Access Bank and its improved growth in profitability
The latest financial results of Access Bank Plc for the full year ended December 2015 indicates another improved growth in gross earnings that translate to better growth in profitability and shareholder returns on investment despite a challenging macro-economic environment.
The bank with a successful Right Issue, recorded an improved growth in shareholders’ funds as well as growth in loan and advances to boost interest income.
With 38 per cent increase in gross earnings, improved cost efficiency and better risk management, the performance of Access Bank further highlighted major impressive results in profit from N43 billion in 2014 to N65.9 billion recorded in the year under review.
The improved performance in gross earnings was driven largely by strong growth in trading income that includes gains from an enhanced securities trading portfolio.
For shareholders, their investment proposition outlook closed on positive note as the management proposed a dividend of N0.30kobo per 50 kobo Ordinary Share,(interim dividend of N0.25) making it a final dividend of N0.55.
With a remarkable growth in gross earnings, both interest income and non-interest income rose by 17 per cent and 89 per cent respectively in the period under review. Interest income was spurred by a substantial growth in income from loans and investment securities to N207.8 billion in 2015 from N176.9 billion in 2014.
However, interest expenses rose higher by a notable 33.2 per cent to N102.4 billion from N76.9 billion over the same period.
Net interest income also rose by 5.4 per cent due to significant growth in interest income base despite a faster growth rate in interest expenses.
The significant growth in interest expenses was driven by a continued high interest rate environment due to the monetary policy in operational at the period.
Considerable growth in non-interest income
Non-interest income grew Substantial by 89.2per cent to N129.45 billion in 2015 from N68 billion. This contributed significantly to growth in profitability.
Non-Interest income recorded eight per cent year-on-year (y/y) growth in net fees and commission income to ₦33.3billion (₦30.8billion in 2014) largely driven by a 69 per cent y/y rise in card-related commissions on the back of increased transaction and payment volumes.
Also, improved net gains on securities trading accounts for 69 per cent of the Bank’s trading income in 2015.
Operating expenses grew by 39 per cent to N145.6 billion in 2015 compared to N104.77 billion in 2014 primarily driven by continued investment in business growth, particularly retail, and brand equity.
Access Bank recorded 38 per cent in enhanced staff strength expenses in order to fill manning gaps at branches so as to boost retail market penetration and improve branch profitability.
The bank also spent 73 per cent of its expenses on investments (largely one-off) in systems and technology improvements (e.g. Flexcube upgrade and channels expenses) to increase automation and enhance service delivery.
Gain from earnings assets yield profits
Operating income rose to N234.8 billion from N168 billion indicating a growth of 39 per cent in the period under review. Profit before tax showed a growth of 44 per cent to N75 billion from N52 billion over the period.
Profit for the year rose by 53 per cent to N65.9 billion from N43.1 billion that translates to a remarkable 42 per cent increase in earnings per share (EPS) to N2.65 kobo in 2015 from N1.86 kobo in 2014.
Access bank performance reflects outstanding efficiency ratios
The Bank’s total assets grew by a substantial 23 per cent to N2.6 trillion in 2015 from N2.1 trillion in 2014.
The growth in total assets was largely driven by growth in loan book and increased investments in high-yield government securities.
Loans and advances to customers grew by 25 per cent to N1.4 trillion from N1.1 trillion recorded in 2014, owing largely to increased on-lending activities to state governments, as well as devaluation and growth in the Agriculture and Construction sectors.
This was further supported by balance with cash and balances with other banks that moved from N405 billion to N478 billion in 2015.
The bank was able to grow its customer’s base by 16 per cent to N1.68 trillion as at December 2015 from N1.45 trillion recorded in 2014, resulting in a increase in loan to deposits ratios of 80.2 per cent from 71.4 per cent in 2014, positioning Access Bank as one of the highest loan to deposits lender in the country after Zenith Bank Plc that has 67.2 per cent in 2015.
The growth in total customers deposit is expected to grow further incoming year as the Bank’s continued strategy partly targets the opportunities of the vast unbanked populace in Nigeria.
Also, shareholders’ funds rose by 33 per cent to N368 billion in 2015 from N277 billion in 2014.
Expectedly, in line with the substantial growth in profit and equity, Return on Assets (ROA) improved to 3.2 per cent in 2015 from 2.6 per cent in 2014 largely driven by a 53 per cent y/y growth in net profit to ₦65.9billion in 2015(₦43.1billion in 2014)
Return on Equity (ROE) grew to 20.4 per cent in 2015 as against 16.5per cent in 2014–the highest since 2012 –owing to improved profits and a significantly increased equity base (+33per cent y/y, ₦368billion in 2015)
The bank’s liquidity ratio rose from 36 per cent to 38 per cent. An improvement in the quality of bank’s assets was also recorded as Non-Performing loans (NPL) relating stable at 1.7 per cent from 2.2 per cent, showing effective overall repayment of loans and advances.
Points to consider
Despite the macro-economic challenges, alongside CBN’s monetary tightening policy which constraint most banks income generation and resulting in high cost of funds within the financial system, Access Bank was able outperform general expectation.
Based upon the bank’s flexibility to current regulatory policies and macro-economic challenges which has cost banks efficient strategy towards liquidity and income generation capacity, there is the belief that the bank will enhance its profitability and growth in assets quality.
The management of Access Bank should strictly work on cost reductions to boost profit–growth in 2016 and optimize branch operations.
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Today, I went to the beachfront with my kids. I found a sea shell and gave it to my 4 year old daughter and said “You can hear the ocean if you put this to your ear.” She placed the shell to her ear and screamed. There was a hermit crab inside and it pinched her ear. She never wants to go back! LoL I know this is entirely off topic but I had to tell someone!
Currently it seems like Expression Engine is the top blogging platform available right now. (from what I’ve read) Is that what you are using on your blog?
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I’m curious to find out what blog platform you happen to be working with? I’m having some minor security problems with my latest website and I’d like to find something more secure. Do you have any solutions?
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Hmm is anyone else having problems with the images on this blog loading? I’m trying to determine if its a problem on my end or if it’s the blog. Any suggestions would be greatly appreciated.
Today, I went to the beach front with my children. I found a sea shell and gave it to my 4 year old daughter and said “You can hear the ocean if you put this to your ear.” She put the shell to her ear and screamed. There was a hermit crab inside and it pinched her ear. She never wants to go back! LoL I know this is totally off topic but I had to tell someone!
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LIke your site. Do you want to trade links.
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I’ll gear this review to 2 types of people: current Zune owners who are considering an upgrade, and people trying to decide between a Zune and an iPod. (There are other players worth considering out there, like the Sony Walkman X, but I hope this gives you enough info to make an informed decision of the Zune vs players other than the iPod line as well.)
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Hey there this is kinda of off topic but I was wanting to know if blogs use WYSIWYG editors or if you have to manually code with HTML. I’m starting a blog soon but have no coding experience so I wanted to get guidance from someone with experience. Any help would be enormously appreciated!
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Hey! Do you know if they make any plugins to safeguard against hackers? I’m kinda paranoid about losing everything I’ve worked hard on. Any recommendations?
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Hmm is anyone else encountering problems with the images on this blog loading? I’m trying to determine if its a problem on my end or if it’s the blog. Any feed-back would be greatly appreciated.
Woah! I’m really digging the template/theme of this website. It’s simple, yet effective. A lot of times it’s hard to get that “perfect balance” between usability and visual appearance. I must say that you’ve done a great job with this. In addition, the blog loads extremely quick for me on Chrome. Outstanding Blog!
Howdy! I know this is somewhat off-topic but I needed to ask. Does running a well-established blog such as yours require a large amount of work? I’m completely new to writing a blog but I do write in my diary everyday. I’d like to start a blog so I can easily share my experience and feelings online. Please let me know if you have any ideas or tips for new aspiring blog owners. Thankyou!
Hey there would you mind sharing which blog platform you’re working with? I’m planning to start my own blog in the near future but I’m having a tough time choosing between BlogEngine/Wordpress/B2evolution and Drupal. The reason I ask is because your layout seems different then most blogs and I’m looking for something completely unique. P.S My apologies for getting off-topic but I had to ask!
I am really loving the theme/design of your site. Do you ever run into any internet browser compatibility issues? A few of my blog readers have complained about my blog not working correctly in Explorer but looks great in Safari. Do you have any recommendations to help fix this problem?
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Heya just wanted to give you a brief heads up and let you know a few of the images aren’t loading properly. I’m not sure why but I think its a linking issue. I’ve tried it in two different internet browsers and both show the same results.
Cool blog! Is your theme custom made or did you download it from somewhere? A design like yours with a few simple tweeks would really make my blog jump out. Please let me know where you got your design. Kudos
Hi! I realize this is kind of off-topic however I had to ask. Does running a well-established website such as yours require a large amount of work? I’m completely new to operating a blog however I do write in my journal on a daily basis. I’d like to start a blog so I can easily share my own experience and thoughts online. Please let me know if you have any kind of ideas or tips for brand new aspiring blog owners. Appreciate it!
Does your website have a contact page? I’m having problems locating it but, I’d like to shoot you an email. I’ve got some suggestions for your blog you might be interested in hearing. Either way, great website and I look forward to seeing it grow over time.
Superb post but I was wanting to know if you could write a litte more on this topic? I’d be very grateful if you could elaborate a little bit more. Cheers!
I’m really loving the theme/design of your blog. Do you ever run into any internet browser compatibility problems? A number of my blog readers have complained about my website not operating correctly in Explorer but looks great in Chrome. Do you have any recommendations to help fix this problem?
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Wonderful blog! Do you have any suggestions for aspiring writers? I’m hoping to start my own website soon but I’m a little lost on everything. Would you propose starting with a free platform like WordPress or go for a paid option? There are so many choices out there that I’m totally confused .. Any tips? Bless you!
My partner and I stumbled over here coming from a different page and thought I may as well check things out. I like what I see so now i’m following you. Look forward to going over your web page again.
Cool blog! Is your theme custom made or did you download it from somewhere? A design like yours with a few simple adjustements would really make my blog shine. Please let me know where you got your design. Appreciate it