Access Holdings Plc slashed interest expenses by more than N204 billion in the first quarter, offsetting the hit from reduced interest earnings and preventing a potential decline in profit.
Despite disappointing earnings and rising costs, the significant reduction in funding costs more than compensated.
In the first quarter of 2026, the bank holding company’s interest income dropped by about N86 billion, bringing the total for the quarter to N895 billion.
During the same period, bad loan charges surged to nearly N74 billion, more than tripling year-on-year. At the same time, operating expenses rose sharply while revenue remained flat.
The reduction in interest expenses offset the disappointing interest earnings, the sharp increase in loan losses, and the strong growth in operating costs. Even with these challenges, it still managed to deliver an impressive 18.5 per cent boost to the bottom line.
Cutting from depositors to pay bad debtors, suppliers and shareholders seems to summarise Access Holdings’ earnings story in the first quarter.
Bad loan losses are on the increase for the multinational banking group for the third year running after increases of 76 per cent to N245 billion in 2024 and a 113.4 per cent surge to a record high of N523.6 billion in 2025.
Non-interest earnings became weak, managing to make up for the drop in interest income, and leaving gross earnings flat at N1.37 trillion for the first quarter.
Cost-cutting, therefore, presented the only option to avert a profit drop in the face of flat revenue and the cost of funds provided sufficient room for the slashing. That, expectedly, registered adversely on customer deposits, which closed flat at under N35 trillion over the three months.
The bank effectively reduced the average cost of customer deposits from 2.2 per cent for the 2025 operations to 1.6 per cent, one of the lowest average costs of funds in the Nigerian banking space.
Savings from reduced interest expenses were clearly reflected in net interest income after impairment charges, which jumped 33.6 per cent year-on-year to N265 billion by the end of the first quarter.
This also provided sufficient room to absorb increases in operating expenses, which grew by over 25 per cent year-on-year to N437.5 billion at the end of March 2026.
The strong growth in operating costs against flat revenue means an increase in operating cost margin, which grew from 25.6 per cent to 31.8 per cent over the review period.
The cost encroachment, however, was more than countered by a drop in the share of gross earnings devoted to interest expenses from 55.7 per cent in the same period last year to 40.4 per cent in the first quarter of 2026.
Net profit margin, therefore, expanded from 13.4 per cent in the first quarter of 2025 to 15.7 per cent at the close of the first quarter in 2026.
The narrow door to profit improvement saw the bank through to an after-tax profit rise of 18.5 per cent year-on-year to N216.5 billion at the end of the first quarter.
First quarter ended with earnings per share of N3.69, a drop from N4.88 per share in the same quarter in 2025. The drop reflects an increase in outstanding volume of shares arising from an increase in share capital over the period.
