Access Bank Plc has recorded flat profits after taking a hit of N54.71 billion due to foreign exchange (FX) losses in the first quarter (Q1) of 2020 as the lender struggles with rising operating expenses.
Net income in the first three month of March reduced 0.53 percent to N40.92 billion as against N41.14 billion the previous year (Jan – March 2019).
In the year ago period the bank booked FX gains of N6.2 billion.
Access Bank attributed the FX losses to combined Foreign exchange trading loss and unrealised FX loss on revaluation.
“Net foreign exchange loss includes loss arising from the spot leg of derivatives,” the bank said in a note accompanying the results.
While there was a 319.50 percent surge in net investment securities to N82.90 billion in the period under review, the gain was wiped out by foreign exchange revaluation loss of N54.12 billion, personnel expenses of N19.6 billion and other operating expenses of N63.55 billion.
According to the bank, the net foreign exchange loss includes loss arising from the spot leg of derivatives with corresponding gains.
Total Operating expenses increased by 65.17 percent as at March 2020, as there are speculations that the lender is mulling cutting salaries to avoid job losses as the coronavirus pandemic hampers operations across the country.
But the central bank has ordered all lenders not to retrench workers or lay-off any staff of any cadre.
Access Bank, which acquired rival Diamond Bank Plc last year, had 6,898 permanent staff at the end of 2019, according to a presentation on its website. The acquisition partly contributed to a 31 percent increase in operating expenses.
Nigerian banks are bracing for loan loss provisions as the lockdown policy paralyzed business activities, making it practically difficult for companies to pay debts.
Access Bank’s impairment charge on financial assets surged by 154.12 percent to N8.58 billion as at March 2020.