• As Interest Expense, Impairment Loss Drags Nigerian Operations

Access Holdings Plc, at the weekend, hinted that the top notch performance of its various subsidiaries across the continent of Africa saved it from what would have, perhaps, been a disastrous outing, judging by its unaudited financials for the nine months ended September 30, 2022, showing that although the Nigerian business contributed 79.77% of gross earnings income, it could only muster a mere 15.84% of profit before tax, unlike last year, when it pooled 79.51% of earnings and 58.55% of profit. The group’s businesses across the African continent raked in 69.21% of profit, from a mere 15.27% of earnings, from 24.14% and 14.12% respectively in the same period of 2021; while the European subsidiary accounted for 14.94% of profit, from just 4.95% of revenue, compared to 17.3% and 6.35% last year.

A review of the account showed that the group’s Nigerian business was impaired by twin effects of the N247.967bn interest expense, and N48.504bn impairment losses, up from N174.818bn and N33.345bn respectively.

Gross earnings for the period stood at N936.638bn, from the previous N687.074bn, of which N747.209bn was derived from its Nigerian operations, from N546.348bn in the same period of last year; followed by N143.001bn from the rest of Africa, against N97.048bn in 2021, while N46.428bn came from Europe, an improvement on the previous N43.679bn.

Interest income for the period amounted to N571.977bn, from N470.913bn, the bulk of which was the N352.007bn earned as interest on customer loans, up from N261.095bn; interest expenses rose from N203.185bn to N291.449bn, being mainly the N175.833bn paid on customer deposits, from N105.724bn; while net interest income amounted to N280.528bn, an improvement over the previous nine months’ N267.678bn. Net impairment charge on financial assets increased from N38.663bn to N52.953bn, with allowance for impairment on customer loans and advances increasing from N36.962bn to N44.157bn; following which net interest income after impairment was N227.575bn, a slight decrease from the N229.016bn reported in the corresponding period of last year.

Fee and commission income improved from N113.562bn to N133.494bn, as credit related fees and commission grew to N41.724bn from N31.374bn; while account maintenance charge and handling commission rose slightly to N18.705bn, from N16.219bn. The biggest revenue subhead was however the N49.399bn from channels and other e-business income, up from N45.984bn. Expense rose from N24.842bn to N38.311bn, boosted by the e-banking expense of N32.443bn, against the N24.842bn in 2021; leaving net fee and commission income of N95.183bn, up from N88.719bn.

Total gains on financial instruments at fair value through loss stood at N80.933bn, from a profit of N8.577bn. Details showed that trading loss on fixed income securities amounted to N42.902bn, from the previous profit of N77.825bn; just as fair value loss on non-hedging derivatives dropped to N36.827bn from N82.237bn; while fair value loss on equity investments stood at N2.962bn, from the previous N23.742bn gain.

Net gains on financial instruments at fair value soared to N78.435bn, compared to the previous N1.78bn net loss; this was enhanced by the N96.895bn reported as net foreign exchange gain over the period, which was an improvement on the N86.806bn of the prior nine months. Net gain on fair value hedge (hedging ineffectiveness) stood at N8.796bn from N1.117bn; other operating income dropped from N21.822bn to N17.219bn.

Personnel expenses increased to N89.84bn from N71.736bn; depreciation rose marginally from N21.384bn to N22.466bn; amortization and impairment inched from N8.967bn to N10.277bn. Other operating expenses soared to N254.341bn, compared to N188.816bn in the similar period of last year, of which Asset Management Corporation of Nigeria (AMCON) surcharge increased to N52.734bn, from N41.509bn.

Profit before tax increased to N147.296bn, up from N135.212bn; income tax dropped to N10.289bn from N13.181bn; following which net profit amounted to N137.006bn, compared to N122.03bn in the corresponding period of last year, which translated to Earnings Per Share of N3.88, from N3.46 each.

The group also reported appreciable growth in its balance sheet, compared to the level at the end of last full financial year in December, as total assets stood at N13.45tr, from N11.731tr, driven mainly by the customer loans and advances at N4.621tr, up from N4.161tr. Total liabilities rose to N12.415tr from N10.681tr, lifted by the N8.189tr in customer deposits, which increased from N6.954tr, with total equity (shareholders’ funds) dropped marginally from N1.05tr to N1.034tr.