Nigeria’s biggest lender, Access Holdings, reached a new revenue milestone in its thirty-fifth year last year, with gross earnings only a breath away from the N5 trillion mark.
Bottom line was, however, only 3.7 per cent up, even though revenue surged by as much as 88 per cent.
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The financial services group was able to turn just 13.2 per cent of gross earnings into profit as cost-to income ratio surged, crowding out net profit margin, its latest audited accounts show.
That was a sharp fall from a year ago when the margin was roughly 24 per cent.
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The relatively low margin makes the banking group an outlier in the high profitability trend that has been noted among the Big Five banks, with net profit margins for GTCO, Zenith, UBA and First Holdco standing at 47.4, 26, 24.1 and 21.6 per cent respectively.
One key pressure point here was interest expense, which galloped 130.7 per cent to N2.2 per cent, indicating a steep jump in the cost Access Holdings incurred from borrowing money. Interest expense consumed as much as 63.6 per cent of the interest the group earned during the year.
West Africa’s largest lender, now valued at N41.5 trillion ($25.9 billion), is relentlessly on a drive to scale and branch out into other sectors outside its core banking business.
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In 2024, it completed four banking acquisitions in Angola, Sierra Leone, Tanzania and Zambia; closed deals to buy out three banks in Kenya, Mauritius and Uganda; and secured a go-ahead to set up a subsidiary in Namibia.
Also that year, the corporation got approval to set up Oxygen (its consumer lending division), consummated a business combination of its pensions arm and ARM Pensions Manager and acquired Megatech Insurance Brokers.
About 70 per cent of the group’s acquisitions have been financed from shareholder funds, Roosevelt Ogbonna, the CEO of Access Bank, the banking division, said.
Access Holdings, which slipped from among the top ten lenders on the continent to the eleventh spot in 2023 after its asset value took a hit from a devaluation of the naira, its reporting currency, is hoping to take place among Africa’s five biggest lenders by 2027.
The group is shifting attention to Southern Africa, the most lucrative region on the continent for banking business, where it is eyeing further acquisitions in some of the key markets.
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Access Holdings has footprints in all but two countries in the region.
Net interest income climbed to N1 trillion from N555.8 billion in the period under review. The cash allocated to covering potential loan defaults ballooned by 75.8 per cent, indicating one of the repercussions of elevated lending rates on borrowers.
Pre-tax profit increased by 18.9 per cent, while profit after tax climbed to N642.2 billion from N619.3 billion.
Return on equity fell to 17.1 per cent from 29.4 per cent a year ago.
Access Bank plans to raise fresh capital in two tranches through debt sales to development finance institutions and retail investors, with the first expected to be issued by the end of June.
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