The much awaited half year result of Access Bank Plc, hit the market on Friday September 6, 2019, with the board of directors declaring 25 kobo dividend for the period ended June 30, 2019. The result was impressive at the bank recorded strong growth in both gross earnings and profitability. Closure date for the interim dividend is September 24, 2019, while shareholders are expected to receive their bank Alert on October 3, 2019. As at the time of this write up the bank share was selling at N6.80 kobo.
Highlight of the financial statement shows that the strong performance was underpinned by funded income growth, with non-funded income underperforming the prior year. Consequently, the bank recorded a strong profit before tax growth of 61.7 percent. The bank recorded interest income growth of 46.4 percent to N226.1 billion in the period, which was underpinned by the strong growth recorded in gross loans and advances of 30.6 percent to N2.72 trillion.
The bank recorded a profit before tax growth of 61.7 percent to N74.12 billion, while profit after tax settled at 59.1 percent higher at N63.02 billion. On the other hand, non-interest income declined by 28.7 percent to N47.15 billion, as trading income on investment securities declined by 93.0 percent to N4.15 billion. Interest expense increased by 16.1 percent to N117.75 billion, significantly below the growth rate in income, resulting in a significant growth in net interest income of 81.9 percent.
Consequently, the bank’s net interest margin expanded by 2.0ppts to 7.6 percent from the prior year, reflecting the benefits of the bank’s increased pool of low-cost liabilities. Also, the bank’s operating expenses increased substantially during the period by 28.9 percent to N123.30 billion.
This was driven by a combination of increases in AMCON levy (+29.4% y/y) given the expansion in the bank’s assets base (+31.0% y/y to N6.49 trillion), (2) Professional fees (+325.1% y/y to N4.84 billion) related to the business consolidation with Diamond, (3) Personnel expenses (+19.8% y/y to N31.5 billion) also related to the larger entity, as well as other ancillary costs. However, despite the expansion in operating expenses, the bank’s cost-to-income ratio (after accounting for LLEs) moderated to 62.5% from 68.2% in the corresponding period of the prior year.
The macro-prudential ratios remained strong, save for the bank’s NPL of 6.4% which remains above the statutory level but has trended downward from the 10.0% recorded in Q1-19. The bank’s capital adequacy ratio of 20.8% remains well above the statutory limit for D-SIBs (16.0%), while the bank’s liquidity level of 49.7% also remains well above the limit. While the bank has significant headroom to drive growth given the macro-prudential ratios, we expect more focus on the remediation to bring NPLs downwards.
Access Bank Plc, is a leading full service commercial bank operating through a network of more than 600 branches and service outlets, spanning three continents, 12 countries and 29 million customers. The Bank employs 28,000 thousand people in its operations in Nigeria, Sub Saharan Africa and the United Kingdom, with representative offices in China, Lebanon, India and the UAE.
Listed on the Nigerian Stock Exchange since 1998, Access Bank is a diversified financial institution which combines a strong retail customer franchise and digital platform with deep corporate banking expertise and proven risk management and capital management capabilities.
The Bank serves its various markets through five business segments: Personal, Business, Commercial, Corporate & Investment Banking and Operations and IT. The Bank has over 800,000 shareholders, including several Nigerian and International Institutional Investors, and has enjoyed what is arguably Africa’s most successful banking growth trajectory in the last 17 years. Following its merger with Diamond Bank in March 2019, Access Bank became one of Africa’s largest retail banks.
As part of its continued growth strategy, Access Bank is focused on mainstreaming sustainable business practices into its operations. The Bank strives to deliver sustainable economic growth that is profitable, environmentally responsible and socially relevant, helping customers to access more and achieve their dreams.