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Friday, March 24, 2023

Access Bank Profit Surges as Devaluation Boosts FX Gains

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Access Bank Nigeria Plc, the largest lender by total assets in Africa’s most populous nation has shrugged off the punitive regulatory environment as second quarter profit surged, a sign that the dark days of the coronavirus pandemic are over.

For the first six months through June 2021, Access Bank’s net income spiked by 42.38 percent to N86.93 billion from N61.03 billion as at June 2020.

Despite the dovish stance by the central bank such as barring non corporate and individual from its Open Market Operations, the cut in cash reserve ratio, slash in charges, and hike in loans to deposit ratio, Access Bank was able to grow interest income by 29.58 percent to  N319.71 billion as at June 2021.

A breakdown of non-interest revenue shows fees and commission income spiked by 44.67 percent to N58.72 billion in June 2021 from N40.59 billion the previous year.

The growth in earnings is largely due to an uptick in foreign exchange gains brought on by the continual devaluation of the currency by the regulator and from fees and commission income.

It realized N68.15 billion from foreign exchange gains from a loss of N66.22 billion on the transaction the previous year.

The lender is leveraging on the latest technology to spur electronic banking, and the segment is contributing to Group revenue as it realized N143.34 billion from non-interest revenue.

Analysts are optimistic that the reopening of the economy that galvanized business activities after a long hiatus will help lenders reduce bad loans and impairment charges on financial assets.

This is because a benign economy allows or gives customers the leeway to pay interest on loans.

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