BY EMEKA EJERE
Access Bank Plc has defied challenging economic landscape and regulatory hurdles in 2020, recording positive figures across major income lines, even as the board has recommended a final dividend of 55 kobo, bringing the total dividend to 80 kobo per share.
According its audited financial statement submitted to the Nigeria Stock Exchange (NSE), the bank recorded gross earnings of N764.7 billion, up by 14 per cent from N666.8 billion in 2019.
Profit before tax (PBT) grew by 13 per cent to N125.9 billion from N111.9 billion, despite the high cost of operating an enlarged franchise and the increase in net impairment charge of near N43 billion arising principally from a Structured Trade Finance(STF) portfolio in the Access Bank UK.
According to the tier 1 lender, the STF impairment is one-off/COVID related and recoverable over the next 12-18 months against insurance cover from world class insurers.
Profit after tax (PAT), however, rose by same margin from N94.1 billion to N106 billion in 2020 on the back of a 32 per cent growth in operating income, which offsets the rise in impairment charges and operating expenses.
Customer deposits grew by 31 per cent to N5.59 trillion in December 2020, from N4.26 trillion, while net loans and advances grew by 18 per cent to N3.61 trillion, up from N3.0 trillion in 2019.
The bank also recorded consistent growth in its retail banking business, leading to a 5.8mn growth in customer sign-on during the year via its financial inclusion drive and retail revenue of ₦177.2bn (FY 2019: ₦107.8bn).
The assets of the lender appreciated by N1.537 trillion or 21.6 per cent to stand at N8.680 trillion, making it Nigeria’s biggest lender by assets value. The lender had briefly lost the position to Zenith Bank Plc which hogged the prime spot since February 23, when its audited financial statement for 2020 put its asset estimate at N8.481 trillion.
Valuation has been helped by two crucial deals outside Nigeria last year that involved the acquisition of Cavmont Bank in Zambia and Transnational Bank in Kenya.
Chief Executive Officer, Access Bank Plc, Herbert Wigwe, described the full year performance as an attestation to the bank’s s long history of resilience, scale, dedicated people and sustainable business model.
“Our resilient business model ensured that the group adapted to accommodate the resultant macro-economic downturn and headwinds of the COVID-19 pandemic”. Wigwe said.
“Our asset quality also continued to improve as guided to 4.3 per cent (December 2019 5.8 per cent) as we intensified recovery efforts, undertook significant write off and leveraged our robust risk management practices.
“This is expected to continue to trend downwards as we strive to surpass the standard we had built in the industry prior to the merger with Diamond Bank.”
According to Wigwe, the strategic actions that the bank has taken over the past 12 months evidence a strong focus on retail banking and financial inclusion, an African expansion strategy and a drive for scale for sustainable value creation.
He noted that in 2020, Access Bank proudly opened its doors for business in Kenya and Mozambique, further increasing its footprints across the African continent.
Access Bank Zambia also concluded the acquisition of Cavmont Bank Limited in January 2021 and the Group recently announced the approval by relevant regulatory authorities for the acquisition of Grobank Limited, creating an inroad into the South African market in realization of the Group’s strategic ambitions.
Already, the bank has received the Approval-In-Principle from the Central Bank of Nigeria (CBN) for transitioning to a HoldCo structure in view of the opportunities that exist in the market.
The holding company structure to be adopted by the bank will see it open four subsidiaries cut across insurance brokerage, consumer lending and agency banking as well as payment business to boost revenue.
“Going into the fourth year of our 5-year cyclical strategy, our focus remains on consolidating our retail momentum and expanding our African footprint in a sustainable manner,” Wigwe said.
Extending African footprint
Access Bank on Tuesday said it paid about $60 million to purchase a controlling interest in South Africa’s 74-year-old Grobank, signalling the culmination of the tier 1 lender’s aspiration to foray into Africa’s most industrialised nation and tap its market.
The move makes it Nigeria’s first bank to do so, with Access Bank plowing in both equity and debt in Grobank as part of the grand plan to explore trade banking deals on its way to becoming “Africa’s Gateway to the world”, Wigwe told CNBC Africa.
It is expected to open up the means to widen trade finance capacity in Grobank, which is presently increasing its attention on the country’s agriculture industry. No mention was made of the precise stake size but the lender said in a note in September “the first is an initial cash consideration for a 49 per cent shareholding, increasing to a majority stake in the second tranche”.
Banks in Nigeria are stepping up efforts to create new ways of bolstering earnings beyond its shores as a buffer to an economic downturn that has triggered a fall in government bond yields and accelerated the incidence of restructured loan, helped by the pandemic.
“We have a full retail banking licence in South Africa. We will pursue a wholesale banking franchise. We will pursue trade finance,” Wigwe said.
The South African acquisition is its third in eight months, having taken over Kenya’s Transnational Bank in July and Zambia-based Cavmont Bank in January.
As part of its positioning strategies to take advantage of the African Continental Free Trade Area (AfCFTA}, the bank has targeted eight African countries, including Morocco, Algeria, Egypt, Ivory Coast, Senegal, Angola, Namibia and Ethiopia for a potential expansion.
Wigwe revealed in January that Access Bank plans “to expand to high-potential markets, leveraging the benefits of AfCFTA”, adding that the bank would use its London-based office as an “anchor for growth” to expand representative offices in countries such as India, Lebanon and China.
He also hinted that the bank plans to eventually expand into 22 other African countries to cushion challenges in some markets, diversify earnings and take advantage of growth opportunities in the continent.
“We believe that we are best positioned to basically do all of that. Our focus is to become an aggregator in Africa and we are building a global payment gateway and providing trade finance support and correspondent banking across the continent. We are focusing on the key markets,” Wigwe said.