Banking
Access Bank Will Remain Profitable in 2020—Fitch
By Dipo Olowookere
One of the respected global rating organisations, Fitch Ratings, has expressed confidence that tier-one Nigerian lender, Access Bank Plc, will remain profitable in 2020.
Since the beginning of this year, the world has been battling with a global health pandemic called coronavirus.
The disease has forced many countries to lockdown, causing a global economic crisis and recession, with many businesses losing billions of Dollars.
But in a statement last week, Fitch said it sees Access Bank remaining “profitable in 2020 due to strong margins (including further improvement in its cost of funding), robust non-interest income and lower operating expenses post-merger.”
However, Fitch said Access Bank will face material pressures from a weaker operating environment over the next few months given the oil price crash, potential further devaluation of the Nigerian naira and the impact of the coronavirus pandemic on individuals and businesses.
Last Thursday, the rating agency maintained Access Bank’s ‘A+(nga)’ National Long-Term Rating and ‘F1(nga) National Short-Term Rating on Rating Watch Negative (RWN).
Business Post reports that the action followed a review of the bank’s creditworthiness relative to other Nigerian issuers. Fitch recalibrated the Nigerian National Ratings scale following the sovereign downgrade on April 6.
It noted that resolution of the RWN will depend on the fallout from the oil price crash and the impact of the coronavirus pandemic on the bank’s credit profile.
Fitch said it will focus on Access Bank’s asset quality and capital metrics as these have been pressured by the acquisition of troubled Diamond Bank in April 2019.
In the first quarter of 2020, Access Bank reported an impaired (Stage 3)/gross loans ratio of 5.9 percent and loan loss allowances/impaired loan ratio of 108 percent.
While the impaired loan ratio is in line with peers, its Stage 2 loans/gross loans ratio remains high at 28.0 percent in Q1 2020 compared with 30.7 percent in December 2019.
The majority of Stage 2 loans were inherited from Diamond Bank and these may not migrate to Stage 3 due to pre-emptive and regular restructuring which commenced in 2019.
According to Fitch, 67 percent of the Stage 2 book is in Naira, protecting Access Bank from asset quality and devaluation risks to some extent.
Furthermore, the financial institution made some progress in the first three months of the year in reducing Stage 2 oil and gas loans to 13.8 percent of the total at Q1’20 versus 16.5 percent in FY’19.
“Of the stage 2 loans, the oil and gas related loans are the ones we view as potentially risky given the current low oil prices,” Fitch said in the statement.
It further said Access Bank’s Tier 1 and total capital ratios rose to 17.3 percent and 20.9 percent at end-1Q20.
“Access Bank plans to enhance regulatory capital ratios in 2020 through higher retained earnings, thanks to its solid revenue generating capacity that has been boosted by the acquisition, notwithstanding the pandemic,” the rating firm said.
By Adedapo Adesanya
Access Bank Plc, the banking subsidiary of Access Holdings Plc, has entered into a binding agreement with South African-based Bidvest Group Limited for the acquisition of 100 per cent equity stake in Bidvest Bank Limited.
The deal for the 24-year-old South African lender is due to be completed in the second half of 2025, upon regulatory approval.
This shows Access Bank’s further expansion plans in line with goals set by its late founder, Mr Herbert Wigwe.
The agreement to acquire 100 percent stake in Bidvest Bank reflects Access Bank’s commitment to strengthening its footprint in South Africa and consolidating on its position as the continent’s gateway to global markets as it seeks to optimise the benefits of recent acquisitions and accelerate its transition towards a greater focus on efficiencies.
Bidvest Bank, founded in 2000 is a niche and profitable South African financial institution providing a diverse range of services, including corporate and business banking solutions and diverse retail banking products.
As of its year ended June 2024, Bidvest Bank reported total assets equivalent of $665million and audited profit before tax of $20million.
Upon conclusion of this acquisition, Bidvest Bank will be merged with the bank’s existing South African subsidiary to create an enlarged platform to anchor the regional growth strategy for the SADC region.
This is coming just as the bank opened a new branch in Malta as part of efforts to focus on international trade finance after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).
Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.
The Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.
By Modupe Gbadeyanka
To strengthen Europe-Africa trade ties, Access Bank has opened a new branch in Malta. It will focus on international trade finance, employing approximately 30 people in its initial phase, with plans for controlled expansion over time.
It was learned that this Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.
Access Bank Malta Limited commenced operations after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).
Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.
Malta, a renowned international financial centre, and a gateway between the two continents, is strategically positioned to play a pivotal role in advancing commerce and fostering economic partnerships.
This strategic expansion into Malta enables The Access Bank UK Limited to leverage growing trade opportunities between Europe and Africa.
It underscores the organisation’s commitment to driving global trade, financial integration, and supporting businesses across these regions.
“By establishing operations in Malta, we will gain a foothold in a market that bridges European and North African economies, moving us one step closer to our goal of becoming Africa’s Gateway to the World.
“It further enhances our bank’s capacity to support clients with innovative solutions tailored to cross-border trade and investment opportunities,” the chief executive of Access Bank, Mr Roosevelt Ogbonna, stated.
“Europe has emerged as Africa’s leading trading partner, driven by initiatives such as the Economic Partnership Agreements between the EU and African regions and the African Continental Free Trade Area (AfCFTA).
“With Europe-Africa economic relations entering a new phase, The Access Bank Malta Limited is ideally positioned to deepen trade and meet the financing and banking needs of our clients in these expanding markets,” the chief executive of Access Bank UK, Mr Jamie Simmonds, commented.
Also speaking, the chief executive of Access Bank Malta, Renald Theuma, said, “Malta is uniquely positioned as a bridge between Europe and Africa, making it an ideal location for our subsidiary. This move allows The Access Bank Malta Limited to engage more closely with customers in Europe and deliver tailored financial solutions that drive growth and connectivity across both continents.”
By Adedapo Adesanya
The International Finance Corporation (IFC) and Goldman Sachs have announced a new partnership with African banks, including Nigeria’s Zenith Bank and Stanbic IBTC Nigeria to support the Goldman Sachs 10,000 Women initiative, a joint programme launched in 2008 to provide access to capital and training for women entrepreneurs globally.
The two Nigerian banks are part of nine financial institutions from across Africa which have agreed to join the 10,000 Women initiative committing to leverage the business education and skills tools the programme provides to create more opportunities for women entrepreneurs across the continent by providing access to business education.
Others banks include Stanbic Bank Kenya, Ecobank Kenya, Ecobank Cote d’Ivoire, Equity Bank Group, Banco Millenium Atlantico – Angola, Baobab Group, and Orange Bank.
Speaking on this, Ms Charlotte Keenan, Managing Director at Goldman Sachs said – “10,000 Women has had a powerful impact to date, but we know that there are more women to reach and more potential to be realized.
“We are delighted to partner with IFC to supercharge the growth of women-owned businesses across Africa, and mainstream lending to female business leaders. We remain committed to supporting entrepreneurs with the access to education and capital that they need to scale.”
Since 2008, the 10,000 Women initiative has provided access to capital and business training to more than 200,000 women in 150 countries.
“This expanded initiative marks a significant step forward in creating equitable economic opportunities for women in Africa, enabling them to build stronger, more resilient businesses and to realize their entrepreneurial goals,” said Ms Nathalie Kouassi Akon, IFC’s Global Director for Gender and Economic Inclusion.
Goldman Sachs’ 10,000 Women initiative complements the Women Entrepreneurs Opportunity Facility (WEOF), launched in 2014 by Goldman Sachs and IFC as the first-of-its-kind global facility dedicated to expanding access to capital for women entrepreneurs in emerging markets.
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