Takeaways from Access Bank’s conference call
Tier-1 lender, Access Bank on Friday held its investors/ analyst conference call. The call was moderated by top officials of the bank. Among the highlights of the conference include the bank’s performance in the last financial year and outlook into the 2019 financial year.
Etisalat Loan repayment
Tier-1 bank Access bank can now heave a sigh of relief as the value of loan incurred from the troublesome Etisalat deal has reduced by 62.8 percent from N70 billion at the initial stage to a remnant of N26 billion as the loan haircut has been written off.
The repayment of the loan by Etisalat has reduced the bank’s exposure to the Information and communication sector to a meager 0.9 percent compared to a whopping 57.6 percent in 2017.
Growth in interest income driven by Investment securities.
The bank’s gross earnings grew 15% to ₦528.7billion in the full year 2018 compared to ₦459.1billion in the same period in 2017, buoyed by 19% growth in interest income and a 5% increase in non-interest income.
The growth in interest income was driven by 25percent year-on-year growth in income from investment securities, 332% year-on-year growth in interest on cash and cash equivalents, on the back of a 90% increase in foreign currency and bank placements within the period, and 12percent year-on-year growth in interest on Loans and Advances.
The non-interested income was boosted by a 6percent year-on-year growth in net fee & Commission to ₦52.5bn underlined by the increase in commissions on virtual products up 168 percent, credit-related fees, and commissions increased 30 percent year-on-year, and Channels and E-business income increased by 45percent year-on-year.
Access/ Diamond ($600 million) Eurobond repayment
The bank also assured that Access Bank will redeem a $400 million Eurobond, likewise the Diamond Bank $200 million Eurobond this year.
On the much talked about merger between Access/ Diamond merger, the bank noted that it is on the final countdown as the management assuring that the new entity will become operational on April 1, 2019.
Appreciable increase in customers’ deposit
The bank’s customer deposits surged 14 percent to ₦2.57trn in 2018 as compared to ₦2.25trn in the same period 2017. Current and savings account deposits grew 19 percent year-on-year to ₦1.3trn compared to ₦1.1trn in December 2017, buoyed by massive deposit mobilization drive for sustainable low-cost deposit growth. Also, Subsidiaries contribution accounted for 29percent of Group deposits of ₦1.07trn in 2018 with UK and Ghana accounting for 26% of total deposits against 25 percent in 2017
The bank official assured that it will pay more attention to retail banking services in 2019.
Operating expenses and Impairment Charges
The bank’s operating expenses increased slightly by 6 percent to ₦194.0bn from ₦182.8bn in 2017, on account of a 20 percent increase in regulatory charges in the period. Also, on a quarter-to-quarter basis, Operating expense increased by 6percent largely as a result of the additional AMCON charge of ₦2.5bn on off-balance sheet assets.
Loan Book and Advances
The bank adopted a cautious loan book strategy while its loans and advances increased 3 percent at ₦2.14trn. The bank’s Non-performing loan ratio down 230 basis points to 2.5percent in the period as compared to 4.8 percent in the full-year 2017.
Scorecard from its subsidiaries
The officials of the bank noted with delight continued improvement from its subsidiaries to the group’s performance. Recording total subsidiary PBT of ₦27.9bn up 116percent year on year against ₦13bn recorded in 2017, accounting for 27 percent of Group’s PBT. With its UK and Ghana accounted for 88percent of total 2018 subsidiary PBT.
2019 financial targets of the bank
The bank has set its 2019 return on equity at 20 percent, with its Non-performing loan ratio set less than 10 percent, cost of funds set at less than 5 percent and cost to income ratio less than 60 percent.