Nigeria’s biggest lender by asset, Access Bank has recorded its highest profit in 7 years as non-interest income surged.
The tier-one lender saw its profit surge 15.7 percent to N102.3 billion in the first nine months of the year compared to N88.4 billion in the same period last year.
The bank’s share closed 1.15 percent lower at N8.60, Friday.
Interest income plunged 7.4 percent to N375 billion in the nine months period from N405 billion in the same period last year.
“The decline in interest income is reflective of the low yields on treasury bills and other money market instruments,” Ayorinde Akinloye, an Equity Research analyst at CSL Stock Brokers said.
The lower interest rate was compensated by lower interest expense as they recorded lower cost of funds.
Interest expense, the cost incurred by an entity for borrowed funds declined by 8.1 percent to N179 billion in 9M’20 compared to N194.8 billion in September 2019.
Despite the decline in interest expense, Access bank recorded a profit in the nine months period.
“Access bank recorded a profit despite the plunge in interest income because of the surge in non-interest income”.
Trading income grew significantly because of the gains on the sale of treasury bills and bonds. As the yields on these instruments dwindled, prices appreciated and the bank benefited from this,” Akinloye said.
Trading gains on Fixed income securities surged 92 percent to N27 billion in the first nine months compared to N14 billion in the same period a year ago.
Derivative instruments also jumped 126 percent to N43 billion from N19 Billion in the nine months period of 2019.
The bank also seemed to have gained from the Naira devaluation as the Foreign exchange trading gain surged 610 percent to N63.9 billion from N9 billion in the same period last year.
Analysis of the report shows a drop in net interest income after impairment charges by 18.8 percent to N162 billion compared to N199.2 recorded last year.
Net impairment charges plunged by a whopping 216 percent to N10.6 billion in the nine months period as against N34.2 billion recorded in the same period last year.
The lender’s Fees and commission income jumped 31.4 percent to N87.8 billion while Fees and commission plunged N48.1 percent to N10.8 billion.
As a result, net fees and commission income surged 28.2 percent to N71.8 billion in 9M’20 compared to N56 billion in the same period last year.
Access bank’s profit before tax rose by 15.6 percent to N100.8 billion in 9M’20 up from N116.6 billion in 9M’19.
The bank saw a massive surge in its net gain from financial instruments to N84.1 billion compared to N3.3 billion a year ago.
Net foreign exchange gains also rose 147 percent to N12.6 billion from N5.1 billion in the first nine months of 2019.
Personnel expenses, depreciation and amortization surged 4 percent, 31 percent and 33 percent respectively compared to the figures recorded in the first nine months of 2019.
Other operating income dipped 1.5 percent to N32.7 billion from N33.2 billion while other operating income jumped by 34 percent to N163.8 billion compared to N122.2 billion in the reference period.
The lender’s interest income using effective exchange rate plunged 8.9 percent to N317.6 billion in the nine months period from N349 billion in the same period last year.
Interest income on financial assets rose 3.2 percent at N57.6 billion from N55.6 billion recorded a year ago.
Earnings per share rose 7 percent to N290 per share in the first nine month of the year from N271 per share last year.
Income tax was up 16.2 percent to N14.3 billion in the nine months period from N12.3 billion in the previous year.
Interest paid on interest bearing borrowings and debt securities issued jumped 43.5 percent to N34.6 billion compared to N24.1 billion in the period under review.
Dividends paid to owners rose 162 percent to N23.1 billion compared to N8.8 billion paid in the first nine months of 2019.
The bank issued no debt security in the first nine months as against the N15 billion it issued in the same period last year.
Share capital and share premium stood at N251.8 billion in the period, the same value recorded in the year before while retained earnings grew N27.5 percent to N282.6 billion from N221.6 billion recorded in September 2019.
Access bank’s performance in Q3
Access bank made N41.2 billion profit Q3’20, up from N26.5 billion recorded in the same period last year.
Interest income on financial assets rose 153 percent to N22.8 billion from N9 billion recorded in Q3’19.
Using the effective exchange rate, interest income in the third quarter dipped 14.6 percent to N105 billion from N123 billion in the same period last year.
Earnings per share rose 41.4 percent to N116 per share Q3’20 from N82 per share in the third quarter of 2019.
The bank’s before tax rose 52 percent to N42.3 billion compared to N27.8 billion in the Q3’19.
Interest expense dipped 24.1 percent to N58.4 billion in Q3’20 compared to N58.4 billion in the third quarter of 2019.
