Access Bank Plc made a profit rebound in the third quarter to N48 billion after a drop from N57.4 billion in the first quarter to N31.3 billion in the second. The numbers add up to the N137 billion after-tax profit the bank posted at the end of the third quarter of operations in September 2022.
The bank’s third-quarter interim financial report shows that the upturn was driven by a gain in momentum in revenue growth but cost increases continue to depress margins. Gross earnings grew from an average of N296 billion per quarter at half year to N316 billion in the third quarter.
The third quarter revenue figure contributed 35 percent of the nine-month revenue figure of N908 billion at the end of September. Revenue is growing strongly for the second year for Access Bank after an increase of 25 percent to N949 billion in 2021 – the largest revenue figure in the Nigerian banking industry.
Leading revenue growth so far in the year is net gains in financial instruments, which rebounded from a net loss of N1.8 billion in the same period last year to N78.4 billion at the end of the third quarter.
Net gains on hedging followed, making a similar upswing from a net loss of N1.1 billion to N8.8 billion over the same period.
Next is interest income, which rose by about 22 percent from N471 billion in the same period last year to N573 billion at the end of the third quarter.
Costs grew generally ahead of revenue, which undermined the ability to convert much of the revenue gains into profit. Gross income grew two and a half times ahead of profit at 31 percent compared to 12 percent over the review period. Net profit margin went down from 17.6 percent to 15 percent over the same period.
Cost increases are led by interest expenses, which grew by 43.4 percent from the corresponding figure in 2021 to over N291 billion, roughly twice the 22 percent increase in interest earnings.
Another cost encroachment came from net loan loss expenses, which rose by 37 percent from about N39 billion in the same period last year to N53 billion at the end of September 2022. Credit losses are growing rapidly for the fourth straight year after an increase of 32 percent to over N83 billion in 2021.
The increase in interest income represents additional revenue of N102 billion but the two major cost increases consumed more than all the increase and left a slight decline in net interest income after loan impairment charges at roughly N228 billion. This means that no part of the increase in interest earnings reached the bottom line.
The bank however made a little cost saving from operating expenses, which helped to moderate the increases in interest and loan impairment expenses. At N377 billion, total operating expenses grew by less than 30 percent at the end of the third quarter, slightly below the increase of 31 percent in gross earnings.
Operating cost margin went down from 42 percent in the same period in 2021 and from 43.4 at half year to 41.5 percent at the end of the third quarter. This provided room for the 12 percent improvement in profit to N137 billion the bank achieved at the end of the period.
Access Bank closed the third quarter operations with earnings per share of N3.88, improving from N3.46 per share in the same period last year.
Comments are closed.