Barely one year of its post-merger with erstwhile Diamond Bank Plc, shareholders of Access Bank Plc, have started reaping the gains of the successfully consummated marriage which has made the Bank to be the largest in the country by total assets as well as largest in Africa by customer base. The stellar financial performance of the Bank in just one year post- merger for the financial year ended December 31, 2019 is a signal of the gains of the synergy towards achieving its five- year strategic objectives.
Specifically, Access Bank in the full year of 2019, recorded significant growth in virtually all performance indicators. For instance, the Bank grew its Profit After Tax (PAT) by 2.7 percent to N97.509 billion, up from N94.981 billion and paid a final dividend of 40 kobo to bring the total dividend to 65 kobo per share. The Group delivered a 26 percent increase in gross earnings of N666.8billion from N528.7billion in 2018, comprising interest in-come growth of 41 percent from previous levels to N155.9billion despite declining interest rate environment. The effects of an enlarged loan book contributed significantly to the interest income growth of N155.9billion (+41 percent Year on Year, YoY ), leading to strong bottom-line figures.
The net effect on operating income resulted in strong profit before tax (PBT) of N115.4billion as against N103.2billion in 2018. Even in the just concluded first quarter performance of 2020, Q1’20, the Bank showed its resilience in spite of the coronavirus , COVID-19 pandemic effect as it posted good result. Just as the shareholders of the Bank expected, the first quarter, Q1’20 results to be favourable, Access Bank ended March 31, 2020 with a brighter future. The gross earnings of the Bank rose to N211.12 billion in Q1’ 20, up from N160.12 billion in the corresponding Q1’19. Profit Before tax (PBT) and Profit After Tax, PAT stood at N46.29 billion and N41.14 billion in that order.
The Bank gave out more loans as at the end of Q1,20 which stood at N3.14 trillion, compared with N3.06 trillion at the end December 31, 2019. Customer deposits rose by 4.7 percent to N4.45 trillion from N4.25 trillion in full year 2019, while total assets expanded to N7.28 trillion from N7.14 trillion in full year 2019.
Meanwhile, when Access Bank held its 31st Annual General Meeting (AGM) in Lagos recently, the shareholders were full of praise to the Board, Management and its staff. The AGM was held by proxy, following the outbreak of the COVID-19, which necessitated social distancing protocol to avoid the spread of the pandemic. Meanwhile, the three leaders of shareholder associations who represented the minority shareholders at the AGM included Sir Sunny Nwosu of Independent Shareholders Association of Nigeria (ISAN), Mr. Owolabi Peters of Integrated Shareholders Association of Nigeria and Mrs. Bisi Bakare of Pragmatic Shareholders Association of Nigeria.
The shareholders expressed their delight and showered encomiums on Board, Management and Staff for the post merger stellar performance .They expressed that the dividend of the merger has started bearing fruits. They commended the Management on the new head office that befits the status of the enlarged Access Bank Plc and commended the Board for the final dividend of N14.218 billion and given the business strategy unveiled by the Bank, they were sure of better returns on investment going forward.
Specifically, Sir Nwosu said: Access Bank had a good foresight that saw it merge with defunct Diamond Bank.The professional and seamless manner with which the integration was done should be commended and shareholders appreciate the Board and Management.” According to him “ the future is very bright for the all shareholders considering the synergy the merger has brought to the bank and the expertise the management and staff is deploying the ensure Access Bank maintain a leading role in the retail banking space.”
He also commended the leading efforts of Access Bank in the private sector lead Coalition Against COVID-19(CACOVID) in the supporting the Federal Government to fight the pandemic. However, after the showering of praises on the board and management, the shareholders urged the Bank to control its operating expenses. In his response, Group Managing Director of Access Bank, Mr. Herbert Wigwe, said: “The high operating expenses resulted from the business combination with Diamond Bank.
It was a deliberate strategy to ensure the Bank did not lose customers within the first year of the merger. Having successfully integrated the operations of the two banks, we are now addressing the operating expenses using various strategies. Wigwe said: “One of the areas we need to address very seriously and you will see it going into the future is our operating expenses. And for last year, the big jump that you saw came as a result of the merger. We decided to try, for once, a different way of treating a merger. This merger was different because we were bringing a large retail infrastructure and we did not want to lose customers.
“We have seen it happen before, so we told ourselves, let us move with the large infrastructure and gradually see how to manage down the cost. When we did the first merger (with Intercontinental Bank) as successful as it was, we saw a deposit run. Now as today, our savings account is getting to one trillion Naira.” “We could not afford to do anything that will upset the customer, so we made sure that there was no issue of staff going away. We made sure that branch closure was done a very systematic manner not to irritate the customers because it is a very competitive market. Imagine that we had to carry staff strength of 30, 000 right through the year, this made our expenses to rise than normal.
But we have seen our first quarter still high, but we have taken very drastic measures and you will see the results come through in second and third and fourth quarter,” he added. According to Wigwe, “we know what to do when it comes to running our business and one thing we wanted to make sure that the benefit of this combination with Diamond Bank was going to be retained and successful.” “As so we are not in mad rush to do what we would had typically done.
So now, we are basically rationalising the branches, making all the adjustments necessary to ensure that you start seeing a steep reduction in cost as we move on particularly now that a global recession is staring us in the face. We are doing this to be sure that we manage our institution better.” Although Access Bank Plc was already in the process of reducing cost after the successful merger with Diamond Bank, the COVID-19 pandemic has brought more burden on the bank, a development that led to apprehensions that 75 per cent of its workforce would be sacked. However, the management of Access Bank denied any plan to sack its workers, saying it was a baseless speculation.
“This is malicious and a distraction from a genuine and compassionate plan to protect our staff and help keep jobs in the unfolding macroeconomic environment. We state that based on the impact of the COVID-19 pandemic, we do not expect that all our branches will be fully opened for in-branch services until later in the year. This has made it impossible for many of our outsourced workers to perform their duties as usual. “Based on the above-mentioned circumstances, we have commenced engagement with various stakeholders with a view to ensuring that they provide the relevant services and optimum manpower as may be required by the bank on an on-going basis.
As we navigate the new normal occasioned by the COVID-19 pandemic we wish to assure all our esteemed stakeholders that in our traditional manner the bank will continue to ensure that its actions and decisions are guided by fairness, justice, equity and good conscience,” the bank said. Meanwhile, Access Bank explained that it had only suspended operations in some branches following the directive by the CBN. “At the onset of the COVID-19 pandemic lockdown, we suspended in-branch operations at different locations as directed by the CBN and in line with business continuity plans at vulnerable spots, whilst we continued to provide services through our alternative digital platforms.
Beyond complying with the regulatory directive, this action was taken to ensure the health and safety of our customers and employees,” it said. “At the onset of the COVID-19 pandemic lockdown, we suspended in-branch operations at different locations as directed by the CBN and in line with business continuity plans at vulnerable spots, whilst we continued to provide services through our alternative digital platforms.
Beyond complying with the regulatory directive, this action was taken to ensure the health and safety of our customers and employees,” it said. For one, the closure of any bank branches requires the approval of the CBN. But Access Bank has not applied nor obtained the approval of the apex for the closure of any of its branches as widely speculated. The bank has only suspended operations in some branches as directed by the CBN.
However, capital market operatos were of the view thaat Access Bank would not have committed any wrongs if it had chosen to lay off its workers in the context of the COVID-19 crisis.
“But it is not doing so. It had the opportunity to do so when it merged with the now-defunct Diamond Bank Plc. Big companies all over the world are feeling the heat wrought by COVID-19. To put things in proper context, more than three million Americans have filed unemployment claims a couple of days ago, bringing the total number of Americans who have sought government support since mid-March to 33 million,” an analyst said