Access Bank Plc. - FMDQ Group · successfully raised US$350million 5-yr Eurobond and a second $400...
Transcript of Access Bank Plc. - FMDQ Group · successfully raised US$350million 5-yr Eurobond and a second $400...
Access Bank Plc.
Rating Report
The copyright of this document is reserved by Agusto & Co. Limited. No matter contained herein may be reproduced, duplicated or copied by any means
whatsoever without the prior written consent of Agusto & Co. Limited. Action will be taken against companies or individuals who ignore this warning. The
information contained in this document has been obtained from published financial statements and other sources which we consider to be reliable but do
not guarantee as such. The opinions expressed in this document do not represent investment or other advice and should therefore not be construed as
such. The circulation of this document is restricted to whom it has been addressed. Any unauthorized disclosure or use of the information contained herein
is prohibited.
Access Bank Plc 2016 Credit Rating
Access Bank Plc
Rating Assigned:
A+
RATING RATIONALE Access Bank Plc’s (“Access Bank” or “the Bank”) rating is underpinned by
good asset quality despite the challenging macroeconomic environment
prevalent since November 2014. We note that the weak macroeconomic
climate which has affected growth of Nigerian banks is expected to
continue in the short to medium term. The Bank however continues to
ensure adequate levels of local and foreign currency deposits to fund
cautious growths in risk assets and maintain good liquidity levels. We
positively note the Bank’s risk management framework which has provided
adequate buffers, thus largely preserving asset quality. In the year ended
31 December 2015, Access Bank’s non-performing loan ratio stood at 1.5%.
This comparably low level has continued into Q1 2016 with an NPL ratio of
1.5% as at 31 March 2016.
Access Bank having acquired the erstwhile Intercontinental Bank in 2012
has strengthened its people, systems and processes through a series of
capital raising exercises and phased implementation of upgrades over the
years. Operating through over 300 branches in Nigeria, and over 60
branches internationally, the Bank has a 7 million customer base offering a
variety of corporate, commercial and retail banking services as well as
corporate finance and advisory solutions. Access Bank is the fourth largest
bank in Nigeria by total assets & contingents as at 31 December 2015.
Furthermore, the Bank is considered one of the eight strategically
important banks (SIB) in Nigeria. In 2015, the Bank renewed its retail
banking drive with a view to effectively compete with its peers at this
level.
Profitability in 2015 was largely as a result of foreign exchange gains, as
the Bank capitalised on exchange rate volatilities in the earlier part of
2015. In view of recent changes to the structure of the Nigerian foreign
exchange market, we expect earnings in this regard to be significantly
tempered, going forward. Access Bank’s bottom-line was impacted by an
increase in interest expenses especially on expensive tenored deposits and
foreign exchange debt service costs. This is in addition to increases in loan
Outlook: Stable
Issue Date: 22 June 2016
Expiry Date: 30 June 2017
Previous Rating: A+
Industry: Banking
Analysts:
Yomi Akinola
Yinka Adelekan
Agusto & Co. Limited
UBA House (5th Floor)
57, Marina
Lagos
Nigeria
www.agusto.com
2
Access Bank Plc 2016 Credit Rating
loss expenses as warranted by both regulation and internal strategy.
Furthermore, the Bank’s profitability continues to be constrained by
consistently high operating expenses vis-à-vis income. Pre-tax returns on
average assets and average equity nonetheless strengthened to 2.6% and
20.5% respectively over the prior year. We note efforts to temper operating
expenses in 2016 with an improved CIR of 60.1% as at Q1 2016.
Given profitability levels in the year under review as well as a successful
rights issue in 2015, Access Bank’s capitalisation improved year on year
with core capital (Tier 1) totalling ₦360 billion, much higher than the
regulatory minimum of ₦50 billion for Nigerian banks licensed to operate
internationally. In addition, the Bank’s Basel II ratio was adequate at 18%,
above the regulatory minimum of 15%. Access Bank’s capital adequacy
ratio also remained above the newly recommended level of 16% for
strategically important banks. We expect the Bank to maintain satisfactory
capitalisation levels for its business risks upheld by retained earnings, and
contingent on continued effectiveness of its risk management framework.
Furthermore we consider the Bank’s liquidity profile to be good as well as
its ability to refinance if necessary.
Based on the above, we hereby retain our “A+” rating of Access Bank Plc.
Table 1: Background Information
Financial Data FY2015 FY2014
Total assets & contingents ₦2,722 billion ₦2,200 billion
Net earnings ₦194.6 billion ₦132.6 billion
Pre-tax return on average assets & contingents (ROA) 2.6% 2.2%
Pre-tax return on average equity (ROE) 20.5% 17.4%
•Good profitability
•Good asset quality
•Experienced management team
•Good industry position
Strengths
•High level of operating expenses
•Significant and unsustainable FX trading revenue
Weaknesses
•Cost reduction given expected inflationary pressures
•Ability to maintain asset quality in times of weak economicclimate
Challenges
3
Access Bank Plc 2016 Credit Rating
PROFILE Access Bank Plc (“Access Bank” or “the Bank”) was incorporated in 1989 as a private limited liability company,
commencing operations in May of the same year. Access Bank converted to a public limited liability company
in March 1998 and subsequently listed its shares on the Nigerian Stock Exchange in 1998. In February 2001
Access Bank was granted a universal banking license by the Central Bank of Nigeria. Between 2002 and
2007, the Bank embarked on a growth strategy with a view to emerge as one of Nigeria’s leading financial
institutions. This growth strategy saw Access Bank raise capital aggressively starting with a successful public
offer which raised about ₦14.5 billion in 2004, then an Over-The-Counter Global Depository Receipts (GDR)
placement of US$250 million in July 2007 and a third public offer raising about US$1billion. In October 2011,
the Bank acquired 75% equity stake in Intercontinental Bank later merging with the erstwhile Bank in
January 2012. This acquisition enabled the Bank expand its retail banking business. In 2012, the Bank
successfully raised US$350million 5-yr Eurobond and a second $400 million 7-yr Eurobond in June 2014. In
Q1 2015, Access Bank Plc successfully raised ₦42 billion through a rights issue that was 79% subscribed.
Access Bank Plc principal activities includes corporate / commercial banking, retail banking, money market
products and services as well as corporate finance, equipment leasing and foreign exchange operations. As at
April 2016, Access Bank had approximately 7 million customers segmented under four strategic business
units (SBU) namely - Corporate & Investment Banking, Commercial Banking, Business Banking and Personal
Banking. Each of these units offers a variety of products and services in line with the Bank’s strategy to
emerge as “the world’s most respected African bank”. The SBUs are each headed by an Executive Director who
reports to the Group Managing Director.
The Bank carries out its business through 305 branches and service outlets across Nigeria as well as a total
of 66 branches and service outlets in the United Kingdom (2 branches) and other African countries – Ghana
(39 branches), Rwanda (7 branches), Zambia (6 branches), Gambia (6 branches), Democratic Republic of
Congo (2 branches) and Sierra Leone (4 branches). This is in addition to two representative offices located in
the United Arab Emirates and China. Access Bank has also deployed 1,437 Automated Teller Machines (ATMs)
and 9,098 point of sale (POS) terminals in all its operational regions. The Bank also has an offshore Special
Purpose Vehicle - Access Finance BV- for the issuance of the US$350 million 7.25% Guaranteed Notes due
2017 and the issuance of the US$400 million 9.25% Guaranteed Notes due June 2021 guaranteed by the
Bank.
Access Bank’s head office is located at 999C Danmole Street, Victoria Island, Lagos, Nigeria. The Bank
employed an average of 2,828 persons in the year under review. Junior staff accounted for approximately
81% of staff while middle and senior management account for 14% and 5% respectively. Subsequent to the
Bank’s year-end, the Bank expects to grow staff numbers by about 9% as part of expansion plans.
4
Access Bank Plc 2016 Credit Rating
Subsidiaries & Associates
Access Bank’s foreign subsidiaries include Access Bank (Gambia) Limited, Access Bank (Sierra Leone) Limited,
Access Bank (Zambia) Limited, The Access Bank (UK) Limited, Access Bank (Ghana) Limited, Access Bank
Rwanda and Access Bank (D.R. Congo). As at 31 December 2015, Access Bank (Nigeria) accounted for 98% of
total assets of the Access Bank Group. The Bank’s subsidiaries were all profitable in the 2015 financial year
though we note that Access Bank Zambia recorded losses in the four years preceding 2015.
Table 2: Access Bank Plc’s Subsidiaries
Name Principal Business Status Ownership Stake
Access Bank (D.R. Congo) Banking Operational 74%
Access Bank (Gambia) Limited Banking Operational 64%
Access Bank (Ghana) Limited Banking Operational 92%
Access Bank (Sierra Leone) Limited Banking Operational 97%
Access Bank (Zambia Limited Banking Operational 92%
Access Bank Rwanda Banking Operational 75%
The Access Bank (UK) Limited Banking Operational 100%
Access Bank Plc has four associate companies in which it holds 10% or more equity stake and/or voting
rights. They include Stanbic IBTC Pension Managers Limited (17.7% equity stake), CRC Credit Bureau Limited
(13.6% equity stake), Africa Finance Corporation (10.2% equity stake) and Unified Payments Nigeria Plc (10%
equity stake).
Correspondent Banks
Access Bank Plc maintains international correspondent banking relationships, with 24 foreign banks.
These banks include:
Table 3: Access Bank Plc's Correspondent Banks
ABSA/Barclays Bank BNP Paribas
Access UK Byblos Bank
Bank of Beirut Citibank
Bank of China Commercial Bank of Dubai
Banque Libano Credit Agricole
Commerz Bank Credit Suisse Bank
Deutsche Bank First Bank Nigeria (UK)
First Rand Bank Sumitomo Mitsui Banking Corporation
JP Morgan KBC Bank
Mashreq Bank Societé Generale
Standard Bank Standard Chartered Bank
ICICI Bank Unicredit, United Bank of Africa
5
Access Bank Plc 2016 Credit Rating
Technology
Access Bank Plc leverages on technology to drive its banking business as well as operations. The Bank’s IT
function is geared towards driving innovation, enhancing efficiency and improving stability. This is in
addition to securing its business against fraud through maintaining a watertight IT framework as well as the
operation of this framework. The Bank’s e-business platform accommodated 1,437 Automated Teller
Machines (ATMs) and 9,098 point of sale terminals (POS) as at 31 December 2015. In addition, 1.7 million
bank cards were issued while customers who actively use mobile and online banking channels totalled
900,000.
Access Bank processes all its banking transactions through Flexcube, its core banking application and utilises
a variety of other software for operations. In 2015, the Bank focused on improving all core banking software
utilised. This included an upgrade of Office 365, updating of its Enterprise Architecture to facilitate
enterprise-wide work flows/reporting as well as the introduction of two factor authentication and 2FA
protection. Furthermore innovative trade products were a feature in its technology advances in 2015
particularly as the Pay with Capture product was launched in response to an increasing technology reliant
populace.
Access Bank relies on software suites such as Primus for corporate internet banking, Fintrak for financial
reporting, Innovation for global trade & foreign transfer transactions, NEFT for bulk payments and SWIFT for
trade & foreign transfer transactions.
The Bank maintains connectivity within its branches through the use of fibre optics, VSAT links and radio.
This is in addition to two Tier 2 data centres in Lagos – Victoria Island and Ikeja, set up as a business
continuity measure. The Bank also upgraded its high speed network in 2015 and is improving its capabilities
for data warehousing without affecting transaction utilization of its connectivity platform.
Track Record of Financial Performance
Access Bank Plc’s total assets & contingents amounted to ₦2.7 trillion as at 31 December 2015, a 24%
growth over the prior year. Liquid assets totalled ₦487 billion accounting for 18% of the Bank’s total assets
& contingents while gross loans and advances totalled ₦1.3 trillion, 49% of the Bank’s asset base. Non-
performing loans stood at 2.4% as at 31 December 2015. Access Bank’s core capital stood at ₦360 billion,
more than 7 times the minimum ₦50 billion regulatory requirement for banks operating with an
international banking license. The Bank’s Basle II computed capital adequacy ratio stood at 18%, above the
newly prescribed 16% for banks who are strategically important.
The Bank recorded improved pre-tax return on average assets and average equity of 2.6% and 20.5%
respectively in FY2015. Subsequent to year-end, annualized returns on average assets and average equity
further trended up to 2.9% and 22.1% respectively, for Q1 2016.
6
Access Bank Plc 2016 Credit Rating
CURRENT DIRECTORS
Shareholding
Mrs. Mosun Belo-Olusoga* Chairman Direct 0.013%
Mr. Herbert Wigwe Group Managing Director Direct & Indirect 8.9%
Mr. Obinna Nwosu Deputy Group Managing Director Direct 0.103%
Mr. Victor Etuokwu Executive Director Direct 0.047%
Mrs Ojinika Olaghere Executive Director Direct 0.067%
Mr. Elias Igbinakenzua Executive Director Nil
Mr. Roosevelt Ogbonna Executive Director Direct 0.097%
Mrs. Titilayo Osuntoki Executive Director Direct 0.099%
Mr. Oritsedere Otubu Non-Executive Director Direct & Indirect 0.184%
Mr. Emmanuel Chiejina Non-Executive Director Direct 0.033%
Mrs. Kemi Ogunmefun Non-Executive Director Direct & Indirect 0.003%
Mr. Paul Usoro Non-Executive Director Direct 0.004%
Dr. Ernest Ndukwe Independent Director Direct 0.002%
Dr. (Mrs.) Ajoritsedere Awosika Independent Director Nil
*Appointed effective July 2015
9.552%
SHAREHOLDING
Access Bank Plc is listed on the Nigerian Stock Exchange. As at 31 December 2015, the Bank had 820,964
registered shareholders, 978 of which are foreign shareholders who collectively hold 6.4% shareholding.
Significant shareholders however include the following:
Significant Shareholders Shareholding
14.8%
6.1% Stanbic Nominees, Nigeria
Blakeney GP, III Ltd
MANAGEMENT TEAM Mr. Herbert Wigwe is the Group Managing Director and Chief Executive Officer of Access Bank Plc. Mr.
Wigwe commenced his career with Coopers & Lybrand Associates. He later spent 10 years at Guaranty Trust
Bank Plc (GTBank) where he managed several portfolios including financial institutions, Corporates and
Multinationals. In March 2002, Mr Wigwe left GTBank as an Executive Director to join Access Bank Plc as
Deputy Managing Director.
Mr. Obinna Nwosu is the Deputy Group Managing Director of Access Bank. Mr Nwosu joined the Bank in
2004 as an Assistant General Manager (Regional Manager, East). Prior to joining Access Bank, Mr. Nwosu
held various roles at Guaranty Trust Bank Plc over an eight-year period spanning operations and commercial
banking.
7
Access Bank Plc 2016 Credit Rating
ANALYSTS’ COMMENTS
ASSET QUALITY On the basis of total assets and contingents, Access Bank Plc is the 4th largest bank in Nigeria. Total assets
and contingents for Access Bank Plc grew by 24% to ₦2.7 trillion as at year-end 2015, upheld by increase in
capitalisation in the review period. Examining the Bank’s asset structure, liquid assets comprising cash and
equivalents, government securities and quoted investments accounted for 17.9% of total assets and
contingents while gross loans and advances accounted for 48.9%. Long-term assets comprising restricted
funds, Eurobonds held and other long term investments accounted for 15.6% while contingent assets
including letters of credit and other direct credit substitutes accounted for 11.4%.
Figure 1: Breakdown of Total Assets & Contingents
The Bank grew gross loans and advances by a strong 22% during the financial year ended 31 December 2015
to ₦1.33 trillion. This was higher than selected industry peers1 GTBank and Zenith whose loan portfolios
grew by 7% and 18% respectively in the same period. Excluding lending business carried out with the Central
Bank of Nigeria with respect to State Government bail-outs, organic growth of the Bank’s loan portfolio stood
at approximately 10%.
Considering the currency denomination of the Bank’s loan portfolio, we note that 43% of gross loans and
advances were in foreign currency (FCY) higher than the 41% recorded as at 31 December 2015. We believe
this increase is partly due to devaluation of the Naira which occurred in February 2015 which resulted in FCY
loans representing a higher percentage of total loans in Naira terms. Sixty-one percent of gross loans were in
local currency (LCY) at the same period. In view of the current difficult macroeconomic terrain, Access Bank
needs to continue to mitigate exposure to foreign currency obligors (via FX hedges and lending to corporates
1 We consider two industry peers alongside Access Bank Plc for the sake of this rating report. These peers are selected on the basis of
total assets and contingents as well as other performance parameters. The peers used are Guaranty Trust Bank Plc (GTBank) and Zenith
Bank Plc.
Liquid Assets
18%
Net Loans &
Advances
48%
OtherAssets
4%
Other Long-
term Assets
16%
Fixed Assets &
Intangibles
3%Contingent
Assets
11%
8
Access Bank Plc 2016 Credit Rating
who have access to FX receivables, among other methods) given the stifled nature of accessing FX for
repayments, for some of its obligors. We however note that the Bank has reduced growth in its FCY lending
rather focusing on clearing existing letters of credit transactions based on maturity profiles. Furthermore, the
Bank converted a number of FCY loans to LCY in the period under review.
As at 31 December 2015, the Bank’s loan portfolio was 91% in favour of corporate and commercial
organisations. The Bank however adopted a bullish approach in 2015 geared towards promoting its retail
and personal banking business, starting with a structural realignment of its risk functions during the year.
This is in support of its 5-year retail business initiative. This realignment focuses on an overall value chain
model with a tailored risk management framework in this respect. Retail loans have grown from 2.2% of the
Bank’s loan book in 2014 to 3.7% as at 31 December 2015.
Figure 2: Breakdown of Loans by Sector (2015) Figure 3: Loans by Business Lines (2015)
Loans and advances to the Oil & Gas sector – Downstream, Services, Upstream and Refining accounted for
the largest share - 24% of the Bank’s 2015 lending activities. We note that the devaluation of the naira from
168/1$ to 197/1$ in February 2015 contributed to the seeming expansion of lending to the Oil & Gas sector
in naira terms by 11.9% year-on-year to ₦320.9 billion, particularly the downstream and services sub-sectors.
The Bank’s loan portfolio exhibits some degree of concentration with Oil & Gas, general commerce and
public sector accounting for approximately 47%. Retail loans and general commerce loans accounted for
approximately 14% while lending to a variety of manufacturing sub-sectors such as Flourmills & Bakeries,
Food Manufacturing, Cement, Steel Rolling Mills etc. cumulatively accounted for approximately 12% of the
Bank’s loan portfolio. Furthermore, notable growth was recorded in loans to State Government by 212% to
Agriculture
1%
Construction
6%
Finance &
Insurance
6%
General
4%
General
Commerce
10%
Public Sector
13%
Information &
Communication
9%
Manufacturing -
others
4%
Cement
2%
Conglomerate
1%Steel rolling
mills
4%Food
Manufacturing
1%
Real
Estate
8%
Transportation
& Storage
5%Power & Energy
1%Others
1%
Downstream
9%
Services
9%
Upstream
5%
Refinery 2%
Oil& Gas
24%
Corporate
42%
Commercial
42%
Retail
4%Governmnet
12%
9
Access Bank Plc 2016 Credit Rating
₦168.6billion, as Access Bank supported the bail out of State Governments in 2015 with CBN guaranteed
loans. In addition, loans to the Real Estate sector grew by (52% to ₦100.1billion).
Figure 4: Year-on-Year Loan Growth by Sector
A review of the Bank’s loan portfolio by credit quality showed improvement in loan quality with 68.2% of
gross loans and advances in the investment grade scale as reported by the Bank’s internal risk model,
compared to 54.5% in 2014.
Access Bank’s non-performing loans (NPL) stood at ₦20 billion as at 31 December 2015. The Bank’s non-
performing loans to total loans ratio thus stood at 1.5%, lower than the CBN’s maximum of 5% and the
Bank’s internal limit of 3% (2014: 1.8%). In addition, the Bank’s NPL ratio was better than peers GTBank
(2.7%) and Zenith (2.2%). A breakdown of non-performing loans by lending sector reveal that impairment was
skewed towards the general commerce, oil & gas and construction sectors. The impact of impaired loans
remain moderated by a continued year-on-year growth in the Bank’s loan portfolio. Should the Bank not have
experienced significant loan growth during the year, its NPL ratio would have stood at 1.8%.
Further examining non-performing loans under the prudential approach, we note that NPLs comprising
substandard, doubtful and lost loans amounted to ₦31.6 billion translating to an NPL ratio of 2.4%. Sub-
standard loans accounted for 17.7% of NPLs while doubtful and lost loans accounted for 20.9% and 61.4%
respectively. Access Bank did not write off any impaired loans as uncollectable during the year, in
comparison with the ₦6.1 billion expunged from the Bank’s books in 2014. We however note efforts to
10.0%
-100.0%
37.8%
36.1%
-15.6%
97.1%
-9.9%
211.7%
9.5%
7.0%
18.1%
-8.3%
113.2%
-19.3%
-99.7%
-24.5%
51.9%
56.2%
-47.8%
219.4%
13.9%
6.6%
29.5%
-3.4%
10.3%
-150% -100% -50% 0% 50% 100% 150% 200% 250%
Agriculture
Capital Markets
Construction
Education
Finance & Insurance
General
General Commerce
Government
Information & Communication
Manufacturing - others
Basic Metal Products
Cement
Conglomerate
Steel rolling mills
Flourmills & Bakeries
Food Manufacturing
Real Estate
Transportation & Storage
Power & Energy
Professional, Scientific and Technical activities
Others
Oil& Gas Downstream
Oil& Gas Services
Oil& Gas Upstream
Crude Oil Refining
10
Access Bank Plc 2016 Credit Rating
restructure substandard and doubtful loans. During the year under review, the Bank restructured 2.2% of its
loan book and converted some FCY loans to LCY loans in a bid to preserve asset quality given FX
accessibility constraints for some of its obligors.
In view of the macroeconomic environment and expected impairments particularly relating to oil & gas,
general commerce and manufacturing risk assets, Access Bank increased its loan loss provision to 2% of
gross loans (2014: 1.6%) and 134.6% of non-performing loans (2014: 85.2%). The increase in provisions was
largely on account of additional provisioning made for the general commerce sector, oil & gas – services,
upstream & downstream sectors as well as the construction, real estate, manufacturing and retail lending
sectors. This is in addition to the regulatory 2% additional provisioning for all performing loans effected by
the CBN in 2015.
We expect further asset quality pressures for all the Nigerian banks in the short to medium term.
Nonetheless, we consider Access Bank Plc’s asset quality to be good. We expect its risk management
framework to continue to keep asset quality within acceptable levels.
11
Access Bank Plc 2016 Credit Rating
RISK MANAGEMENT The Bank’s risk management unit acts as a second line of defence after policies have been defined by the
Board of Directors where oversight of the Bank’s risk management function is domiciled. Access Bank’s Board
of Directors have demonstrated accomplishment in the areas of compliance, market risk, credit risk,
operational risk, reputational risk, strategic risk and general oversight. The Board is supported by the
management committees -Board Risk Management Committee, Board Committee of Human Resources, Board
Credit Finance Committee and Board Audit Committee. Access Bank’s Enterprise Risk Management
Framework designates a Head of Risk Management to each of its Strategic Business Units namely corporate
banking, personal banking, business banking and commercial banking divisions. The Heads of Risk
Management units report to the Chief Risk Officer who reports to the Group Managing Director and the
Board.
Access Bank Plc employs a robust risk management function which focuses on risk culture embedding, bank-
wide. Its risk management policies are frequently reviewed and realigned in accordance with the changing
operating terrain. In 2015, Access Bank executed a structural realignment of its risk functions in support of a
new 5-year retail business drive. This includes the establishment of dedicated risk management teams with
an overall value chain model perspective. Furthermore, the Unit has daily portfolio review meetings and fully
rolled out a risk based performance measurement initiative in 2015. This initiative includes charges for
concentrations in accordance with risk charge metrics already set. We also note the various electronic
banking platforms the Bank has deployed, including Access Mobile, Access Money, Online Banking, Primus
and Pay with Capture platforms thus making a healthy risk management profile imperative.
Credit Risk -The Bank adopts a risk appetite rating of ‘2’ on the Banks ‘1-4’ risk appetite scale, indicative of an
overall moderate risk appetite. An internal rating model guides this process in compliance with a portfolio
plan for each business unit that adheres to monitoring benchmarks and lending limits. Access Bank’s internal
rating model takes into account financial and non-financial parameters with different risk weightings
attached, as well as risk acceptance criteria. The Bank’s internal rating model is currently being upgraded to
align the bank’s strategy more closely with Basle provisions using the standardized approach. Lending limits
are also checked daily.
In 2015, efforts were particularly concentrated in portfolio planning, stress testing, steps to de-risk early,
tightening of collections and internal risk pricing as well as the conversion of FCY exposures. The Bank also
reinforced dual ownership of risk assets between relationship managers and the credit risk unit as well as
deployed a collateral management application that manages collateral in a centralized location accessible to
all authorised users.
Market Risk – Market risk functions are guided by limits and benchmarks approved by Executive Management
which are monitored regularly. Access Bank’s exposure to market risk applies particularly to its trading as
well as lending business. The Bank values its trading securities daily on a mark-to-market basis, utilising a
mark-to-model method where market prices are not available. The Bank employs various trading limits
12
Access Bank Plc 2016 Credit Rating
which are monitored by the various risk management units in addition to internal control, treasury and
compliance who provide reports to Board and Management committees.
Operational Risk – Access Bank’s operational risk function in 2015 was characterised by the commencement
of full risk automation and integration. The Unit measures its operational risk using the value at risk (VaR)
methodology, regular and event driven stress testing as well as mark-to-market and sensitivity analyses. The
Bank reviews its operations policy at least annually. In the year under review, Access Bank was served
penalties totalling ₦408.9 million for various infractions most notably a penalty for the delay in remitting an
undisbursed loan under the Commercial Agriculture Credit Scheme. In addition non-compliance with
Regulation 13 of the Banks and Other Financial Institutions Act (BOFIA) with respect to cash ratio
requirement on equity investments and other Know-You-Customer (KYC) requirements attracted penalties.
We note a need to improve compliance in view of infractions penalised for, in the year under review
In the year under review, the Bank recorded 323 fraud incidences, particularly relating to ATM and e-banking
amounting to a ₦184.5 million loss to the Bank.
We also note improvements to the Bank’s automated risk reporting portal and collateral management
deployed in 2015 enhancing accessibility to information for authorised personnel. In addition, Access Bank’s
core banking application FlexCube was upgraded in the year under review alongside a variety of software and
connectivity updates. Access Bank continues to make significant improvements in the technology used to
drive its business thus mitigating the impact of operational losses.
We consider the Bank’s risk management framework to be acceptable.
13
Access Bank Plc 2016 Credit Rating
EARNINGS Access Bank Plc recorded a net revenue from funds totalling ₦76.8 billion in the year under review. Net
revenue from funds was buoyed by a 15.3% growth in interest income from an enlarged loan portfolio.
However, a 32.6% growth in interest expense to ₦94 billion constrained net revenue from funds due to
increase in expensive tenored deposits. In addition, loan loss expense increased by 25.2% to ₦13.3 billion in
line with prudential requirements (2014: ₦10.6 billion). Access Bank Plc recorded a lower net interest margin
of 48.9% from 55.6% recorded in the prior year, lower than peers GTBank (70%) and Zenith (64%). This was
on the back of higher interest expenses caused in part by the higher cost of FX debt service, and lower
interest income due to its main exposure to low yielding assets such as government bonds and its exposure
to large corporates. The Bank faces intense competition in the corporate banking business segment which
continues to hamper its margins.
Figure 5: Breakdown of Total Revenue by Business Line
Access Bank’s profitability in 2015 was essentially based on the rise in non-interest income. Non-Interest
income jumped by a significant 116% to ₦117.9 billion for the 2015 financial year. This spike was driven by
fees and other income amounting to ₦91.9 billion as well as significant foreign exchange income which
grew from a ₦3.4 billion loss in 2014 to ₦23.2 billion profit in the year under review. Foreign exchange
income accounted for 11.9% of net earnings for the year as the Bank capitalized on naira volatilities in the
first half of the year. Access Bank engaged in derivative transactions with the Central Bank of Nigeria as well
as customers. This source of income arose as a result of efforts to protect customers and the Bank from naira
depreciation in foreign exchange terms by engaging in hedge transactions. In view of the recently released
foreign exchange market guidelines and as the currency markets stabilize, we expect this source of income
to be significantly tempered. Fees and commission income was also boosted by the issuing of corporate
cards which commenced in 2015.
Operating expenses trended up by 48% to ₦146 billion in the period under review. Most notably amongst
operating expenses was staff costs which grew by 39% to ₦35.7 billion on the back of an increase in the
number of staff by 172 persons. In addition, technology related expenses rose as the Bank upgraded a
number of its IT operating platforms in 2015. This is in addition to a growth in administrative expenses
39%
42%
39%
35%
8%
8%
14%
14%
0 50 100 150 200 250 300 350 400
2014
2015
₦ billion
Corporate & Investment Banking Commercial Banking Business Banking Personal Banking
14
Access Bank Plc 2016 Credit Rating
particularly travel costs and marketing expenses with its new retail drive. Access Bank Plc’s cost-to-income
ratio (CIR) measured in operating expenses to net earnings, however stood at par with the prior year at 66.6%
Access Bank has traditionally recorded high overhead cost levels compared to its earnings. The Bank’s CIR
has consistently been higher than peers GTBank (41%) and Zenith Bank (57%). In our opinion, Access Bank
Plc must make concerted efforts to rein in operating expenses to preserve profitability. This is in view of
further inflationary pressures expected in 2016 on the back of adverse macroeconomic challenges currently
being experienced. Nonetheless, we note positively that the Bank is executing a cost reduction programme
to optimize its cost profile. The Bank’s CIR improved to 60.1% in Q1 2016.
The Bank recorded an overall improvement in profitability year-on -year. Pre-tax return on average assets
and average equity trended upwards to 2.6% and 20.5% respectively (ROA FY2014: 2.2%, ROE FY2014:
17.4%). These ratios were comparable to Zenith Bank but weaker than GTBank. We note that Access Bank’s
profitability profile in 2015 was largely upheld by strong foreign exchange income. Without this, ROA and
ROE would have deteriorated to levels lower than the previous year at 1.7% and 13.2% respectively.
Subsequent to year-end 2015, the Bank’s annualised pre-tax return on average assets and pre-tax return on
average equity strengthened to 2.9% and 22.1% respectively as at Q1 2016.
Figure 6: Profitability Ratios
We consider Access Bank’s profitability to be good. Nonetheless, we note that the Bank needs to strengthen
sustainable interest income.
2.2
%
17
.4%
55
.6%
65
.9%
2.6
%
20
.5%
48
.9%
66
.6%
4.1
%
29
.5%
70
.0%
41
.4%
2.5
%
21
.7%
63
.8%
57
.4%
ROA ROE NIM CIR
Access 2014 Access 2015 GTBank 2015 Zenith 2015
15
Access Bank Plc 2016 Credit Rating
CAPITAL ADEQUACY Access Bank Plc’s majority shareholders include Stanbic Nominees Nigeria (14.8%) and Blakeney GP, III
Limited (6.1%). Core capital stood at ₦360.4 billion as at 31 December 2015, a 31.5% growth over the prior
year following a successful rights issue between January and March 2015 which saw the Bank raise ₦42
billion. The Bank’s capital base stood well above the ₦50 billion regulatory requirement for a Nigerian
commercial bank licensed to operate internationally. Core capital remained sufficient to fund 13.2% of total
assets and contingents compared to 12.5% in 2014. Tier 1 capital was 91.3% of adjusted capital, well above
the regulatory minimum of 50% while Tier 1 capital stood at 19.2% of risk weighted assets. We consider the
quality of the Bank’s capital to be good.
Access Bank’s Tier 2 capital amounted to ₦78.5 billion, as at 31 December 2015, the amortized cost of a
$400 million Eurobond Debt security issued in December 2014 for a 7-year period. The principal amount is
payable at maturity but interest payments are made semi-annually.
Despite expected pressures on capitalization for banks in view of higher credit risks due to the difficult
operating environment, the Bank’s Basle II ratio for the period under review improved to 18% from 17% in
the prior year. The marginal improvement in capital ratio reflected the conservative balance sheet growth,
increase in Tier 2 bonds as well as further internal generation of capital. This ratio is above the minimum
15% required for international commercial banks as at year-end 2015 and the newly prescribed minimum of
16% (effective July 2016) for strategically important banks, of which Access Bank is one. At this level the
Bank’s capital adequacy stood at par with selected industry peer GTBank (18%) but lower than Zenith (20%).
Figure 7: Capital Adequacy Ratios
We consider the Bank’s capital ratios to be adequate. We expect capitalisation to be upheld by internal
capital generation and conservative growth in risk-weighted assets in the short term.
18
.0%
17
.0%
18
.2%
17
.5%
20
.0%
19
.0%
15.5%
16.0%
16.5%
17.0%
17.5%
18.0%
18.5%
19.0%
19.5%
20.0%
20.5%
2015 2014
Access GTBank Zenith
16
Access Bank Plc 2016 Credit Rating
LIQUIDITY AND LIABILITY GENERATION During the 2015 financial year, Access Bank’s total deposits grew by 8% to ₦1.6 trillion. Growth in total
deposits was tempered in the year under review partly impacted by the remittance of government funds to
the Treasury Single Account (TSA) domiciled with the Central Bank of Nigeria. Total deposits comprising
local currency deposits (67.7%) and foreign currency deposits (32.3%) were sufficient to fund 58.5% of the
Bank’s total assets and contingents and 119.6% of gross loans and advances. The Bank’s corporate business
serving multinationals and well-structured organizations with turnovers above ₦10 billon provided 27% of
total deposits. Its commercial banking business line serving organizations with annual turnovers between ₦1
billion and ₦10 billion as well as government organisations provided 40% of total deposits. The Bank’s
business banking business focusing on SMES with turnovers less than ₦1 billion accounted for 12% while
personal banking business largely retail, value chain and high net worth individuals accounted for 21% of
total deposits. We consider renewed efforts in driving its retail business focusing on a value chain model that
mirrors the strength of its corporate and commercial banking strategy and expect further growth in business
and personal banking deposits in 2016.
Figure 8: Breakdown of Deposits by Business Line (2015) Figure 9: Breakdown of Deposits by Region (2015)
We note continued skewness in the Bank’s LCY deposit mix in favour of expensive tenored deposits, a trend
identified over the last five years. Expensive tenored deposits accounted for 58.7% of total LCY deposit
liabilities as at 31 December 2015 vis-a-vis low cost demand and savings deposits. Thus, the Bank’s
estimated weighted average cost of funds (WACF) remained elevated at a high of 5.7% for the 2015 financial
year (2014: 4.6%). We believe that reliance on behaviourally long tenured deposits makes the Bank
vulnerable to repricing risks especially in periods of volatile interest rates. Given Access Bank’s size, we
remain concerned about its inability to significantly grow market share of retail funding, particularly savings
deposits, like some of its contemporaries in the Top 5 category.
The Bank’s FCY deposits continued on a growth trajectory in the 2015 financial year to ₦513.4 billion (2014:
₦451.4 billion). We believe this is partly due to customers’ balances awaiting naira devaluation.
Corporate &
Investment
Banking
27%
Commercial
Banking
40%
Business
Banking
12%
Personal
Banking
21%
Rest of Africa
8% Europe
1%
Nigeria
91%
17
Access Bank Plc 2016 Credit Rating
Access Bank Plc’s liquid assets grew by 46.6% to ₦487.1 billion in the period under review making up
approximately 17.9% of total assets and contingents. This growth was on account of an increase in its
investment securities which consist mainly of available for sale government securities. Liquid assets to LCY
deposits increased to 47.5%, remaining well above the regulatory benchmark of 30%. The Bank has a good
reputation in the money market and we do not doubt its ability to refinance should the need arise. In
addition, Access Bank has a contingency funding plan in place to be used in periods of stress.
As at 31 December 2015, FCY borrowings totalled ₦199.8 billion, a combination of on-lending facilities and
the amortised cost of $400 million subordinate notes issued in December 2014 (₦78.5 billion) maturing
December 2021. The Bank also had confirmed standby lines of credit from its various correspondent banks
totalling $1.9 billion as at 31 December 2015.
We note a degree of mismatch in the maturity profile of deposit liabilities and loans, in that ₦690.6 billion in
loans mature over 360 days as compared with nil deposit liabilities in the same period. We are however
comforted by the Bank’s existing Eurobond as well as deposits which are behaviourally long dated often on a
rolling contractual basis. Typically, the Bank’s Eurobond proceeds have funded FCY loans maturing about the
same period as the Eurobond.
We consider the Bank’s liquidity position to be good with a sturdy reputation to refinance should the need
arise.
OWNERSHIP, MANAGEMENT & STAFF Access Bank Plc is a listed company on the Nigerian Stock Exchange (NSE) and had 820,964 shareholders as
at 31 December 2015. The Bank’s shareholding structure was as follows.
Table 4: Shareholding Structure
Shareholder % Shareholding 2015 % Shareholding 2014
Stanbic Nominees Nigeria Limited 14.79% 32.09%
Blakeney GP 6.08% 4.29%
Others 79.13% 63.62%
Stanbic Nominees is a nomineeship company holding the shares on behalf of a shareholder/shareholders
while Blakeney GP is an institutional investor like based in the United Kingdom but with historical presence
in Africa and the Middle East. Members of the Bank’s Board of Directors control (directly & indirectly) 11% of
the Bank’s paid up share capital while foreign shareholders account for 6%. We observe a degree of key man
risk in that the Group Managing Director controls an 8.6% direct/indirect stake.
Access Bank’s affairs are steered by a 14-member Board of Directors. Collectively the Board controls a 9.6%
equity stake and comprises seven executive directors and seven non-executive directors (including two
independent directors). The Chairperson, Mrs. Mosun Belo-Olusoga was appointed effective July 2015
18
Access Bank Plc 2016 Credit Rating
following the retirement of Mr Gbenga Oyebode as Chairman, having completed the regulatory maximum
tenure.
Mr. Herbert Wigwe is the Group Managing Director and Chief Executive Officer of Access Bank Plc. Mr.
Wigwe is a Chartered Accountant and commenced his career with Coopers & Lybrand Associates. Mr. Wigwe
then joined Guaranty Trust Bank Plc in 1991 where he managed several portfolios including financial
institutions, Corporates and Multinationals over an 11 year period. Mr. Wigwe left GTBank in March 2002, as
an Executive Director to join Access Bank Plc as Deputy Managing Director. Mr. Wigwe is supported by a
Deputy Group Managing Director and five members of senior management.
Access Bank employed an average of 2,828 persons in 2015 (2014: 2,721 persons). As a result, gross
employee expenses trended upwards by a significant 39% to ₦35.7 billion due to an increase in the number
of staff. In the same vein, the Bank’s staff cost per employee grew to ₦12.6 million from ₦9.4 million
recorded in the prior year, indicative of changes to the organization’s remuneration structure. Net earnings
per staff improved considerably to ₦68.8 million (2014: ₦48.8 million). The Bank’s net earnings per staff was
better than peers GTBank (₦57.8 million) and Zenith Bank (₦43.1 million).
We consider positively the breadth of the Bank’s management and note relentless efforts to ensure an
efficient operating structure, leveraging on cutting-edge technology to facilitate operations. Thus, in our
opinion, Access Bank’s performance is good and its management team experienced.
MARKET SHARE Access Bank Plc ranks fourth among the 24 banks in the Country on the basis of total assets. Access Bank had
until 2015 focused on corporate and commercial banking business but has now renewed its drive to grow its
retail business as part of a 5-year strategic project. Maintaining an overall moderate risk appetite towards
asset creation and liability generation, the Bank has consistently grown market share particularly over the
last 3 years with respect to total assets and contingents, LCY deposits, loans & advances as well as net
earnings and pre-tax profit.
Table 5: Market Share Indicators
Name Access 2015 Access 2014 GTBank 2015 Zenith 2015
LCY Deposits 7.8% 6.8% 8.4% 12.6%
Total Assets & Contingents 9.2% 7.2% 9.4% 13.5%
Total Loans & Leases (net) 11.0% 9.1% 10.7% 14.5%
Net Earnings 11.3% 7.1% 11.2% 13.3%
Profit before Tax 13.8% 7.4% 24.0% 24.5%
We consider Access Bank’s market share to be good.
19
Access Bank Plc 2016 Credit Rating
OUTLOOK
Access Bank Plc’s strategy which has seen the Bank steadily enhance its brand equity through customer
satisfaction, continues to be reflected in consistent improvements to the Bank’s financial performance over
the last three years. Subsequent to year-end 2015, the Bank recorded a further enhanced annualized pre-tax
return on average assets of 2.9% and an annualized pre-tax return on average equity of 22.1%. In addition,
the Bank’s cost –to – income ratio of 60.1% was better than the 66.6% recorded for FY2015. The Bank’s NPL
ratio of 1.5% as at 31 December 2015 remained at this level in Q1 2016.
Looking ahead, the Bank expects to focus on transaction based lending thus buoying fee income, as well as
grow on-lending for state governments and continually improve credit risk mitigation techniques. Whilst
pressures are expected in business with the oil & gas, general commerce and manufacturing sectors, the
Bank bullishly looks to grow retail and SME lending, though targeted at the value chains of its corporate and
commercial customers as well as export businesses.
We expect profitability to be satisfactory upheld by good asset quality despite prevailing difficult economic
conditions in Nigeria. We note that the Bank must prudently ensure cost reduction in line with its target of a
15% year-on-year decline in operating expenses, in order to preserve profitability. We also expect the Bank’s
capital to remain adequate, upheld by retained earnings, baring no significant adverse changes to asset
quality.
We hereby attach a stable outlook to Access Bank Plc.
20
Access Bank Plc 2016 Credit Rating
FINANCIAL SUMMARY
ACCESS BANK PLC
31-Dec-15 31-Dec-14 31-Dec-13
STATEMENT OF FINANCIAL POSITION AS AT ₦'000 ₦'000 ₦'000
ASSETS
1 Cash & equivalents 131,704,943 4.8% 58,606,339 2.7% 134,430,561 7.1%
2 Government securities 355,346,495 13.1% 273,635,719 12.4% 258,866,374 13.7%
3 Stabilisation securities 59,123,792 3.1%
4 Quoted investments 63,979 0.0% 79,440 0.0% 104,918 0.0%
5 Placements with discount houses
6 LIQUID ASSETS 487,115,417 17.9% 332,321,498 15.1% 452,525,645 23.9%
7 BALANCES WITH NIGERIAN BANKS 26,111,216 1.0% 36,965,179 1.7% 89,433,649 4.7%
8 BALANCES WITH BANKS OUTSIDE NIGERIA
9 Direct loans and advances - Gross 1,330,545,199 48.9% 1,092,698,163 49.7% 761,598,821 40.2%
10 Less: Cumulative loan loss provision (26,915,169) -1.0% (17,012,478) -0.8% (13,249,429) -0.7%
11 Direct loans & advances - net 1,303,630,030 47.9% 1,075,685,685 48.9% 748,349,392 39.5%
12 Advances under finance leases - net
13 TOTAL LOANS & LEASES - NET 1,303,630,030 47.9% 1,075,685,685 48.9% 748,349,392 39.5%
14 INTEREST RECEIVABLE
15 OTHER ASSETS 89,026,988 3.3% 73,077,452 3.3% 44,399,035 2.3%
16 DEFERRED LOSSES 10,180,832 0.4% 10,128,537 0.5% 9,847,853 0.5%
17 RESTRICTED FUNDS 248,182,477 9.1% 255,603,361 11.6% 171,944,537 9.1%
18 UNCONSOLIDATED SUBSIDIARIES & ASSOCIATES 45,439,246 1.7% 40,120,572 1.8% 39,551,804 2.1%
19 OTHER LONG-TERM INVESTMENTS 131,379,563 4.8% 89,456,305 4.1% 82,177,299 4.3%
20 FIXED ASSETS & INTANGIBLES 70,878,292 2.6% 68,597,141 3.1% 65,864,798 3.5%
21 TOTAL ASSETS 2,411,944,061 88.6% 1,981,955,730 90.1% 1,704,094,012 90.0%
22 TOTAL CONTINGENT ASSETS 309,707,958 11.4% 218,053,005 9.9% 189,806,599 10.0%
23 TOTAL ASSETS & CONTINGENTS 2,721,652,019 100% 2,200,008,735 100% 1,893,900,611 100%
CAPITAL & LIABILITIES
24 TIER 1 CAPITAL (CORE CAPITAL) 360,428,904 13.2% 274,155,786 12.5% 245,181,997 12.9%
25 TIER 2 CAPITAL 78,516,655 2.9% 73,155,391 3.3%
26 Foreign Currency Borrowings 302,919,987 11.1% 146,345,767 6.7% 120,342,026 6.4%
27 Demand deposits 315,979,951 11.6% 236,042,594 10.7% 372,484,100 19.7%
28 Savings deposits 127,786,239 4.7% 121,351,057 5.5% 106,197,345 5.6%
29 Time deposits 632,818,563 23.3% 586,973,213 26.7% 455,231,840 24.0%
30 Inter-bank takings 1,522,968 0.1% 72,171,314 3.3% 7,161,530 0.4%
31 TOTAL DEPOSIT LIABILITIES - LCY 1,078,107,721 39.6% 1,016,538,178 46.2% 941,074,815 49.7%
32 Customers' foreign currency balances 513,449,947 18.9% 451,366,313 20.5% 337,397,330 17.8%
33 TOTAL DEPOSIT LIABILITIES 1,591,557,668 58.5% 1,467,904,491 66.7% 1,278,472,145 67.5%
34 INTEREST PAYABLE
35 OTHER LIABILITIES 78,520,847 2.9% 20,394,295 0.9% 60,097,844 3.2%
36 TOTAL CAPITAL & LIABILITIES 2,411,944,061 88.6% 1,981,955,730 90.1% 1,704,094,012 90.0%
37 TOTAL CONTINGENT LIABILITIES 309,707,958 11.4% 218,053,005 9.9% 189,806,599 10.0%
38 TOTAL CAPITAL, LIABILITIES & CONTINGENTS 2,721,652,019 100% 2,200,008,735 100% 1,893,900,611 100%
Proof
BREAKDOWN OF CONTINGENTS
39 Acceptances & direct credit substitutes 218,053,005 8.0% 218,053,005 9.9% 189,806,599 10.0%
40 Guarantees, bonds etc..
41 Short-term self liquidating contingencies
21
Access Bank Plc 2016 Credit Rating
ACCESS BANK PLC
STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31-Dec-15 31-Dec-14 31-Dec-13
₦'000 ₦'000 ₦'000
42 Interest income 184,047,834 61.0% 159,578,184 74.5% 127,710,965 71.7%
43 Interest expense (94,001,878) -31.1% (70,911,063) -33.1% (61,025,846) -34.3%
44 Loan loss expense (13,287,613) -4.4% (10,609,300) -5.0% 7,508,216 4.2%
45 NET REVENUE FROM FUNDS 76,758,343 25.4% 78,057,821 36.4% 74,193,335 41.7%
46 ALL OTHER INCOME 117,875,166 39.0% 54,591,795 25.5% 50,384,996 28.3%
47 NET EARNINGS 194,633,509 64.5% 132,649,616 61.9% 124,578,331 70.0%
48 Staff costs (35,699,471) -11.8% (25,611,051) -12.0% (25,937,818) -14.6%
49 Depreciation expense (9,086,366) -3.0% (8,337,641) -3.9% (7,780,207) -4.4%
50 Other operating expenses (84,808,733) -28.1% (53,432,874) -24.9% (61,629,925) -34.6%
51 TOTAL OPERATING EXPENSES (129,594,570) -42.9% (87,381,566) -40.8% (95,347,950) -53.5%
52 PROFIT (LOSS) BEFORE TAXATION 65,038,939 21.5% 45,268,050 21.1% 29,230,381 16.4%
53 TAX (EXPENSE) BENEFIT (6,253,169) -2.1% (6,201,296) -2.9% (5,153,552) -2.9%
54 PROFIT (LOSS) AFTER TAXATION 58,785,770 19.5% 39,066,754 18.2% 24,076,829 13.5%
55 NON-OPERATING INCOME (EXPENSE) - NET 138,975 0.0% 874,372 0.4% 2,135,015 1.2%
56 PROPOSED DIVIDEND (15,241,014) -5.0% (13,729,777) -6.4% (19,450,480) -10.9%
57 GROSS EARNINGS 301,923,000 100% 214,169,979 100% 178,095,961 100%
58 AUDITORS PWC PWC PWC
59 OPINION CLEAN CLEAN CLEAN
KEY RATIOS 31-Dec-15 31-Dec-14 31-Dec-13
EARNINGS
60 Net interest margin 48.9% 55.6% 52.2%
61 Loan loss expense/Interest income 7.2% 6.6% -5.9%
62 Return on average assets 2.6% 2.2% 1.6%
63 Return on average equity 20.5% 17.4% 12.1%
64 Operating Expenses/Net earnings 66.6% 65.9% 76.5%
65 Gross earnings/Total assets & contingents 12.3% 10.5% 9.9%
EARNINGS MIX
66 Net revenue from funds 39.4% 58.8% 59.6%
67 All other income 46.1% 41.2% 40.4%
LIQUIDITY
68 Total loans & leases - net/Total lcy deposits 55.5% 41.3% 39.1%
69 Liquid assets/Total lcy deposits 47.5% 31.5% 57.3%
70 Demand deposits/Total lcy deposits 29.3% 23.2% 39.6%
71 Savings deposits/Total lcy deposits 11.9% 11.9% 11.3%
72 Time deposits/Total lcy deposits 58.7% 57.7% 48.4%
73 Inter-bank borrowings/Total lcy deposits 0.1% 7.1% 0.8%
74 Interest expense - banks/Interest expense 7.4% 4.8% 4.4%
75 NET FOREIGN CURRENCY ASSETS (LIABILITIES) (513,449,947) (451,366,313) (337,397,330)
22
Access Bank Plc 2016 Credit Rating
ACCESS BANK PLC
KEY RATIOS CONT'D 31-Dec-15 31-Dec-14 31-Dec-13
ASSET QUALITY
76 Performing loans (₦'000) 1,310,548,292 1,072,731,642 743,674,642
77 Non-performing loans (₦'000) 19,996,907 19,966,521 17,924,179
78 Impaired Credits/Total loans - Gross 1.5% 1.8% 2.4%
79 Loan loss provision/Total loans - Gross 2.0% 1.6% 1.7%
80 Loan loss provision/Non-performing loans 134.6% 85.2% 73.9%
81 Risk-weighted assets/Total assets & contingents 65.9% 66.7% 59.9%
CAPITAL ADEQUACY
82 Adjusted capital/risk weighted assets 17.2% 19.9% 17.0%
83 Tier 1 capital/Adjusted capital 91% 89% 120%
84 Total loans - net/Adjusted capital (Times) 29% 27% 26%
85 Capital unimpaired by losses (₦'000) 350,248,072 264,027,249 235,334,144
CAPITAL ADEQUACY STRESS TEST
86 Total shareholders' funds (N'000) 292,625,254 193,120,787 193,120,787
87 Cumulative loan loss provision (actual reserves) 17,012,478 13,249,429 13,249,429
88 Equity before all provision (line 86 + line 87) 309,637,732 206,370,216 206,370,216
89 Required reserves* 87,690,000 68,503,273 68,503,273
90 Equity after required reserves (line 88 - line 89) 221,947,732 137,866,943 137,866,943
91 Equity after required reserves/risk weighted assets 15.1% 12.1% 12.1%
STAFF INFORMATION
86 Net earnings per staff (₦'000) 68,824 48,750 50,621
87 Staff cost per employee (₦'000) 12,624 9,412 10,540
88 Staff costs/Operating expenses 27.5% 29.3% 27.2%
89 Average number of employees 2,828 2,721 2,461
90 Average staff per branch 9 9 8
OTHER KEY INFORMATION
91 Legal lending limit(₦'000) 70,049,614 52,805,450 47,066,829
92 Other unamortised losses(₦'000) NONE NONE NONE
93 Unreconciled inter-branch items (₦'000) DR/(CR) NONE NONE NONE
94 Number of branches 305 310 310
95 Age (in years) 27 26 25
96 Government stake in equity - - -
Actual Actual Actual
MARKET SHARE OF INDUSTRY TOTAL 2015 2014 2013
97 Lcy deposits (excluding interbank takings) 7.8% 6.8% 6.7%
98 Total assets & contingents 9.2% 7.2% 7.0%
99 Total loans & leases - net 11.0% 9.1% 8.0%100 Net earnings 7.1% 7.5% 7.5%
101 Profit before tax 7.4% 6.1% 6.1%
102 Cash dividend 7.3% 8.3% 8.3%
100 Non Interest Income 17.9% 7.8% 8.8%
101 Net Interest Income 6.3% 6.6% 5.3%
*: *This is calculated as 100% of non-performing loans, 5% of performing loans (including direct credit substitutes disclosed
as contingent assets) and 1% for all other assets excluding cash, federal government obligations, placements with
discount houses and balances at CBN.
23
Access Bank Plc 2016 Credit Rating
RATING DEFINITIONS
A "+" (plus) or "-" (minus) sign may be assigned to ratings from Aa to C to reflect comparative position within
the rating category. Therefore, a rating with + (plus) attached to it is a notch higher than a rating without the
+ (plus) sign and two notches higher than a rating with the - (minus) sign.
Aaa A financial institution of impeccable financial condition and overwhelming capacity to meet obligations as
and when they fall due. Adverse changes in the environment (macro-economic, political and regulatory) are
unlikely to lead to deterioration in financial condition or an impairment of the ability to meet its obligations
as and when they fall due. In our opinion, regulatory and/or shareholder support will be obtained, if required.
Aa A financial institution of very good financial condition and strong capacity to meet its obligations as and when
they fall due. Adverse changes in the environment (macro-economic, political and regulatory) will result in a
slight increase the risk attributable to an exposure to this financial institution. However, financial condition
and ability to meet obligations as and when they fall due should remain strong. Although regulatory support is
not assured, shareholder support will be obtained, if required.
A A financial institution of good financial condition and strong capacity to meet its obligations. Adverse changes
in the environment (macro-economic, political and regulatory) will result in a medium increase in the risk
attributable to an exposure to this financial institution. However, financial condition and ability to meet
obligations as and when they fall due should remain largely unchanged. In our opinion, shareholder support
should be obtainable, if required.
Bbb A financial institution of satisfactory financial condition and adequate capacity to meet its obligations as and
when they fall due. It may have one major weakness which, if addressed, should not impair its ability to meet
obligations as and when due. Adverse changes in the environment (macro-economic, political and regulatory)
will result in a medium increase in the risk attributable to an exposure to this financial institution.
Bb Financial condition is satisfactory and ability to meet obligations as and when they fall due exists. May have
one or more major weaknesses. Adverse changes in the environment (macro-economic, political and
regulatory) will increase risk significantly.
B Financial condition is weak but obligations are still being met as and when they fall due. Has more than one
major weakness and may require external support, which, in our opinion, is not assured. Adverse changes in
the environment (macro-economic, political and regulatory) will increase risk significantly.
C Financial condition is very weak. Net worth is likely to be negative and obligations may already be in default.
D In default.
www.agusto.com
© Agusto&Co.
UBA House (5th Floor)
57 Marina Lagos
Nigeria.
P.O Box 56136 Ikoyi
+234 (1) 2707222-4
+234 (1) 2713808
Fax: 234 (1) 2643576
Email: [email protected]