…As Stakeholders Salute Growth Strategy
Many stakeholders and big players in Nigeria’s banking industry have not hidden their frustrations that the harsh operating environment and tight monetary policy by the Central Bank of Nigeria (CBN) in 2016 presented enormous challenges to the businesses in the country.
Specifically, their grouse centres on CBN’s adoption of the flexible exchange rate that technically led to a 42 per cent devaluation of the Naira from N199 to a dollar to about N282 to a dollar which amplified pressures on banks’ assets quality and cost of risk in the year under review.
However, Access Bank shareholders are excited that despite the economic downturn; their financial institution ranked among the Deposit Money Banks (DMBs) that witnessed considerable growth at the end of 2016 financial year. In a show of appreciation for a good business harvest at the Bank’s Annual General Meeting (AGM) recently, the shareholders had kind words of praise for the management over this impressive performance. And this easily reflected in their approval of N18.803 billion as total dividend, representing a raise of N2.893 billion compared to N15.910 billion in the previous year.
This is in addition to the earlier paid interim dividend of N7.231 billion and final dividend of N11.571 billion that translates into N0.25 kobo per share and N0.40 kobo per share respectively. The breakdown sums the total payout for the year to N0.65 kobo.
In laying their cards bare on the table for shareholders, Group Managing Director and Chief executive Officer of the Bank, Mr Herbert Wigwe said the challenging economy notwithstanding, 2016 proved a year of progress for Access Bank, adding that many strategic choices made over the years were validated when tested by economic recession.
For him, strict implementation of robust risk management framework ensured the Bank remained strong in local and foreign currency liquidity as well as capital adequacy. According to him, these positives placed the institution in an exceptionally strategic position to maximise shareholders’ value even at vulnerable times.
“In line with our shareholders’ approved capital plan, we were successful in raising $300 million senior unsecured notes and N35 billion commercial paper as part of a N100 billion programme; strengthening our balance sheet and providing us with the flexibility to take advantage of attractive opportunities during the downturn”, Wigwe stated.
He said the bank also increased the number of ATMs nationwide to make banking transactions easy for customers, just as the group reported gross earnings of N381.320 billion, representing N43.916 billion or 13.02 per cent increase compared to N337.404 billion in the corresponding year.
The bank chief said the profit before tax rose by 20 per cent from N75.039 billion in 2015 to N90.339 billion in line with the bank’s strategic growth plan. Also, 2016 profit profile rose to N71.439 billion from N65.868 billion achieved a year earlier.
Wigwe explained that the group’s revenue grow across all operating divisions with substantial support from the retail business that posted N12 billion in profit before tax and contributed 11 per cent to group’s overall profit.
Furthermore, the retail business contributed appreciably to the 66 per cent growth in fee and commission income due to increased adoption and utilisation of e-business channels and digital offerings. Noteworthy is the total comprehensive income for the period that rose from N66.207 billion reported in 2015 to N103.5 billion, representing a boost of N37.293 billion or 56.37 per cent.
Other areas where the management made remarkable showing are total deposits that grew by 36 per cent over the preceding year despite the increasingly competitive deposit market and gross loans that moved up to N1.89 trillion largely due to Naira devaluation and raise on lending activities to boost key sectors of the economy.
Overall, Wigwe said the inspiring performance authenticates the success each of the bank’s lines of business recorded in expanding and deepening client relationships.
He said though 2017 marks the end of its rolling five year strategy flagged off in 2013, the urgency of sustaining a solid foundation for the future has seen the management kicking starting in earnest plans for the next five-year phase, adding that this would position the group not only as the world’s most respected African bank, but also as an emerging global player.
“To secure our strategic aspiration to be a higher performing diversified banking leader, focusing on global best practices, we consider it vital to maintain discipline capital position and tightened risk tolerance”, Wigwe said, adding, “Our top priorities in the coming year will be to cement our position as dominant corporate bank and establish ourselves as a formidable retail player, leverage digital technology and innovation to create value for our customers while unlocking new revenue streams, deliver seamless and superior customer experience across all our service touch point.”
Going forward, the bank’s Chairman, Mosun Belo-Olusoga noted that on-going changes in the banking industry as well as the evolving economic and regulatory environment are forcing banks to adapt new business models and re-examine business investments opportunities.
She said Access Bank responded effectively to the changing landscape by proactively maintaining a disciplined risk culture, thus avoiding apparently risky exposures to the power and downstream oil and gas sectors of the economy.
The Chairman said the bank will continuously explore and exploit market opportunities to support increased business activities in key growth sector such as agriculture and manufacturing in the coming years.
National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Sir Sonny Nwosu, who led the pack in commending the board for sustaining its dividend policy amidst a challenging operating environment, said time has come for the management to consider additional investments in education and agricultural sector to support the country’s economic growth.
He said despite investing N22.746 billion and N2.866 billion in agriculture and education respectively during the period under review compared to the sum of N19.176 billion and N2.113 billion in year 2015, the group must still do more for necessary impact in both sectors.
Nwosu, who conveyed the shareholders’ happiness with the bank’s performance, declared dividend and accessibility despite restricted funds, said, “It is noteworthy that the bank has performed well in the 2016 financial year and we are happy. We will also expect a better performance for the current year because of the fact that Nigeria is gradually getting out of recession. A bank that performed well in a recession should be able to perform better without it.”
For the system regulators, Nwosu did not mince words insisting that they must desist from shortchanging investors and shareholders through unfriendly rules and regulations that tend to hurt players in the banking sector.
Lending a voice to those criticising the regulators, President, Nigeria Shareholders Solidarity Association (NSSA), Timothy Adesiyan frowned at the huge fines imposed on banks by CBN, arguing that the regulators are witch hunting shareholders and illegally taxing their genuine investments through fines and penalties.
He urged the apex regulator to apply human face in their penalties’ regime, stressing that the concerns of regulating and supervisory agencies should be more with the growth of the capital market through friendly policies and incentives.
Similarly, there is the investors’ challenge for the management to liaise with registrars in reducing the Bank’s unclaimed dividend that has been on the increase and now stands at over N12 billion .