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Access Bank splashes N13.7bn on shareholders

By BusinessNews Staff on March 19, 2015

Access Bank last week became the third bank to announce its 2014 results, putting a smile on the faces of its shareholders, writes Goddy Egene

The sluggish performance of the nation’s stock market may be a source of worry to short term investors, given that little growth has been witnessed since the beginning of the year. The Nigerian Stock Exchange (NSE) All-Share Index (ASI), which is the major gauge to measure the aggregate performance of the market, has recorded a decline of about 11 per cent as at last Monday. Some stocks have even underperformed the ASI, declining by over 20 per cent. It is expected that the market will remain bearish due to political risk occasioned by the general elections, and economic risk caused by falling price of crude oil, which has had a negative impact on the Naira.

However, long term investors are now smiling as companies begin to announce their 2014 results. Such investors, who depend significantly on dividends, have started knowing what they are to receive on their investments for 2014 financial year. Most exciting is the banking sector, where all expectations were very low due to the headwinds the sector faced last year. But Zenith Bank Plc and Guaranty Trust Bank Plc two weeks calmed the nerves of by reporting growth in their bottom line contrary to a contraction that was expected.

Access Bank Plc last week raised the stakes with a result that is even better considering most of the performance indicators. The bank did not only record improved profitability by also declared a gross dividend of N13.7 billion.

Corporate History
Access Bank Plc has transformed from an obscure Nigerian bank into a leading African financial institution. The bank is now regarded as one of the top largest banks in Nigeria in terms of assets, loans, deposits and branch network. Access Bank commenced operations in Apapa on May 11, 1989. It became a public limited liability company on March 24, 1998 and was listed on the Nigerian Stock Exchange (NSE) on November 18, of this year. Access Bank obtained universal licence from the CBN in 2001. With a new board and management in 2002, the management got a mandate “to reposition the bank as one of Nigeria’s leading financial institutions within a five year period (March 2002 – March 2007).”

The new management team subsequently created a transformational agenda for Access Bank which represented a departure from all that characterised the bank in the past and became the road map for the conversion of the bank into its present leading position.

The board of the Access Bank is led by Gbenga Oyebode as the chairman while Wigwe is the MD/CEO. Other executive directors include: Obinna Nwosu; Victor Etuokwu; Ojini Olaghere; Elias Igbinakenzua; Titi Osuntoki and Roosevelt Ogbonna. Non-executive directors are: Mosunmola Olusoga;
Mahmoud Isa-Dutse Oritsedere Otubu; Emmanuel Chiejina; Anthonia Olufeyikemi Ogunmefun; Ernest Ndukwe; Ajoritsedere Awosika and Paul Usoro.

Growth Plan
In order to achieve its aspiration as one of the top financial institutions, Access Bank Plc last year unveiled a five-year growth plan, which the Wigwe-led management is executing. The new vision is to make the bank the most respectable bank in Africa by 2018 and would be driven by what it called Speed, Service and Security (SSS).

Commenting on the plan, Wigwe had said in the last 10 years, Access Bank had focused on wholesale banking, adding that part of the new vision is to get embedded in retail strategy in order to take over that segment of the market. “In our five-year business plan, we have customers as the central focus. We have said going forward into the future, our customers will be taken along as true partners. We want to be all that Nigeria needs in financial services; we want to be the change that Africa needs. By 2018, we will be known as the most respected bank in the African continent.”

According to the CEO, the bank has identified 14 target sectors that would drive the new vision, noting that the bank’s electronic transactions would be second to none globally.

He said that going forward Access Bank would lay emphasis on growing the Small and Medium scale Enterprises (SMEs) as well as support women-owned businesses.

He added that Access Bank would, in years ahead, be consolidating on its reputation to offer timely, improved and secured services to millions of customers.

“We will be transparent. We will take time to understand you and your needs. We will develop the society in which we do business and most importantly, we will deliver on speed, security and service. This is our promise and we want you to hold us responsible for this promise.”

Wigwe assured stakeholders that the bank would also provide all the necessary support to the real sector such that the small enterprises could become big corporate, saying in order to do this, credit would be deployed to critical sectors like infrastructure in view of the critical roles in national economic transformation.

2014 Financial Results
Access Bank posted gross earnings of N245.218 billion, up by 18.5 per cent from N206.89 billion recorded in 2013. Interest income grew by 21 per cent from N145.961 billion to N176.918 billion, while interest expense moved up by 13 per cent from N68.237 billion to N76.901 billion. This brought net interest income to N100 billion, from N77.72 billion, showing an increase of 29 per cent. Non-interest income went up by 12 per cent from N60.930 billion to N68.263 billion, bringing total operating income to N168.280 billion, showing an increase of 21 per cent from N138.548 billion.

Access Bank contained its expenses as operating expenses rose marginally by three per cent to N104.605 billion, from N101.181 billion.

However, loans impairment charges soared by 289 per cent to N11.6 billion, from N6.164 billion.

Consequently, profit before tax grew by 20 per cent from N43.531billion to N52.022 billion. A higher tax payment of N8.959 billion, compared to N7.499 billion in 2013, reduced the growth in profit after tax to 18 per cent. The bank ended the year with a profit after tax of N42.97 billion, up from N36.298 billion in the previous year.

Earnings per share rose from 158 kobo to 188 kobo. Out the EPS, the shareholders are to receive total dividend of 60 kobo. While 25 kobo was paid earlier, the directors recommended a final dividend of 35 kobo that will be paid on May 7, after the bank’s annual general meeting in Lagos.

A further analysis of the performance ratios of the bank also showed an improvement on the previous year’s level. For instance, PBT margin improved from 21.05 per cent to 21.21 per cent. Cost to income ratio reduced from 73.03 per cent to 62.16 per cent, while return on average equity improved from 14.94 per cent to 16.47 per cent. Similarly, return on average on average asset stood at 2.18 per cent, as against 2.03 per cent in 2013. The dividend yield remained at 9.84 per cent. Loan growth was 38.5 per cent in 2014, up from 33.21 per cent in 2013, while deposit growth improved from 8.1 per cent to 12.1 per cent. The growth in deposit indicates the confidence of depositors in the bank.

Consolidating with N52.6bn Right Issue
After a successful $350 million five-year senior debt issued in 2012 and another highly successful $400 million Eurobond in June 2014, Access Bank Plc is currently shopping for N52.6 billion via a Rights Issue from shareholders. The bank is selling 7.628 billion shares of 50 kobo each at N6.90 each to raise the money that will enable the bank pursue its expansion and boost its cash reserves.

The right issue opened on January 26, 2015 and it will close today.

According to Wigwe, the proceeds would be used to upgrade the bank’s information technology platforms to enable it provide better services, upgrade its branch networks and further improve its working environment.
“The funds raised would provide Access Bank with additional capacity to further consolidate its leading corporate banking business as well as additional capital headroom to support our increasing market share in the SME and retail segments” Wigwe said.

He noted that despite the challenging conditions in the nation’s banking sector with regulatory changes and increased competition, Access Bank has continued to sharpen its execution skills, thereby ensuring a solid platform to build on.
Wigwe explained that the capital raising is in line with the bank’s five-year corporate strategy plan to be one of the top three banks in the country and the world’s most respected African bank.

This, according to him, will be anchored on four critical pillars – capital, human capital, governance and risk management.

“It will also enable the bank to be more competitive and meet the funding needs of its blue chip customers that meet its credit risk criteria,” he said.

[ThisDay]

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