Access Holdings Plc built a balance sheet of N20.85 trillion at the end of half-year operations in June 2023, an increase of roughly N6 trillion in six months over the closing asset base of less than N15 trillion in 2022.
This is the most rapid asset expansion the bank has seen in many years. In four and half years to June 2023, the bank has multiplied its balance sheet more than four times from less than the N5 trillion closing mark in 2018.
The bank’s half-year interim financial report at the end of June 2023 shows equally top record growth in earnings but the challenge of rapidly growing cost of funds squeezing margins intensified further in the second quarter.
Occupying the largest single space in the balance sheet is the bank’s large credit portfolio of N7.6 trillion, made up of N6.7 trillion net lending to customers and due from banks of N913 billion at half-year.
Lending to other banks doubled over the period while customer loans and advances grew by 31.5 percent. Investment securities expanded by 64.5 percent to N4.5 trillion while derivative financial assets multiplied well over four times to N1.75 trillion.
Restricted deposits and other assets amounted to over N3 trillion, pledged assets stood in excess of N1 trillion while cash and bank balances were in excess of N2 trillion at half year.
The assets were funded by a large customer deposit portfolio of N12.5 trillion, up from N9.3 trillion at the end of last year; borrowing from other banks of N2.4 trillion and other borrowings of over N2 trillion besides securities issued of N473 billion.
There are also other liabilities of N1.2 trillion, derivative financial liabilities of N478 billion and equity cushion of N1.7 trillion.
The strong growth in assets yielded an equally strong growth in revenue with gross earnings jumping by 59 per cent year-on-year to close at over N940 billion for the six months of the year.
The revenue figure is dominated by interest earnings – which advanced by 63 per cent to N606.8 billion at the half-year period. Net fair value and foreign exchange gain rose by about 50 per cent to N192 billion while net fee and commission income grew by 58.8 per cent to N88 billion over the review period.
The much more rapidly growing cost of funds continued to hinder the bank’s ability to convert interest income into profit. Interest expenses accelerated from 84 per cent rise in the first quarter to an almost 119 per cent jump in the half year to close at N382.6 billion.
This compares to the 63 per cent increase in interest income over the same period. The cost of funds consumed 63 per cent of interest income in the half year, rising from less than 47 per cent in the same period last year.
The bank however saved cost from net impairment charges on financial assets, as the large expansion in assets did not lead to a significant increase in credit losses.
Net impairment charges on financial assets are only slightly up at N37 billion in the half year, slowing down sharply from a 36.7 per cent increase in the first quarter.
Net interest income after loan impairment charges accelerated from a moderate increase of less than 4 per cent in the first quarter to 16.4 per cent at half-year to close at N187 billion.
Some cost saving was also extracted from total operating expenses, which grew by 23 per cent year-on-year to about N316 billion at the half-year. Operating cost margin went down further from 35.2 per cent in the first quarter and from 43.4 per cent in the same period last year to 33.6 per cent at the half year.
The cost savings made from net impairment charges on financial assets and operating expenses failed to overwrite the incursion of cost of funds on earnings and profit margin went down for the second quarter running.
Net profit margin is down from 16.9 per cent in the first quarter and from 15 per cent in the same period last year to 14.4 per cent at the year, reflecting the lingering inability to grow profit as fast as revenue.
The bank grew the bottom line by 52.6 per cent to N135.4 billion at the half year, improving however from a 24 per cent increase to N71.6 billion in the first quarter.
Access Holdings closed the half-year operations with earnings per share of N3.74, improving from N2.52 per share in the same period last year. It is paying an interim cash dividend of 30 kobo per share to shareholders with a qualification date of 5th October and a payment date of 19th October 2023.
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