Access Holdings Plc reported record net interest income in the second quarter as the tailwind from interest rates continues to lend support to the largest lender by total assets.
Net interest income — or the difference Access Holdings earns from lending and pays for deposits — increased to N513.39 billion for the first six months through June 2024, it said on its website.
That contributed to a 107.70 percent surge in profit after tax (PAT) to N281.32 billion in the period under review from N135.44 billion the previous year.
The return on average equity (ROAE) rose to 22.40 percent in the period under review from 18.30 percent the previous year.
The net interest income increase in the second quarter was driven by improved deposit margins, higher corporate lending volumes and higher treasury income.
The result from the largest lender by deposits in Africa’s most populous nation shows banks are still enjoying interest rate hike by the central bank who seeks to tame a red-hot inflation, which has boosted what they earn on deposit.
The Monetary Policy Committee of the Central Bank of Nigeria has increased the benchmark interest rate by 150 basis points from 24.75 per cent to 26.25 per cent.
Some analysts expect that Access Holdings will return a lot of money to shareholders in the form of dividend, but there are concerns that a pause in hike in interest might slow earnings in the third and fourth quarters.
The lender’s impairment charge on financial assets surged by 230.18 percent to N122.73 billion as at June 2024, partly due to a sluggish economic growth as rising inflation, higher borrowing costs, and foreign exchange scarcity continues to undermine businesses and household income.
Access holdings’ shares have shed -19.34 percent so far this year, underperforming the All-Share-Index (ASI).
An excellent risk management strategy and efficient portfolio allocation across sectors means the non-performing loans ratio stood at 2.7 percent, which is lower than the 5 percent regulatory threshold.
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