Post-merger Integration: Access Bank Delivering Strong Returns

The Nigerian banking scene is not a very conducive environment for operators currently, especially going by the high lending rate and the dwindling fortune in the Nigerian Stock Exchange but Access Bank Plc has proven it is weathering the storm in its chosen field.

It has consistently earned more years in year out and has always managed to retain as much profit as is possible. It also has a policy of dividend pay-out that is favourable to shareholders even in post-merger arrangements.

In 2012 half year results , profit generation showed a quantum leap in key profitability indices as Gross Earnings riding on the back of enlarged? Government? securities? booked? and? increased? transaction banking volume? was up by N108.7 billion about? 103 per cent higher than N53.65 billion recorded in the preceding year.

The bank’s profit after tax (PAT) grew by a 225 per cent to N26.13billion compared with the N8.08billion recorded in the corresponding period in 2011.

Similarly, the bank’s profit before tax (PBT) rose from N12.37billion recorded for half-year in 2011 to N30.07billion in June, 2012.? This represents a 143 per cent growth over last year’s performance.

Net? Interest? income? up? by? 93 per cent year-on-year(YoY),? from N28.601 billion to N55.063 billion while non-interest income? grew? by? 91 per centYoY? to N24.382 billion from N12.771 billion. However,? operating? income grew by 92 per cent to N79.445 billion from N41.372 billion, however operating expenses? remains elevated? on? the? back? of? one off restructuring cost of the bank, from N20.867 billion in 2011 to N47.513 billion in during the period under review, representing a growth of 128 per cent.

Earnings per share (annualised) increased by 158 per cent to 116kobo per share in the half year from 45k per share in the half year period ended June 30 2011.

The balance sheet position of the bank closely mirrored that of income statement as the improvement made during the period under review was better than that of the previous period. For instance total Assets increased slightly by four per cent from N1.629 billion as at June 30, 2011 to N1.693 billion as at June 30, 2012.

Net Loans and Advances rose by five per cent to N608 billion as at June 30, 2012 from N577 billion as at June 30, 2011.

Total Deposit from customers stood at N1.128 billion as at June 30, 2012, which represents two per cent growth over the June 30 2011 figure of N1.102 billion while? Shareholders’ Fund stood at N223 billion as at June 30, 2012 as against N192 billion representing an increase of 16 per cent.

On Efficiency Ratios, the after -tax (annualised) Return on Assets (RoA) increased to 25 per cent from nine per cent.?

Capital Adequacy Ratio (CAR), which measures a bank’s financial strength, soundness and capacity for future expansion, was flat on 22 per cent in 2012 and 2011 respectively well above the regulatory minimum of 10 per cent.

Also the Liquidity Ratio, which measures a bank’s solvency and ability to meet maturing obligations dropped to 64 per cent in 2012 as against 70 per cent June 2011 compared to the regulatory threshold of 30 per cent.? This provides liquidity and headroom for credit expansion as lending recovery peaks.

The bank’s Group Managing Director/CEO Mr.AigbojeAig-Imoukhuede, commenting on the result, said “the management was pleased to announce that Access Bank has delivered very strong audited results for the first half of 2012 whilst also completing its post-merger integration with remarkable success.

“We are now firmly established as a top tier Nigerian Bank. Leveraging on our sustainability driven business philosophy, robust capital position and the quality of our workforce, I am confident that we will continue to deliver strong returns for our investors in 2012,” he said.

Analysts have described the Bank’s performance as a valid testament to its financial strength and capacity for sustainable growth.
Analysis of the result has shown that Access Bank is already extracting value from its acquisition of Intercontinental Bank by leveraging scale and access to large retail deposit base evidenced by the Bank’s low cost of fund.

It should be recalled that Access Bank’s acquisition of Intercontinental Bank significantly altered the ranking of the top five banks in Nigeria. The Bank is now firmly in the league of Nigeria’s 4 largest Banks by all metrics.

This posture is validated by its customer base of over 5.7million, network of 310 branches and over 1700 ATM. The Bank recently revised its corporate philosophy to highlight its vision of becoming “Africa’s Most Respected Bank”.

This vision is underpinned by the Bank’s adoption and entrenchment of the principle of Sustainability at the core of its operations.? Access Bank obtains its operational legitimacy through commitment to responsible business practice and promotion of sustainable social agenda.