The financial year ended December 31, 2023, without mincing words, was the best Access Holdings Plc, otherwise known as Access Corporation had ever delivered.
Most financial analysts acknowledged that the output of the Holdings Company surpassed their expectations and that of other stakeholders especially in the stock market.
“Overall, the results impressed the market, beating both our view and those of other analysts,” financial analysts at Coronation Research noted in a report.
Apart from its outstanding deliveries in all performance- measuring parameters in the review period, more stimulating for its shareholders and investors in the equities market was the board’s plan to pay a final dividend of N1.80 kobo per share for the 2023 financial year, bringing the total dividend payment to N2.10 kobo per share with a total value of N74.6 billion.
Earnings per Share stood at N17.62 in the review financial period ended 2023. The ability of management to curtail cost, grow loans and advances and at the same time reduce non-performing loans and boost profit to an unprecedented level in the industry are factors that stood out the financial institution in the review period.
FY 2023 Performance
The group reported pre-tax and post-tax profit gains of 334.8 percent and 311.9 percent, respectively, for the period. Looking at Q4 23 performance, the group recorded a significant 2007.3 percent boost in pre-tax profits and 2869.0 percent growth in net profits.
Earnings for the period were primarily driven by expansion in non-interest income, particularly trading revenues (fair value gains on financial instruments) and fees & commissions. The groups’ earnings performance, according to financial analysts at Coronation Capital, “beat our FY 23 growth forecast by 204.2%.”
Interest income
Interest income advanced by 99.9 percent y/y for FY 23, driven by 163.4 percent y/y growth in interest from investment securities owing to an expansion in the investment securities portfolio by 93.5 percent y/y. Interest on loans to customers increased also by 62.0 percent y/y. The improvement in yield from advances to customers came on the back of 57.6 percent growth in gross loans which showed a significant contribution of Access Holdings to the growth of the economy in the review period. This makes it the highest y/y growth in five years, surpassing the FY 19 growth of 49.1 percent y/y after the merger with Diamond Bank.
Interest expense rose faster than interest income expanding by 105.0 percent y/y on the back of an 82.5% rise in interest paid on customers’ deposits, reflecting the rising interest rate environment, especially towards the second half of the period. The CASA mix was marginally unchanged at 62.8 percent, adding only 2bps from the preceding period. Interest paid on borrowed funds rose by 52.5 percent for the period owing to a 36.4 percent increase in interest-bearing liabilities. As a result, the cost of funding rose to 5.4 percent from 4.1 percent in FY22.
Nevertheless, net interest income expanded by 93.4 percent y/y with the group’s net interest margin adding 129bps to 5.0 percent.
Non-interest income
Non-interest revenues (NIR) grew by 71.3 percent y/y as trading revenues expanded by 87.4 percent. The expansion came as a result of trading gains from financial assets as well as improvements in fees and commission income (+42.6% y/y) on the back of improved income from the group’s channels and e-business income and credit-related fees and commissions. The contribution of non-interest revenues to total revenues declined to 55.6 percent from 58.6 percent in FY 22.
Operating expenses grew 38.9 percent y/y, principally driven by IT and e-business expenses, regulatory costs, and administrative expenses. However, Q4 23 expenses alone declined by 12.4 percent q/q and 42.0 percent y/y.
The cost-to-income ratio fell to 44.5 percent y/y from 57.9 percent y/y, indicating the ability of management to efficiently cut costs to boost profitability. Pre-provision operating profits expanded by 137.5 percent y/y.
Despite significant growth in loan and advances in the period, loan loss provisions declined 29.5 percent y/y with the cost of risk declining to 2.1 percent from 4.2 percent in FY 22. Overall, the group’s pre-tax profit grew by 334.8 percent y/y, the effective tax rate increased to 15.0 percent (8.8% in FY 22).
Asset quality
The non-performing loan ratio declined to 3.1 percent for the period from 3.4 percent in FY22, a positive trend in asset quality over the last four years and below the 5.0 percent regulatory limit. The total capital adequacy ratio ended the period at 19.0 percent, higher than the minimum regulatory requirement of 15.0 percent.
Repositioning for better performance
As part of the firm’s growth strategy, it has announced its proposed acquisition of the National Bank of Kenya and it acquired an insurance company Megatech Insurance Brokers, and others. It is expected that this diversification will continue to further strengthen the group.
“The group’s solid foundation in the financial industry, strategic acquisitions across the continent and significant investments in digital and technological advancements will support its strategy of capitalising on emerging opportunities and help it remain competitive,” experts at Cordros said.
“The Group’s strong performance in 2023 reflects our commitment to delivering value to our shareholders and stakeholders amidst challenging operating environments”
To further drive growth aggressively in the years ahead, Access Holdings has unveiled plans to establish a Capital Raising Programme of up to $1,500,000,000.00 (One Billion, Five Hundred Million United States Dollars) or its equivalent (‘the Programme’). The Programme aims to enhance the Group’s financial strength through the issuance of various financial instruments such as ordinary shares, preference shares, Alternative Tier 1 capital, convertible and/or non-convertible debt, bonds, or other capital and/or funding instruments.
“The Programme may be executed through a variety of methods including public offerings, private placements, rights issues, book building processes, or a combination thereof. The specifics regarding the tranches, series, proportions, dates, pricing, tenor, and other terms and conditions that may be associated, will be determined by the Board of Directors, contingent upon securing the necessary regulatory approvals,” a statement from the Holding Co. disclosed.
Drawing from the Programme, the Group expects to raise up to N365,000,000,000.00 (Three Hundred and Sixty-Five Billion Naira) specifically via a Rights Issue of ordinary shares. The proceeds of the proposed Rights Issue would be used to support ongoing working capital needs including organic growth funding for its banking and other non-banking subsidiaries.
The plans for the Programme were disclosed in the Group’s Notice of the 2nd Annual General Meeting to be held on April 19, 2024 which was published on the Nigerian Exchange portal on March 27, 2024.
Board/management comments
Commenting on the performance, Bolaji Agbede, Acting Group Chief Executive Officer, Access Holdings Plc, said: “The Group’s strong performance in 2023 reflects our commitment to delivering value to our shareholders and stakeholders amidst challenging operating environments. The significant growth in our earnings is a testament to the resilience, strategic focus, and efficiency of our team, and reflects the diversity of our offering across banking, pension, insurance, and payments driven by robust risk management, best-in-class corporate governance, and cutting-edge technology. As we look ahead, we remain committed to driving sustainable growth, consolidating our footprint, and accelerating the attainment of our 2027 strategic objectives.”
Access Holdings’ regulatory ratios strengthened in 2023 as Capital Adequacy Ratios for the Group, and its flagship subsidiary, Access Bank, stood at 19.01 percent and 21.09 percent, respectively. The Liquidity Ratio remained robust at 51.8 percent, well above the regulatory threshold.
Roosevelt Ogbonna, Managing Director/CEO, Access Bank remarked on the Bank’s accomplishments, saying, “As we reflect on the results of 2023, characterised by robust growth, strategic acquisitions, and expansion into key trade hubs, I am excited about the prospects for Access Bank. Our relentless focus on customer-centricity, digital innovation, and operational excellence has positioned us strongly to capitalise on emerging opportunities. As we enter the consolidation and efficiency phase of our Africa and international expansion strategy, we remain committed to driving sustainable growth, enhancing shareholder value, and delivering exceptional banking experiences to our customers across Africa and beyond.”
Access Holdings’ other subsidiaries also posted strong results, as Access Pensions Limited recorded a 75 percent growth in gross revenues, amounting to N12.3 billion, while Hydrogen Payment services posted an operating income of N2.1 billion and a PBT of N161 million.
Access Holdings Plc acquired Megatech Insurance Brokers Ltd. (now known as Access Insurance Brokers Ltd.) and successfully completed a $300million capital injection into Access Banking Group, which acquired several entities including Finibanco Angola S.A., and selected Standard Chartered Bank operations in Africa.
Access Bank’s UK subsidiary also opened a branch in Paris and received regulatory approval to commence operations in Hong Kong.
Reiterating his confidence in the organisation’s resilience, Aigboje Aig-Imoukhuede, Chairman, Access Holdings, said: “As we navigate this transformative period, we remain confident in the leadership of the Group to continue this upward trend and set the standard for financial service groups in the continent. Access Holdings has a rich history of excellence, and we will continue to deliver unparalleled value to our stakeholders.”
Commencing in the second half of 2024, the Group’s Africa and international expansion strategy will enter the consolidation and efficiency phase, aligning with the institution’s five-year plan to accelerate the attainment of its 2027 strategic objectives.
