The merger that produced the current Access Bank has started to pay off in view of the N63.02 billion profit after tax it announced last Friday for the half-year ended June 2019. The half-year profit after tax amounted to an increase of 59.1 percent when compared with pre-merger N39.6 billion announced last year June. This improvement, as well as in other metrics, has positioned Access Bank for the banking industry leadership in the country.
Spurred by the desire to become a market leader, Access Bank executed a seamless merger with Diamond Bank between late 2018 and early 2019, culminating in the establishment of the biggest tier-one bank by assets in the country. The decision was supported by shareholders and endorsed by a court of competent jurisdiction. As at the close of business last Friday, its share price closed at N6.90 per share and it is worth N245.3 billion on the Nigerian Stock Exchange.
The significant rise in Access Bank’s PAT or an additional N23.4 billion profit, surpassed 15.4 percent industry growth in profits by the five tier-one banks at half year 2019. The five tier-one banks – Access Bank, Zenith Bank, GTB, FBN and UBA, realised N339.41 billion as profit after tax compared with N294.2 billion realised by same banks in June 2018.
The benefits of the merger also manifest in other areas of Access Bank’s operations. The combined net-interest income(NII) of the five banks stood at N670.9 billion at half year, representing 8.6 percent increase over N617.90 billion they all made last year June. From this, Access Bank made N155.1 billion as net interest income, implying that its post-merger net interest income soared by 82 percent over pre-merger NII of N85.3 billion, meaning that an additional N69.8 billion was contributed to the industry NII in the first six months of 2019.
The industry net fee and commission income grew by 23.2 percent only that three tier-one banks were responsible for this growth. Access Bank grew its net fee and commission income by 24.8 percent during the period, which is above the industry growth rate. The highest growth in the net fee and commission income was recorded by Zenith Bank at 33.6 percent and followed by GTB at 30.6 percent. UBA grew its net fee and commission income by 10.6 percent while First Bank Holdings recorded 15.8 percent growth in its net fee and commission income at half year 2019.
Total assets of the tier-one banks rose by 8.6 percent to N26.8 trillion at half year 2019, an addition of N2.21 trillion to N24.6 trillion recorded in June 2018. Growth in Access Bank’s assets was outstanding at 31 percent when juxtaposed with the pre-merger N4.95 trillion to post merger N6.5 trillion. Other banks that recorded increase in their total assets include GTB, whose assets rose by 9.5 percent to N3.60 trillion from N3.3 trillion last year June. UBA and FBN increased their total assets by 4.8 percent and 1.8 percent respectively.
Total equity of the top banks increased by 6.7 percent to N3.09 trillion in June 2019 as against N2.90 trillion same period last year. Only Access Bank and UBA outperformed the industry growth rate. During the period, Access Bank grew its equity by 19 percent from N491 billion to N584 billion. UBA’s equity rose by 7.9 percent to N542.5 billion up from N502.6 billion in June 2018. Other tier-one banks performed below the industry average on this metric.
The total loans and advances of the tier-one banks added up to N9.2 trillion in June 2019, representing 8 percent increase over N8.47 trillion in June 2018. Again, Access Bank’s loans and advances rose by 32.9 percent, making it the only bank within the tier-one group that outperformed industry growth rate in loans and advances. In addition, Access Bank accounted for 96 percent of the total growth in industry loans and advances during the period.
Further, customer deposits of the tier-one banks rose by 13.9 percent from N15.36 trillion last year June to N17.5 trillion by June 2019. Again, only Access Bank surpassed industry growth rate as its customer deposits jumped by 63.1 percent from N2.56 trillion in June 2018 to N4.18 trillion by June 2019. This implies that out of the N2.14 trillion additional deposits made by the customers of the tier-one banks, Access Bank accounted for N1.62 trillion, which amounted to 76 percent of the additional deposits mobilised by tier one banks in the first six months of this year.
Access Bank, in line with its tradition, has proposed to pay shareholders an interim dividend of 25 kobo per share. The register of members will close on September 24 while payment date is October 3, 2019.
As at the close of business last week Friday, Access Bank’s share price, which closed higher at 1.5 percent year to date, is the only tier-one bank that recorded appreciation in its share price. The share prices of other tier-one banks closed in the negative territory. FBN Holdings closed the week at -45.3 percent YTD; GTB, -24.1 percent YTD; UBA, -20.8 percent YTD and Zenith Bank, -21.9 percent YTD.
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