up 4,677 percent from N4.36billion to N208.31billion, profit rose 6,801 per cent fromN556.5million to N38.4 billion, dividend also grew 1,600 per cent from 5k in 2003 to 85 kobo in 2012.
So far, Hebert Wigwe who took over the mantle of leadership in the bank in 2013 has grown its total assets by 98 percent in 2016 from N1.75 trillion in 2012 to N3.38 trillion in 2016. While revenues rose by 83 per cent, profit after tax advanced 86 per cent. However, dividend fell 23 per cent from 85 kobo in 2012 to 65 kobo in 2016.
With markets, still likely to struggle with economic uncertainty and public policy misadventures in 2017, Access Bank may have to distil the key elements of its formula for sustaining profitability in 2016 and project the strategy into the new year. The strong economic winds ahead (with inflation at 17.7 % and unemployment at 36% by Bureau of Statistics figures) may require more than an umbrella and rain jacket.
‘’Somehow, we know there are more fundamental issues around the economic challenges than what we have been told so far. The point is that recession or stagflation may just be the symptom of a fundamentally flawed economic structure. An economy that has remained import- dependent for decades cannot withstand external shocks. An economy characterized by decayed infrastructure, in roads, rails, airports, marine transport, and the biggest one, power cannot be said to be resilient’’, Dr. Alex Otti, Former Managing Director of Diamond Bank said in a publication in one of the National Newspapers. With the scenario painted by Dr. Alex Otti, banks will continue to face very tough times.