How Access Holdings built N26.7trn balance sheet in 2023 — biggest expansion in years

Access Holdings Plc took a big advantage of its aggressive offshore expansion to build a balance sheet of N26.7 trillion in 2023 — the biggest asset expansion the bank holding company has seen in many years.

The group’s audited financial report for the full year ended December 2023 shows that, in a space of one year, it grew asset base by N11.7 trillion or 78 percent from the closing mark of a little under N15 billion at the end of 2022.

In five years to 2022, Access Holdings could not achieve the same margin of expansion in assets as it did in a single year in 2023.

The multinational banking group has one of the largest offshore banking operations among the Nigerian banking giants and, therefore, raked in one of the biggest net foreign exchange (FX) gains, as the naira devaluation last year multiplied the values of dollar-denominated assets in local currency counting.

Offshore operations led business growth by assets and earnings with the contribution of offshore banking subsidiaries to total operating income growing from 22.7 percent in 2022 to 25.7 percent at the end of 2023.

The book value of the bank’s investments in offshore banking subsidiaries also advanced from N290 billion in 2022 to N443 billion at the end of 2023, covering the bank’s operations in 15 countries.

The contribution of offshore banking subsidiaries swelled from 16.5 percent of the group’s total assets in 2022 to 21 percent at the end of 2023.

Offshore-driven revenue saw the bank through to gross earnings of N2.6 trillion at the end of 2023, which is an increase of 87 percent in the year and the strongest revenue growth for the bank in decades.

Leading the massive growth in earnings is total interest income that doubled to N1.65 trillion in the year. The bank has not seen interest income grow anything close to that record in its many years of trading.

Next on the revenue growth of the bank is net fair value and FX gain of N628.9 billion, which is a rise of 87.4 percent from the figure of N335.5 billion in the preceding year.

The net fee income also accelerated from 23.2 percent growth in 2022 to 42.6 percent increase to close at N207.8 billion in 2023.

The bank added some cost savings to the revenue gains to multiply the profit numbers in 2023.

Loan loss expenses led the cost-saving lines in the year, with a drop of 29.5 percent to N139.5 billion at the end of the year.

Personnel costs also moderated at an increase of 44 percent to N167.9 billion compared to the much higher growth in earnings.

However, two other cost elements could not be contained — interest cost and the inflation-driven other operating expenses.

Interest expenses more than doubled at 105 percent to close at N959 billion at full year — the most rapid increase in the cost of funds for the bank in many years.

Cost of funds claimed an increased share of interest earnings in the year at 58 percent but that still permitted a strong growth of 93.4 percent in net interest income to N695.4 billion.

The cost saving from bad loan losses reinforced earnings performance with net interest income after the loan charges, multiplying more than three times to N555.8 billion.

The upshot in earnings against the general slowdown in costs sums up the earnings story of Access Holdings in 2023.

The result is a four-time jump in after-tax profit to close at N619.3 billion at full-year. The bank converted 23.9 percent of gross income into profit in 2023, more than double the 11 percent profit margin in 2022.

The directors have announced a final cash dividend of N1.80 per share to shareholders.