There are three key factors that have played significant roles in the performance of most financial institutions.
First is the level of investment made on technology, followed by quality customer services and the quality of management.
For Access Bank Plc, the three factors played out positively in its 2021 full year results released to the Nigeria Exchange (NGX).
The bank has shown a profit after tax of N160 billion in its full year results for the period ended December 31, 2021, representing 51.13 per cent increase year-on-year. The bank also reported earnings per share of N4.58, a 52.16 per cent growth from the N3.01, reported a year earlier in 2020.
Access Bank Plc has grown its profits by 167 per cent in four years since hitting N60 billion in 2017 with the profit now touching about N160 billion.
The statement revealed that in financial year 2021, net interest income grew by 14.64 per cent from N262.95 billion to N301.46 billion in the current period.
Access Bank’s profit performance is on the back of margin growth as income from interest, trading, fees and commission appreciated year on year.
The bank leveraged its investment in e-banking channels to achieve these milestone results.
Access Bank has over the years, leveraged technology, including advanced analytics, cloud computing, artificial intelligence, machine learning, and robotics process automation to reform business operations and drive performance to improve customer experience.
Analysing the results
Access Bank recorded gross earnings of N971.9 billion, representing an increase of 27 per cent over N764.7 billion posted in the financial year 2020.
The bank’s financial results showed that its Profit Before Tax (PBT) for the period rose by 40 per cent year-on-year, to N176.7 billion from N125.9 billion in 2020.
Access Bank grew its income from commission and fees rising 36.40 per cent to N159.18 billion year-on- year. It also generated a total of N166.10 billion in trading income on securities representing an impressive 423.35 per cent increase year-on-year.
The bank’s e-banking raked in N66.28 billion, representing a 18 per cent spike from N56.09 billion in 2020. This suggests that the bank has improved in its utilisation of the e-banking channels in the delivery of financial services to its customers.
In addition, the group also grew its deposits from customers by a whopping 24.47 per cent to N6.95 trillion while its total assets are N11.73 trillion, more than twice the bank’s total assets in 2018.
The bank’s net assets rose 38.03 per cent to N1.03 trillion. Access Bank Plc last traded at N10.40 per share and its market capitalisation stands at N369.67 billion as of March 17, 2022. Year-to-date performance shows that the share price of the company has appreciated by 11.83 per cent.
Its Board of Directors have proposed a final dividend per share of N0.70 per share, to be paid on each of the 35,545,225,622 issued ordinary shares and payable to shareholders on the register of shareholding at the closure date.
The company had earlier paid an interim dividend of N0.30 kobo in September 2021, hence bringing the total dividend for the financial year to N1.00 kobo.
The proposed dividend will be subsequently subjected to withholding tax at the time of payment. Based on its share price, Access Bank Plc’s dividend yield is about 9.62 per cent.
Its gross earnings rose by 27 per cent to to N971.9 billion in 2021 from N764.7 billion reported in 2020, with interest and non-interest income contributing 62 per cent and 38per cent.
Customer Deposits totalled N7 trillion in 2021 from N5.6 trillion in 2020, while net loans and advances totalled at N4.4 trillion in 2021 from N3.6 trillion reported in 2020.
The Chief Executive Officer, Access Bank, Herbert Wigwe in a statement said:” Our diversified business model yielded positive sustainable results, guided by a robust risk management framework, as we grew the business cautiously and recorded sound prudential ratios.
“This year’s results reinforce our resolve to generate sustainable returns despite challenging market conditions. The group achieved a 27 per cent year-on-year growth in gross earnings to N971.9 billion, leading to an improvement in the Profit After Tax to N160.2 billion.
“Consequently, our Return on Average Equity (ROAE) stood at 17.8 per cent, tracking in line with our commitment to stakeholders. We sustained robust capital and liquidity positions, well above regulatory levels with a Basel II Capital Adequacy Ratio of 24.5 per cent and a Liquidity Ratio of 51 per cent.
“This positions the bank to support our customers across various markets and adequately execute our expansion strategy. To actualise our vision of becoming the world’s most respected African Bank and Africa’s Payment Gateway, we have taken strategic strides to create indelible footprints across the African continent.
“These include our most recent additions in South Africa, Botswana, and Guinea We also strengthened our business in Mozambique and Zambia, with noticeable improvement in rankings and market share. In the year, we successfully issued the first Additional Tier 1 (AT1) Eurobond out of Nigeria.The $500 million instrument enhances our capital ratios and provides significant headroom for growth and the execution of our strategic objectives.
“We also issued a $500 million Senior Unsecured Eurobond during the period, elongating the duration of our FX balance sheet and strengthening our liquidity. 2022 is pivotal for our franchise, as we conclude our 2018 to 2022 corporate strategic plan. In the year, we will focus on a disciplined implementation of our strategy to drive efficiency and operational excellence across all segments, expand revenue and increase profitability, with enhanced focus on risk management practices and a disciplined cost containment structure.
“As we go into our next five-year strategy cycle, we are realigning the franchise for growth, by transitioning into a Holding Company (HoldCo). This will enable us to unlock and capture available non-banking opportunities in the market, that would lead to the diversification of our earnings, drive efficiency, and grow scale while maintaining our moderate risk management approach.
“Having met regulatory requirements and obtained the court sanction, we expect the HoldCo to become operational in the first half (H1) of 2022. This will lead to the delisting of Access Bank Plc’s shares on the Nigerian Exchange (NGX) and listing of Access HoldCo shares.”
Access Closa Agents empowered
Access Bank’s commitment to delivering services to at least one in every two Nigerians has been reaffirmed as it inaugurated and empowered 100,000 Access Closa Agents to provide more than banking services to existing and new customers across the nation.
The product’s inauguration aligns with the Central Bank of Nigeria (CBN) Governor, Godwin Emefiele’s policy, who urged banks to bring banking closer to the people.
With the number of Access Closa Agents spread across the 774 local government areas in the country, the bank has significantly grown access to finance and banking services to millions of previously un(der) banked Nigerians, while providing alternate streams of income for MSMEs, promoting financial literacy, and also advancing its ambition to bank one in every two Nigerians by 2025.
According to Executive Director, Retail Banking, Access Bank Plc, Victor Etuokwu, the exponential growth of the bank’s agent network was in fulfilment of the its promise to ensure easier and safer access to financial services for every Nigerian.
“As a bank driven by innovation, we must deliver better outcomes for customers in terms of speed, security, and service to enhance customer experience in all the locations that we operate.
“With the recent achievement of hitting a 100,000 milestone of Access Closa Agents, customers and non-customers of the bank who are travelling for business, events, or to visit loved ones in any location in Nigeria will continue to enjoy uninterrupted banking services as our Closa agents are available in several rural and semi-urban locations across the country.”
Reiterating Etuokwu’s statement, Robert Giles, Senior Advisor, Retail Banking, Access Bank Plc said: “The Access Closa network is a bespoke channel through which the bank expresses her passion and commitment to broadening the opportunities and access to financial services for every Nigerian and African, irrespective of the location they might be.
“Customers can locate a Closa agent near them by simply searching for ‘Access Closa Agent’ on Google Maps on their phone instead of walking long distances in search of a branch.
“With over 100,000 agent locations spread across every neighbourhood in the country, we are making sure our customers and potential customers enjoy seamless banking close to where they live and work, in a safe and convenient manner. By offering basic financial services such as account opening, cash withdrawal, cash deposit, and bill payments.
“Our continuously growing agent network is increasingly making the need to visit a bank branch unnecessary for everyone. We are committed to being at the forefront of providing digital financial services in Nigeria,” Rob added.
Expansion to new markets
Access Bank said it will consolidate its operations in Mozambique into one financial services unit, and hope that gaining new grounds will add bigger value to miles already covered after acquiring another banking asset in the Southern African nation.
The bank wants its business outside Nigeria to make 30 per cent of the group’s profit and gaining in the southern end of the continent seems crucial to that goal, with three more acquisitions in Zambia, South Africa and Botswana.
An already cluttered market in its base, Nigeria, is pushing the country’s biggest bank by asset to seek growth in the rest of Africa at a time when the coronavirus crisis has grievously deteriorated credit quality and lenders still battle the headwinds of last year’s record crash in the prices of oil on earnings. Oil and gas contributes the bulk of the credit base of the banks.
With the Mozambican takeover, the bank’s combined assets from a proposed merger between Access Bank Mozambique S.A and the new acquisition will make it the seventh largest bank in the country.
“We are building the scale necessary to compete effectively and efficiently in key African markets outside Nigeria and ensure we sustainably deliver strong return on invested capital in our African expansion.
“Scale is an important contributor to returns and this transaction is consistent with our rigorous efforts to create to create a strong presence with scale across Africa,” Wigwe added.
But pursuing scale at all cost could be sometimes counter-productive and misjudging the competition in the market where a company is planning expansion is one of the gravest mistakes of mergers and takeover deals.