Access Bank recovers N14bn in bad loans

September 9, 2019
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Months after completing its merger with Diamond Bank, Access Bank Plc has given its investors reasons to smile with the outcome of its 2019 half-year results which shows that pre-tax profits rose from N45.8 billion to N74.1 billion.

Access Bank remains the largest bank by Customer deposits, rising from N2.56 trillion to N4.1 trillion. The closest is Zenith Bank at N3.8 trillion.

In the report, the bank revealed that it paid N62.5 billion (N23.1 billion was cash) for Diamond Bank, paying 260 per cent or2.6x the share price of N0.87. The bank also acquired N76.2 billion in PPE from the merger with Diamond Bank.

Access Bank also recovered a whopping N13.9b from bad debts following the merger with Diamond Bank up from N1.6b a year earlier. It was able to recover these loans following tough negotiations with obligors whom they had a cordial business relationship with.

On the 2019 H1 results, Net Interest income rose from N85.3 billion to N155.1 billion, Income from investment securities topped fees income which was N37.5billion net while Net income from fees rose from N30 billion to N37.5 billion.

On reliance on Government securities, Access Bank like most Nigerian banks still relies on government securities. The bank had invested about N1.1 trillion in treasury bills alone up from N677 billion the year before.

The bank earned about N60 billion from securities investment up from N28 billion a year earlier.  Out of Access Bank’s N5.5 trillion in investable assets about N2.8 trillion was lent out as external loans.

Acquiring Diamond Bank also had to come with some cost, so the bank’s allowance for credit losses rose from N88.1 billion at the end of last year to N219.3 billion by half-year.

The merger between Access Bank and Diamond Bank was expected to provide positive synergies for shareholders. In the first half of this year, value-added in quantum was about N48.5 billion year on year. Also, 40 per cent of the N148 billion (2018 H1: N103 billion) value-added in the half-year was retained as profits for shareholders.

Earnings per share at the end of the first half of the year was N1.93 up from N1.38 same period last year. Return on Average Equity was also 11.7 per cent during the period compared to 8.1 per cent at the end of June 2018.

These positives should douse most concerns about its depressed share prices.

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