Access Holding Company in its half-year (H1) financial result released on the Nigeria Exchange Group (NGX) recorded growth in pre-provision operating profits, supported primarily by non-interest revenues (NIR), specifically trading revenues.
Non-interest revenues (NIR) grew by 67.5 percent year on year in the first half of 2022, as trading revenues surged by 215 percent year on year.
Notably, the N69.57 billion earned from trading revenues in the second quarter of 2022 came as the group recorded a net gain on financial instruments at fair value of N64.14 billion in H1 22 compared with an N23.26 billion loss in H1 21.
The bank’s return on average equity in the first half of 2022 was reduced by 603 basis points to 16.7 percent from 22.7 percent in the first half of 2021.
The Board of Directors proposed an interim dividend of 20 kobo per ordinary share.
Below are five takeaways from the unaudited half-year financial statement;
Net Interest Income slows
The tier one bank’s net interest income in the first half of 2022 was down by 1.25 percent to N197.5 billion from N200 billion in the first half of 2021.
Interest income grew by 16.5 percent primarily due to 37.0 percent year-on-year (y/y) growth in interest earned on loans to customers.
Interest income in the period amounted to N372.3 billion, up from N319.7 billion in the first half of 2021.
“The group experienced an increase in interest income on investment securities as a result of an increase in the volume and improved yield on securities during the period, and the group’s interest expense experienced a growth due to increased growth in customer deposits during the period,” Access Holdings stated.
Interest expense, however, grew larger by 46.1 percent y/y as the interest on customer deposits (up 99.29 percent) almost doubled. The bank’s interest expense amounted to N174.8 billion in H1 2022 from N119.7 billion in H1 2021.
“This is likely due to the group rebalancing its deposit base and opting for more expensive term deposits during the period,” Coronation Research stated.
Loans and advances to customers gain momentum
Access Holdings loans and advances to customers increased by 28.49 percent to N4.6 trillion in the first half of 2022 from N3.58 trillion in the first half of 2021.
Access Holdings stated that “the increase in interest income on loans is attributable to the increase in value of loans and advances to customers.”
Non-performing loan (NPL) ratio declined to 3.7 percent in H1 2022 from 4.3 percent in H1 2021 and is below the statutory limit of 5.0 percent.
Operating Expenses up 35.4 percent
The tier one bank’s operating expenses (Opex) grew by 35.4 percent to N256.7 billion in the first half of 2022 from N189.6 billion in the first half of 2021, mostly on personnel expenses which grew by 33.9 percent.
Other operating expenses grew by 40 percent to N176.7 billion in the first half of 2022 from N126 billion in the first half of 2021.
Major drivers of the strong growth in other operating expenses were growth from premises and equipment costs (up 141.7 percent), administrative expenses, (AMCON) surcharge (up 27 percent), and IT and e-business expenses (up 97.4 percent).
Consequently, operating efficiency worsened, with the cost-to-income ratio rising to 65.6 percent in the first half of 2022 from 60.1 percent in the first half of 2021.
Profit for the period (up 2.29 percent)
Access Holding’s profit climbed by 2.29 percent in the first half of 2022 to N88.89 billion from N86.90 billion in the first half of 2021, representing the highest reported in five years.