In a move to capture and optimize opportunities in line with its Africa expansion strategy, Access Bank Plc will be transitioning to a Holding Company (HoldCo) structure, said Herbert Wigwe, Group Managing Director, Access Bank Plc.
Wigwe disclosed this on Tuesday January 19 during Access Bank’s virtual Investor Engagement Forum where he provided the investing community with general corporate updates, as well as details about the bank’s recent strategic actions.
The HoldCo will consist of four (4) subsidiaries – Access Bank Group, Payments Business, Consumer Lending & Agency Banking, and Insurance Brokerage.
Through this reorganisation, the bank said it will create new product revenues without taking additional risk for the enterprise, ensure diversification of earnings, and support outside of Africa expansion.
In line with Access Bank’s move to realign for growth, the GMD said the “Group will consist of Nigeria, Africa and International subsidiaries. The Payments subsidiary will leverage the strong suite of the Bank’s assets. The African electronic payments market is expected to grow at 18-20percent per annum until 2025, reaching about $27billion, up from about $8billion in 2018. The Consumer Lending business has seen over 60percent growth in digital lending volume and value.
“The Insurance subsidiary will adopt a dynamic and creative approach to deliver value-added services focused to meet customer insurance needs. There is a market opportunity of about $150billion in countries with Access presence assuming insurance penetration in these countries (4.4percent) grows to South African penetration (13.1percent)”.
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The bank is driving Group revenue growth through retail banking expansion. Its retail banking business has grown consistently across all income lines, driven by strong focus on consumer lending, payments and remittances, digitization of customer journeys, and customer acquisition at scale.
Access Bank has the largest customer base in Africa, with a significant share of digitally active customers. As at 2019, the bank has 36million customers out of which 19 million are digital customers.
Looking ahead, Group Managing Director said opportunities for growth will be supported by a digital strategy that will set Access Bank apart as a clear-cut digital leader.
“Digital channel transactions have experienced a circa 10 times growth over 3 years”, he added.
Access Bank has continued to deliver strong results. In the nine months (9M) to September 2020, the bank grew gross earnings by 15 percent to N592.787billion from N513.656billion in 9Months of 2019.
Profit before tax (PBT) increased by 16 percent to N116.623billion from N100.802billion in 9M’2019; while profit after tax (PAT) increased by 16percent to N102.300billion from 9M’2019 low of N88.438billion.
In the nine months to September, the bank grew its Net Loans and Advances by 14 percent to N3.502trillion as against December 2019 low of N3.064trillion.
“We have focused on generating sustainable revenue across all income lines. Gross revenue grew 26percent to N592.8billion (from 9M’18 to 9M’20). There has been steady growth across all income lines.
“Strong and diversified revenue growth has been driven by: Expansive retail banking growth and increased velocity of transactions; optimising value chain of wholesale banking customers; credit growth engine; prioritizing margin growth through efficiencies; payments and delighting the customer at every touch point”, Wigwe told participants at the virtual Investor Engagement Forum.
“With the growth of our operations, we have maintained a focus on efficiency in the last 3 quarters”, he added. On the bank’s cost-to-income ratio, Wigwe noted that Access Bank’s sustainable cost to income ratio will be between 50-55percent “given investments in digital and growth over the next two years”.
“We have maintained strong capital levels despite investments for growth, accumulating capital over time. Despite investment in organic and inorganic growth in the past, Access Bank has improved its capital ratios, given optimum capital structure (tier 1 and tier 2). Emphasis will continue to be on capital retention and strengthening the bank’s capital position”, the bank’s GMD said.
Access Bank said its Africa expansion strategy is deliberate and disciplined, with a targeted focus and approach, supported by key enablers. The bank’s focus is to become an aggregator in Africa by: building a global payments gateway; offering holistic trade finance support and; offering correspondent banking. It also focuses on key markets to support regional trade by targeting new opportunity markets and positioning the bank as a trade and payments gateway to the world. It is also focused on transforming payments and remittances using cheap FX from international remittances to feed trade, leveraging AccessAfrica connections to wallets and payment platforms.
“Across Africa, there is an opportunity for Access Bank to expand to high-potential markets, leveraging the benefits of African Continental Free Trade Area (AfCFTA) Agreement. Access Bank is best positioned to maximize the opportunities, given its significant traction in Nigeria. Our Africa expansion is bolstered by presence and entry into key global financial hubs.
“Our Africa strategy is supported by our presence in key international markets which enables us to: diversify our earnings away from the volatile operating environments in Africa; orchestrate operations as a global payments gateway; manage our risk and exposures to soft currencies; and enhance our profitability without excess risk. Our outside Africa subsidiaries will be anchored out of Access Bank UK” Wigwe said.
Access Bank said it will continue to execute these growth plans in line with its 5-year corporate strategy.
