Access Bank NPLs to Total Gross Loans Stand at 1.9% in H1'16 As Against 1.7% in 2015


Friday, August 19, 2016 4.19pm/ Access Bank Plc/ Press Release

Access Bank Plc., (Bloomberg: ACCESS NL / Thomson Reuters: ACCESS.LG) (“Access Bank” or the “Bank”), the full service commercial bank with headquarters in Nigeria and with operations across Sub-Saharan Africa, the UK, Asia and the Middle East, announces its audited results for the half year ended 30 June 2016 and proposes an interim dividend of 25 kobo per share. 

Group Managing Director / Chief Executive Officer’s Review

“Access Bank’s performance continues to be resilient in the face of a challenging macro-economic environment, which has been further exacerbated by double-digit inflation, amidst an untimely devaluation. Despite these macro uncertainties, we delivered gross earnings of 174 billion, while pre-tax profits grew 28% to 50 billion in the period.

The results underscore our continued ability to grow sustainably whilst effectively adapting to a challenging operating landscape.

The prevalent macro-economic conditions put a strain on business performance across the industry, with increased concerns about asset quality deterioration. Despite these challenges, the Bank’s asset quality remained stable, as non-performing loans remained below industry average, in line with our guidance. Our capital and liquidity levels were also sustained above regulatory limits.

During the period, we grew our retail market share, leveraging innovation and technology to create lifestyle products and enhance customer experience. This growth has led to significant increase in our transaction volumes and fee-related income. In addition, our cost of funds dropped by 170 bps y/y reduction, reflecting the increase in our low cost funding base.

Notwithstanding the high inflation and the impact of the currency devaluation on cost, operating cost remained stable owing to our cost management initiatives. Optimising operational efficiency will remain an imperative for the second half of the year, as we continue to see the benefits of our cost initiatives intensify over the next few months.

We believe that macro conditions will remain challenging. Nonetheless, our priority in the coming months will be to strengthen our position in the industry; increasing focus on risk and operational efficiency, with customer-centricity at the heart of our strategy.”

Financial Performance Review

Revenue and Profitability

Gross Earnings of 174.0 billion in H1 2016, up 3% y/y from 168.3 billion in H1 2015

Interest Income up 14% y/y to 112.3 billion in H1 2016 from 98.9 billion in H1 2015; benefitting from steady income growth from the Bank’s core business and a 14% y/y reduction in interest expense

Strong growth in fee and commission income contributed to Non-Interest Income of 61.7 billion (H1 2015: 69.4 billion); largely offsetting the decline in trading income. However, on a q/q basis, non-interest income grew significantly by 50% (Q1’16: 24.7 billion)

Operating Income grew 11% to 130.2 billion in H1 2016 from 117.6 billion in the corresponding period of 2015

Profit Before Tax (PBT) up 28% to 50.0 billion in the period from 39.1 billion in H1 2015

Profit After Tax (PAT) of 39.4 billion, up 26% in H1 2016 compared to 31.3 billion in H1 2015

Return on Average Equity (ROAE) of 19.8% in H1 2016 (H1 2015: 21.6%) 

Balance Sheet
Loans and Advances totaled 1.82 trillion in H1 2016, up 29%, from 1.41 trillion in December 2015, with the devaluation accounting for 16% of loan growth in the period. Core loan growth was 4.5%, which is in line with our guidance for the year

Total Assets of 3.27 trillion, up 26% compared to ₦2.59 trillion in December 2015

Customer Deposits grew 17% to ₦1.97 trillion from ₦1.68 trillion in December 2015

Stable capital position as Capital Adequacy Ratio (CAR) stood at 19.6% as at June 2016, well above the regulatory minimum

Asset Quality
Asset quality was steady in the first half of 2016 as the percentage of non-performing loans to total gross loans stood at 1.9%, a 20bps increase from 1.7% as at December 2015

Coverage Ratio (with regulatory risk reserve) stood at 223.6% in the period, from 216.4% as at December 2015

Impairment Charges of ₦10.2 billion, up 15% from ₦8.9 billion in H1 2015.

Cost of Risk improved by 10bps to 1.1% in H1 2016 from 1.2% in H1 2015

Operational Efficiency
Net Interest Margin (NIM) up 80bps y/y to 6.4% in H1 2016 (H1 2015: 5.6%)

Improvement in Cost of Funds (+170bps y/y) to 3.6% in the period from 5.3% in H1 2015

Strong income growth and improved cost controls accounted for the reduction in Cost to Income Ratio (CIR) by 550bps y/y to 53.7% in H1 2016 (H1 2015: 59.2%)

Financial Highlights

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