Access bank sustains growth trajectory with impressive half-year result

To pay shareholders 25 kobo interim dividend

By Destiny Day

One of Nigeria’s grade A commercial banks, Access Bank, has indicated that her shareholders will be receiving 25 kobo interim dividend as the bank records commendable half- year result.

And like the bank’s group managing director/chief executive officer, Herbert Wigwe said: “The Group’s performance in the first half of the year reflects the strength and sustainability of our business, and the effective execution of our strategy.”

The half-year report of Access Bank released recently showed that the bank is steadily weathering the economic challenges facing the banking sector.

As a result, its shares have been on demand since Wednesday, August 23 following an impressive first-half (H1) 2017 report before the Nigerian the Nigeria Stock Exchange.

In the bank’s half year report, Access not only recorded impressive gross earnings, but also has declared dividend of 25 kobo for its numerous shareholders.

Access Bank’s group audited results for the half year ended June 30, 2017 indicate that the gross earnings rose by 42 per cent year-on-year (y/y) to N246.6 billion as against N174.1 billion recorded in H1’16, with interest income and non-interest income contributing 66 per cent and 34 per cent respectively.

Interest Income grew by 44 per cent y/y to N161.9 billion in H1 2017 from N112.3 billion in H1 2016. Non-Interest Income of N84.4 billion (+37percent y/y) compared with N61.7 billion in H1 2016, underlined by strong FX income on the trading portfolio.

Operating Income increased to N167.5 billion (+29% y/y) compared with N130.2 billion in the corresponding period in 2016.

Profit Before Tax (PBT) for the period rose to N52.0 billion, representing a 18 per cent y/y growth when compared to N43.9 billion1 in H1 2016.

Profit After Tax (PAT) grew to N39.5 billion in H1 2017 from N33.6 billion1 in H1 2016.

Access Bank is a full service commercial bank with headquarters in Nigeria and operations across Sub-Saharan Africa, the United Kingdom, Asia and the Middle East.

Amid this impressive audited results for the half year ended 30 June 2017, the board has proposed an interim dividend of 25 kobo per share.

The bank shares were on demand on the Nigerian Stock Exchange Wednesday, August 23 which led to 39 kobo dividend from day open level of N9.85 to close at N10.24.

Return On Average Equity (ROAE) of 16.9 per cent in H1 2017 flat y/y (H1 2016: 16.9 per cent) on account of higher income tax of N12.6 billion in the period (June 2016: N7.4 billion). Loans and Advances totaled N1.79 trillion as at June 2017 (December 2016: N1.86 trillion) reflecting a cautious approach in light of a recovering macro.

Customer Deposits declined by 9 per cent to N1.90 trillion in the period, from N2.09 trillion in December 2016. Total Assets was flat at N3.46 trillion as at June 2017 (Dec’16: N3.48 trillion).

Capital Adequacy of 21.6 per cent and Liquidity ratios of 45.4 per cent, remain consistently above the regulatory minimum requirement. Non-performing loans (NPLs) to total gross loans stable at 2.5 per cent as at June 2017 (December 2016: 2.1 per cent).

NPL Coverage Ratio (with regulatory risk reserves) stood at 174.8 per cent as at June 2017 (December 2016: 169 per cent).

Cost of risk stable at 1 per cent in H1 2017, from 1.1 per cent in H1 2016 on the back of prudent risk management practices during the period.

Cost-to-Income Ratio (CIR) up 430bps to 62.7 per cent in H1 2017 (H1 2016: 58.4 per cent) driven by increase in operating expenses. Operating Expenses increased by 38 per cent y/y to N105.1 billion (H1 2016: N75.9 billion), and 34.8 per cent quarter-on-quarter (q/q), driven by the high inflationary environment and the effect of unamortized AMCON charges.

Net Interest Margin (NIM) remained unchanged q/q at 6.7 per cent in second-quarter (Q2) 2017: however increased y/y by 40bps from 6.3 per cent in H1 2016. Cost of Funds (CoF) of 5.6 per cent increased from 5.1 per cent in March 2017 and 3.6 per cent in H1 2016.

Commenting on the scorecard Wigwe added: “We delivered gross earnings of ₦246.6 billion – up 42 per cent y/y, and pre-tax profits of ₦52 billion during the period. Net interest margin expanded to 6.7 per cent y/y in H1’17, on the back of a higher interest rate environment. “Non-interest income remained strong on the back of 68.8 per cent growth in FX income demonstrating our optimisation of revenue generating opportunities.

 “We maintained stable asset quality, recording non-performing loans and cost of risk ratios of 2.5 per cent and 1.0 per cent, respectively and wound down on our foreign currency exposures as a deliberate strategy to de-risk the business.

“As we cautiously grow our loan portfolio in light of macro realities, we will continue to uphold our proactive risk management principles in order to maintain asset quality within acceptable limits.

“Whilst balancing our appetite for growth and profitability, we remain committed to maintaining solid liquidity and capital ratios (45.4 per cent and 21.6 per cent respectively).

 “These, as well as AMCON charges resulted in higher operating expenses in the period. We continue to, however, intensify the implementation of our cost reduction initiatives in order to improve the bottom-line despite high inflationary environment.

“In view of the recovering macro, our focus remains growing the retail franchise through digital expansion to enable diversified earnings as well as continuous and proactive risk management as we selectively grow risk assets. We will remain resilient in the execution of our bold strategy for increased growth and profitability whilst maximizing shareholder value in 2017 and beyond.”

He maintained that Access Bank retail expansion drive led to investments “in our channels, distribution network, service quality and brand enhancement.”