Why Access Holdings’ Profit Jumped Four-fold To N619bn In 2023
Substantial offshore earnings, huge interest earnings, enormous fee and commission income and a marked slowdown in costs enabled Access Holdings Plc to multiply after-tax profit more than four times from N152 billion in 2022 to over N619 billion in 2023.
The increase is more than the preceding five years’ annual profits put together.
The extraordinary performance was powered by a combination of exceptional rise in incomes as seen in the bank’s audited financial report for the full year ended December 2023 during which diversified operations across markets of the multinational financial services group placed it on the side of foreign exchange gains, as the local currency devaluation in the year distributed huge gains and losses to operators across the economy.
Companies and individuals with substantial foreign currency-denominated earning assets were on the side of gains. A good instance is Access Holdings which raked in as much as N629 billion in net fair value and foreign exchange gains, an upsurge of over 87 per cent from the closing figure of N335.5 billion it realised in the prior financial year. The massive offshore earning assets propelled the most outstanding growth in interest income the bank has recorded in many years.
Interest earnings doubled from N827.5 billion in 2022 to N1.65 trillion at the end of 2023, and further strength on the side of earnings came from net fee and commission income, which grew by 42.6 per cent to stand at almost N208 billion at the end of the year.
The outstanding growth in earnings is reinforced by a slowdown in some key cost elements of the bank – which stretched out margins and propelled the robust growth of the bottom line.
The biggest cost saving came from net impairment charges on financial assets, which recorded a surprising drop of 29.5 per cent to N139.5 billion after advancing by 137.7 per cent to roughly N198 billion in 2022.
Another key cost-saving line is staff cost, which slowed down relative to earnings at an increase of 44 per cent to about N168 billion. The inflation-driven other operating expenses equally slowed down relative to earnings at an increase of 36 per cent to close at N465.7 billion.
Some key cost lines of the bank however defied management controls and made substantial incursions on earnings. The main culprit is the cost of funds, which grew ahead of interest income at 105 per cent, amounting to N959 billion at the end of the year. It was the most rapid increase in interest expenses for Access Holdings in many years.
Despite that cost of funds claiming an increased share of interest earnings at 58 per cent, the bank still achieved strong growth of over 93 per cent in net interest income to N695.4 billion in the full year.
The pressure from the cost of funds was more than countered by the drop in loan loss expenses – propelling net interest income after the loan impairment charges to multiply more than three times to about N556 billion.
The cost savings extracted from operating costs stretched out margins further, leading to a robust growth of 334.8 per cent in pre-tax profit to N729 billion for the year.
The summary of the bank’s earnings story in 2023 is that management combined a massive expansion in earnings with a general slowdown in costs to produce a four-fold jump in profit for the year.
Access Holdings closed the year with total assets towering at N26.7 trillion, a massive expansion from less than N15 trillion in 2022. It carries a customer credit portfolio of over N8 trillion, investment securities of over N5 trillion and restricted deposits and other assets of almost N5 trillion.
The bank closed the year with earnings per share of N17.23, rising from N4.44 per share in the preceding financial year. It is paying a final cash dividend of N1.80 per share to shareholders.