Access Bank Plc reported that net profit for the first quarter ended March 31, 2021, jumped 67.35%, significantly outpacing the slow 5.88% start in gross earnings, after net gains on financial instruments at fair value suffered a 67.35% slump, just as interest expense for the period dropped, while other operating income took a 79.85% dive.
Specifically, gross earnings rose from N209.794bn in the corresponding period of last year to N222.141bn, with corporate and investment banking accounting for N95.161bn, down from N152.178bn in 2020; followed by N58.261bn from its commercial banking business, as against the previous N24.377bn; while retail banking raked in N57.45bn from N27.05bn (personnel banking) in 2020; and N11.267bn from business, as against N6.189bn.
By geography, Nigeria remains the group largest market, accounting for a princely N179.533bn, down from N181.307bn; followed by N25.961bn from the rest of Africa, as against N19.401bn; and just N12.548bn, compared to N10.843bn from Europe.
Interest income stood at N143.797bn, up from N131.868bn, a breakdown of which showed that commercial banking contributed N58.261bn, down from N16.062bn; followed by the N45.225bn from corporate & investment banking, as against the previous N97.028bn in 2020Q1, while retail banking contributed N33.791bn from N15.268bn, and N8.666bn from business banking, as against N3.508bn.
Interest income was mainly boosted by the N82.094bn earned on customer loans, a mild drop from N83.843bn; while that from financial assets at face value jumped from N16.372bn to N29.742bn.
Interest expense reduced from N59.656bn to N49.838bn, led by N20.324bn from corporate & investment banking, up from N45.531bn in the previous Q1; N19.923bn was incurred in the commercial banking segment, down from N6.655bn; while N6.93bn came from the group’s retail operations, up from N5.29bn; and N2.659bn from the business segment as against N2.178bn. This resulted in a net interest income of N93.959bn, compared to the N72.212bn of the corresponding period of 2020.
A further probe of these numbers showed that the group spent N13.739bn on deposits taken from financial institutions, down from N17.024bn during the quarter under review; while paying N21.028bn on customer deposits, a drop from N31.269bn; just as interest-bearing borrowings and other borrowed funds gulped N9.762bn, an increase from N6.335bn.
There was a net impairment charge of N12.535bn in the review period, up by N3.952bn from N8.582bn, mainly the N7.056bn from corporate & investment banking, while commercial banking contributed N5.734bn; and the N668.898m from retail banking. Of the total, a total provision of N12.159bn in allowance was made for impairment on customer loans and advances, up from N7.12bn. Business banking, on the other hand, recorded a write-back of N924.299m; unlike in 2020 when net impairments were almost evenly distributed, with commercial and corporate & investment banking recording N4.479bn and N4.125bn respectively. Personal banking recorded N208.915m loan loss, just as there was a N231.138m write-back from business banking during the period.net interest income after impairment charges at N81.424bn, as against the N63.629bn in 2020.
Fee and commission income increased from N27.942bn to N38.95bn, with credit related fees and commission contributing N11.023bn from N8.503bn; followed by account maintenance charge and handling commission, N5.201bn, up from N3.885bn; while commission on bills and letters of credit increased from N701.006m to N1.018bn. Fee and commission expense jumped to N8.22bn from N4.944bn, helped by the expense on electronic banking of N7.181bn, up from N4.106bn; as bank and electronic transfer charges rose from N837.794m to N1.038bn; following which net fee and commission income jumped from N22.997bn to N30.729bn.
Net gains on financial instruments at fair value through profit and loss dropped by N55.837bn from N82.904bn to N27.067bn, lifted by the N35.281m fair value gain on equity investments, which declined from N82.359bn; the impact of which was reduced by the N9.71bn fair value loss on fixed income securities, up from N1.043bn in the same period of 2020. Net foreign exchange gain stood at N1.079bn, compared to a loss of N54.717bn; just as net gain on fiar value hedge stood at N5.328bn, from nil in 2020Q1. Other operating income dropped from N21.797bn to N5.917bn; personnel expense rose marginally from N19/632bn to N20.062bn. Depreciation inched marginally from N5.979bn to N6.269bn; amortization and impairment rose to N2.67bn from N1.155bn; just as other operating expenses fell slightly to N62.493bn from N63.551bn.
Profit before tax rose from N46.292bn to N60.05bn, powered by the N31.291bn from corporate and investment banking, up from N30.998bn; N11.65bn from commercial banking, a significant growth, when compared to the previous N6.01bn; N10.097bn from retail banking, as against N5.944bn; while business bank pooled N1.724bn, a slight increase from N1.567bn.
Income tax grew from N5.364bn to N7.503bn, resulted in net profit of N52.547bn, up from N40.928bn, translating to earnings after tax of N1.49, up from N1.21 each.
Total assets for the period rose from N8.679tr on December 31, 2020, to N9.054tr on March 31, 2021, buoyed by the N3.256tr customer loans and advances, which grew from N3.218tr; just as total liabilities climbed to N8.261tr to N7.928tr, lifted significantly by the customer deposits totaling N5.684tr, up from N5.587tr. Total equity (shareholders’ funds), therefore, improved marginally from N751.041bn in 2020Q4 to N793.074bn.