Thursday, November 19, 2020 / 07:00 PM / NSE/ Header Image Credit: Access Bank Plc
Access Bank Plc released its Q3 2020 Unaudited results for the period ended September 30th, 2020.
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Group Unaudited Results for the Nine Months ended 30 September 2020
Access Bank delivered strong top-line figures despite a challenging and fast-changing macro and banking landscape, occasioned by the COVID-19 Pandemic and the consequent decline in oil price. This is an attestation to the effective execution of our strategies and strong risk management culture.
The Group recorded gross earnings of N592.8bn (+15% y/y), on the back of a 100% y/y growth in non-interest income to N217.5bn, buttressing the effectiveness of our strategy and capacity to generate sustainable revenue. We continued to grow our transaction banking income through the optimisation of our channels and electronic banking platforms (+105% y/y), notwithstanding the reduction in transaction charges following the revised guide to bank charges in December 2019. Despite the high cost of operating the enlarged franchise and increase in net impairment charge, Profit Before Tax stood at N116.6bn.
Customer deposits also grew by 24% YTD to N5.26trn in Sept' 2020 with a strong savings account deposits of N1.23trn. Similarly, net loans and advances grew by 15% to N3.53trn.We maintained a robust capital and liquidity positions of 21.1% and 48.0% respectively, well above regulatory levels. We recorded consistent growth in our retail banking business, as evidenced by the growth in customer sign-on by 3.2mn customers YTD via our financial inclusion strides. Transaction volume and value also grew based on our deliberate investments in digital banking.
Asset quality continued to improve as guided to 4.2%, on the back of impairment charges, strong recoveries and a robust risk management approach. This is expected to trend downwards as we strive to surpass the standard we had built in the industry prior to the merger with Diamond Bank.
We have continued to grow our African footprint in a capital-efficient and profitable manner, in furtherance of our vision to be the World's most respected African Bank and Africa's payment gateway. Our African expansion strategy is two-pronged; consolidating in markets we already exist (Mozambique and Zambia) to become major players, and entering into new key African markets and trade corridors (Guinea, Kenya and South Africa).
In addition, we have received the Central Bank of Nigeria's Approval-In-Principle for a holding company ("HoldCo") structure which will enable us further accelerate our objectives around business diversification, improved operational efficiencies, talent retention as well as robust governance.
The year has been challenging for all and I would like to appreciate our customers for their unwavering loyalty in these uncertain times. Recognizing the adverse effects of the recent events on our customers, we remain committed to delivering superior value to our customers and providing innovative solutions for the markets and communities we serve.
Going into the last quarter of the year, our focus remains on consolidating our retail momentum and expanding our African footprint.The next two years will see updates with regards the realization of synergies and actualization of the Bank's strategic intent. Finally, I would like to thank our people and shareholders as we could not have achieved these feats without their dedication, commitment and support.
Herbert Wigwe, GMD/CEO
Financial Review for The Nine Months Ended 30 September 2020
Gross Earnings rose 15% y/y to N592.8bn in 9M 2020, (9M 2019: N513.7bn), with interest and noninterest income contributing 63% and 37% respectively. Interest Income declined by 7% y/y to N375.3bn in 9M 2020 (9M 2019; N405.0bn), largely driven by the falling yield environment which saw income on investment securities drop by 15% y/y to N118.8bn.
Non-Interest Income increased by 100% y/y to N217.5bn (9M'19: N108.6bn), largely led by the year-on-year growth in trading income. Transaction fees, Commissions and Other operating income accounted for 55% and Net trading income the balance of 45%. Included in Other operating income are recoveries of N24.8bn. We also had strong showing in our Channels and other E-business of N38.8bn(+105% y/y). These gains buttress the resilience of the Bank even in these uncertain period.
Profit Before Tax (PBT) for the period rose by 16% y/y to N116.6bn (9M 2019: N100.8bn), and Profit After Tax (PAT) also grew by 16% y/y to N102.3bn from N88.4bn in 9M 2019, on the back of a 29% y/y growth in Operating income despite the rise in Impairment Charges and Operating Expenses. Accordingly, Return on Average Equity (ROAE) stood at 21.2% with a Return on Asset (ROAA) of 1.8% in the period.
The assets base of the Bank remained strong and resilient with Total Assets of N7.93trn in September 2020, a growth of 11% YTD from N7.14trn in December 2019. Net Loans and Advances totaled N3.53trn as at September 2020 (December 2019: N3.06trn).
Customer Deposits increased by 24% YTD to N5.26trn in September 2020 from N4.26trn in December 2019. Low cost deposits (Current Accounts and Savings Accounts) accounted for 62.4% of the deposit base. Savings accounts deposits closed at N1.23trn as at September 2020.
Capital Adequacy Ratio (CAR) remained well above regulatory minimum at 20.3%, reflecting the adjusted impact of the IFRS 9 implementation. Similarly, Liquidity ratio of 48.0% (December 2019: 47.0%) remained well above regulatory requirements.
Non-Performing loans (NPL) ratio stood at 4.2% as at September 2020 (December 2019: 5.8%), on the back of a N70.1bn write-off and cautious restructuring in the period.
Net Interest Margin (NIM) of 5.1% in 9M 2020 from 6.8% in 9M 2019, while Average Cost of Funds (CoF) decreased 160bps y/y to 3.6% from 5.2% in 9M 2019 (Actual CoF in the period was 3.5%). Yield on Assets of 9.7%, down by 336bps y/y from 13.0% in 9M 2019. These are on the back of the declining yield environment.
Cost-to-Income Ratio (CIR) declined by 176bps y/y to 62.1% in 9M 2020 (9M 2019: 63.8%), despite the high cost of operation of the enlarged business scale. We continue to drive our cost transformation initiatives to minimize cost, which will result in improved efficiency ratios.