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Access Bank Reports Significant Revenue Increase in 2022

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How Access Holdings is expanding its banking footprint with 14 subsidiaries across Africa
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Access Bank Reports Significant Revenue Increase in 2022

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Access Bank Plc. (Access Holdings Plc.), a major financial institution, has reached a gross income of N1.38 trillion, marking the first time a Nigerian banking institution has surpassed the N1 trillion barrier in gross earnings. This gain in revenue represents the biggest increase in ten years, at about 42 percent.

NewsReport gathered that the bank’s 10-year record revenue growth was followed by its first profit decline in five years, with after-tax profit falling by 5% to N152 billion. This implies a significant decline in profit margin, which fell from 16.4% in 2021 to 9% in 2022, the bank’s lowest level in more than ten years.

The bank holding company’s audited financial report for the year ended December 2022 shows that the increase in gross earnings represents as much as N416 billion added to the large revenue pool of the group in the year. However, no part of the increase reached the bottom line.

 

Read More: Polaris Bank Rated the Best Retail Bank in the KPMG Customer Experience Survey.

A disparity in growth between revenue and profit observed at the end of the third quarter (Q3) worsened at the end of the full year. Quarterly profit numbers dropped from N48 billion in Q3 to N15 billion in the final quarter, the lowest of the year. Simultaneously, quarterly revenue rose from N316 billion to N472 billion over the same period.

This online information understands that the total expenses grew ahead of the revenue increase and undermined the ability to convert revenue into profit, leading to the divergence in revenue and profit in the year. The challenge to the bank in the year was located in its lending field, where interest expenses and loan loss charges consumed far more than the increase in interest earnings.

While the bank grew interest income by 37.5 percent to N827.5 billion at the end of the year, an increase of N226 billion, interest expenses rose by 55.8 percent to N467.8 billion in the year, claiming over 74 percent of the increase in interest earnings.

Worse than that is an upsurge in net credit losses that registered a high jump of 137.7 percent in the year, from N83.2 billion in 2021 to N197.8 billion at the end of 2022. Credit losses have swelled for the bank for the fourth straight year, summing up to about N364 billion thrown off revenue in the four years to 2022.

 

Read More: Cadbury Nigeria Plc Reports a First-Quarter Net profit of N3.4 Billion.

NewsReport learned that the two major cost increases consumed far more than all the increase of N226 billion in interest income in the year and slashed net interest income after loan impairment charges by 25.8 percent to N161.8 billion.

The rapid expansion of the loan book that the bank has seen in the past five years was sustained in 2022, with the net customer lending position advancing by a clear N1 trillion to N5.1 trillion at the end of the year. In the five years to 2022, the bank’s net loans and advances to customers have jumped more than two and a half times from less than N2 trillion in 2018.

The weakness in income net of loan loss expenses was largely remedied by strong gains in non-interest income, which were led by net gains in financial instruments that multiplied more than six times from N44.8 billion in 2021 to N281.3 billion at the end of 2022.

Also, net gains on hedging jumped from a slight loss to close at N19.7 billion over the same period. Fee and commission income equally grew by 24.3 percent to N197.6 billion in the year.

The gains in non-interest earnings were supported by a relative slowdown in operating expenses, which helped to temper the impact of the drop in net income on the bottom line. At N502.4 billion, total operating expenses grew by 35.4 percent, which is below the 42 percent increase in gross earnings.

The moderation enabled a decline in operating cost margin from 38.2 percent in 2021 to 36.2 percent at the end of 2022. This means the bank used a lower operating cost to generate the naira of its revenue in 2022 than in the prior financial year as well as any time in more than a decade.

The cost savings from operating expenses and the improvements in non-interest income provided the upside force that bridged the 25.8 percent drop in net income to achieve a moderate decline of 5 percent in after-tax profit in the year.

Highlights of the bank’s first quarter (Q1) earnings performance in the current financial year show that the disparity between the growths in interest income and expenses is persisting, but with a slowdown in credit losses, profit for the quarter has stretched out to N71.6 billion.

The directors have announced a final cash dividend of N1.30 per share after paying an interim cash dividend of N20 kobo per share in the course of the financial year.

 

 

Access Bank

Best Bank for Investor Relations, Global Brands Magazine Award; Excellence in Financial Inclusion, Africa. PAN Finance Award, , Sustainability and Social Investment Award (SSI), CSR Awards include 2018 Best Company in Employee Volunteering Initiative (SSI Awards), Winner of the 2019 Karlsruhe Sustainable Finance…

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