Nigeria’s biggest lender by assets, Access Bank has recorded its highest half-year profit in nine years in the second quarter of 2021 on the back of increased interest income fueled by the growth in corporate and retail value chains.
The tier-one lender which is the second among its big five peers to release half-year results grew profit by 42.45 percent to N86.94 billion in the financial period ended June 2021 from N61.03 billion in the comparable period of 2020.
Access Bank’s retail banking business continued to grow with a 24percent year-on-year increase in gross earnings to N118.6billion (H1 2020: N95.8billion), driven by a 58.52 percent year-on-year increase in Interest Income and 37percent year-on-year growth in revenue from other channels and digital businesses.
This feat was achieved through Access Bank’s unique business model that supports the corporate and retail value chains throughout the African continent and beyond.
With improving profitability, resilient capital position and a robust, diversified balance sheet, the Group said it’s on track to deliver on its vision to be the World’s Most Respected African Bank.
Despite the inflationary environment and increased regulatory costs, the bank’s Cost-to-Income Ratio stood at 60.1percent, a 570-basis point reduction from 65.8percent in H1 2020.
During the period, the bank recorded progress in its financial inclusion objective to bank 1 in every 2 Nigerians. It added 2,371,832 new customers as well as 16,428 new agents, creating more employment and providing convenience to customers.
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These strides in the bank’s retail business resulted in growth in savings deposits to N1.4trillion, a 4percent growth from N1.3trillion in December 2020, and a Cost of Funds reduction to 2.9percent (H1 2020: 3.7percent).
Breakdown of the Bank’s half-year financials showed it reported weaker gross earnings to N450.6 billion in the six months to June, 14 percent increase when compared to the N396.8 billion recorded at half-year 2020, the peak of the pandemic when Nigerian lenders tightened credit criteria to enable them to prevent an increase in non-performing loans. Meanwhile, a bank’s gross earnings is used to measure how efficient it is as it determines how well it uses its resources to produce a profit.
Access Bank, however, reported a growth in its earnings per share by 43.35 percent to N248 in the six months to June from N173 reported in the corresponding period of 2020.
“Throughout the pandemic, we have been able to demonstrate our ability and willingness to support our customers, our communities, and our colleagues. As the outlook improves, and as business returns to a new normal, we will continue to support our communities to stimulate growth and create new opportunities.
To accomplish our vision to be the World’s Most Respected African Bank, we are working together across the Group on the back of our robust balance sheet, increased retail momentum and efficiency,” Herbert Wigwe, chief executive officer, Access Bank Plc, said.
According to the CEO, Access Bank’s push for digital innovations to improve efficiency for its customers resulted in a significant increase in the lender’s USSD transaction volume (+62percent y/y) and its Mobile and Internet Banking transactions volume (+67percent y/y).
Despite the challenging economic climate, Access Bank Plc maintained strong asset quality with a stable NPL ratio of 4.3percent (Dec. 2020 4.3percent). It expanded its loan portfolio, supporting sectors with the highest impact on the economy, with good quality assets as reflected by the growth in its net loans and advances to N4trillion year to date compared to N3.6 trillion as of December 2020.
Furthermore, Access Bank Plc maintained robust capital and liquidity positions well above regulatory levels, with a Capital Adequacy Ratio of 21.3percent and a liquidity ratio of 50.7percent, positioning the bank to support its customers and execute its growth strategy.
Over the last few months, Wigwe said the Bank has completed acquisitions in South Africa, Mozambique, and Zambia, emphasising its footprint in key markets around the globe.
“We will continue to grow our presence in geographies with significant growth potential, especially where they support our global customers,” Wigwe said.
As Access bank plans to become Africa’s Gateway to the World, the tier-one bank said it would also seek markets that support its trade and payments aspirations and the African Free Trade Agreement.
“To further enhance our operating efficiency and ensure strong returns on invested capital, we will bring the best of our group assets, specifically our digital banking capabilities that support individuals and businesses, enhance financial inclusion, and deliver the benefits of a strong network effect across our enlarged Group,” it said.
