20 May 2019

Nigeria: We Suspend Raising Tier-1 Capital to Enhance Shareholders Value - Access Bank CEO

interview

The shareholders have expressed their concern on low dividend payout for 2018 financial year and have requested for a higher dividend come next year, what is your view?

We are assuring our shareholders of enhanced value creation in the years to come; however, the 50k dividend for the financial year 2018 was due to the bank's decision to suspend raising of Tier 1 capital. The bank's decision to depend on organic capital contributed to the 50k dividend during the period under review.

The Bank needed to think towards the future and cautiously decided on the dividend based on the just concluded merger. The Bank's dividend payout in 2017 was 40 kobo, with earnings per share of N2.11. Access Bank would remain committed to the optimisation of shareholders value as better rewards were ahead in terms of dividend to shareholders and stakeholders.

What is your view on the increase in the unclaimed dividend as contained in your financial statement?

The rising unclaimed dividend is worrisome. We will try to map out strategies to reduce the N14.6 billion shareholders' unclaimed dividend as at the financial year ended December 31, 2018. We are also not happy as the figure keeps increasing, so we want shareholders to come over and pick their dividend. We will work with our registrar, company secretary to see how to get this figure down.

Your debt recovery drive has been commended, what will happen to the debt owed to Diamond Bank now that you have merged with the bank?

We recovered N2.2 billion bad debt in the year under review. Access Bank will intensify effort to ensure that it recovers the debt owed to Diamond Bank. We will go out for Diamond Bank' debtors and if they are not ready to redeem their debt we will publish their names in the newspapers.

You have heard the concern by stakeholders on their future, regarding sustenance of dividend payment given the successful merger with Diamond Bank; what is your take?

We have assured shareholders of our determination to enhance their value while thanking them for the support and approval given to them to merge with Diamond Bank Plc. whilst acknowledging the merits of the merger with respect to revenue and profits. We will not lose sight of operating efficiency and return ratios. These measures will continue to be our priority, ensuring that shareholder value is maximized. Customer satisfaction will also remain a key focus, ensuring the new entity delivers superior benefits to its newly expanded customer base.

The Bank began its five year strategy in 2018 with focus on retail banking growth. Capital and liquidity levels for the period remained adequate at 19.9 percent and 50.9 percent respectively, providing buffers as we continued to explore market opportunities.

What is your assessment of the financial performance in the year 2018?

The group recorded a profit before tax of N103.2 billion for the financial year ended December 31, 2018 as against N78.2 billion achieved in 2017, an increase of 32 per cent. Profit after tax of N95 billion, growing by 58 per cent compared with N60.07 billion recorded in the corresponding period of 2017.

Our gross earnings rose by 15 per cent to N528.7 billion in contrast with N459.1 billion posted in the comparative period of 2017 with interest and non-interest income contributing 72 per cent and 26 per cent respectively. The asset base of the bank remained strong and diversified with a growth of 21 per cent in total assets to N4.95 trillion in December 2018 from N4.10 trillion in December 2017.

Loans and Advances rose to N2.14 trillion during the period under review against N2.06 trillion in 2017. Total assets grew by 21 percent to N4.95 trillion from N4.1 trillion in 2017. Deposit also grew by 14 percent to N2.56 trillion in 2018 from N2.25 trillion in 2017. Our shareholders' equity, however, fell by four percent to N491 billion in 2018 from N511 billion in 2017.

Customer deposits increased by 14 per cent to 2.57 trillion in December 2018, from 2.25 trillion in December 2017. The Board and Management gratitude goes to our shareholders, customers and all who have stood by us through the years. With their support, we have built a world class sustainable institution underpinned by strong ethical and governance standards.

Can your elaborate on some of the expected benefits to the bank following the successful merger with Diamond Bank?

Following the successful completion of the merger with Diamond Bank in March 2019, we have now fully positioned ourselves in the retail market with a view to bringing the power of banking to the doorsteps of millions. We are providing a broader platform to facilitate payments services in Nigeria and across Africa, by harnessing our significantly enhanced digital technology capabilities.

The merger brings together Access Bank's strong wholesale banking capabilities and Diamond Bank's unparalleled retail expertise. The bank would create an institution with over 27 million customers, 3,100 ATMs and 33,000 POS as well as over 10 million mobile customers. The bank, with over 600 branches represented in 10 countries and three countries would soon expand footprints to Asia. Access Bank is the only Nigerian bank to record profit in its London subsidiary.

Most respected African Bank

We remain committed to the achievement of our strategic imperatives going forward; as we continue to invest in our people, technology and most importantly, our product offerings to customers. Our focus is to become the world's most respected African Bank by leveraging on the strength of our retail and wholesale business to provide unrivalled value to our customers.

The bank floated and listed a green bond recently, what is your view on it?

Like you witnessed during the meeting, the shareholders did commend on our initiative on the bond issuance. The green bond issuance highlights the bank's commitment to sustainability and its status as a pioneer in green financing in both the domestic and international capital markets. The bond comes amidst a global drive for responsible and sustainable green financing and will allow the financing of new loans and refinancing of existing loans in accordance with the Bank's green Bond Framework. It will support projects directed at flood defense, solar generation facilities and agriculture.

At Access Bank we are a pioneer in both domestic and international capital markets, leading the way with our commitment to sustainable banking. We hope that this bond issuance inspires other African companies to support the long-term development of the green finance market whilst simultaneously realizing the growth potential of the fast-developing low carbon economy.

Your first quarter, Q1 2019 results look good, do you see the Bank sustaining this in the remaining quarters of the year?

The group delivered solid earnings underscoring the value potentials of the newly expanded business model. Gross earnings showed a 16 percent increase to N160.1billion from the prior year, comprising strong earnings on Interest income and non-interest income of 69 percent and 31 percent respectively, whilst Profit before Tax, PBT, grew by 66 percent to N45.1billion.

Liquidity position

Our capital and liquidity position remained above regulatory levels, with CAR at 19.5 percent and liquidity ratio of 47.6 percent further demonstrating the capacity of the enlarged balance sheet to cope with possible negative shocks.

We hope to sustain and surpass this performance in the remaining quarters of 2019. Following the successful completion of the merger with Diamond Bank in March 2019, we have now fully positioned ourselves in the retail market with a view to bringing the power of banking to the doorsteps of millions. We are providing a broader platform to facilitate payments services in Nigeria and across Africa, by harnessing our significantly enhanced digital technology capabilities.

We have made solid progress throughout the first quarter of 2019 in line with our 2018-2022 five-year strategy, and we remain committed to the achievement of our strategic imperatives going forward; as we continue to invest in our people, technology and most importantly, our product offerings to customers. Our focus is to become the world's most respected African Bank by leveraging on the strength of our retail and wholesale business to provide unrivalled value to our customers.

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