Access Bank books N68bn in digital loans to customers in 9M 2020

As thousands of lenders in Nigeria jump on the digital journey to improve customer experience and disbursement speed around lending, Access Bank appears to be leading the pack on this digital lending drive.

Information gathered from the 9 months 2020 financial performance highlights showed that Access Bank disbursed about N68 billion in loans through its digital channel in the first 9 months of the year, representing a 57 percent jump from the N43 billion it recorded in the first 9 months of 2019.

Access Bank who have leveraged their mobile application and USSD platform to drive digital loans to its 36 million+ customers recorded a total loan count of 3 million loans as at Q3 2020, up from 2 million loans year on year.

With the pace of growth in retail loans, it is easy to see the power of technology in banking as analysts estimate that such velocity in loan demand may never have been satisfied without leveraging the digital platforms.

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Although the bank recorded 3 million digital loan counts in 9 months, it is unclear how many of these loans were collected by unique customers which could have given deeper insights into the level of adoption of digital loans among Access Bank customers. Nevertheless, it is quite clear that Access Bank investors can rest assured that their investments in technology over the years are already yielding returns for the business both in terms of improved customer experience and interest income earned from disbursed loans.

Analysts estimate that the average digital loan disbursed per transaction was just over N22,600 as at Q3 2020, marginally higher than the N21,500 recorded as at Q3 2019. The loan value suggests that customers are largely booking nano (small ticket) loans using the Access digital lending platform.

While most Fintechs pushing digital loans to customers have struggled with poor collection performance and high non-performing loans, Access appears to be managing the risks of digital lending quite brilliantly.

Non-performing loans for the bank dropped to 4.2 percent in Q3 2020 from 5.8 percent in Q3 2019, dropping within the regulatory threshold despite growth in their digital lending business.

However, at N68 billion in digital loan disbursements, the size of the digital lending business still remains a very small portion of the N3.5 trillion loan book sitting on the bank’s balance sheet which could hide poor collection performance on their digital lending platform if there was any.

Still, with digital loan disbursements now nearly 2 percent of total loans and advances in Access Bank, it won’t be too long before it becomes a significant portion of the bank’s total loan book based on the historical growth performance of the digital lending business.