By Uche Henry
In 2002, when a new board and management that included Aigboje Aig-Imoukhuede and Herbert Wigwe, took Access Bank from the brink, it was obvious they had a clear understanding of what they wanted in a bank that would later transition into a continental model of financial intermediation many years after.
Indeed, it goes without saying that taking a bank ranked 65th out of 89 mushroom lenders back in 2002, to become one of the first five Systemically Important Banks (SIB) in a harsh operating environment like Nigeria in less than 20 years, gives the conviction that from the onset, the managers were quite at home with what it takes to get to the top. It was also evident that there was the zeal and commitment to achieve the dream of being on top without let or distractions.
Therefore, when news of a planned takeover of the 49.9 percent of Atlas Mara’s stake in Union Bank of Nigeria began flying in the media space, no one doubted Access Bank’s capacity to add that to its fast -growing network across Africa, against management’s target of having presence in at least 22 countries of Africa by end of 2022. The move tends to open another window for a pan- African contest with two other competitors that already had strong presence in both Nigeria and the African continent.
But with a track record of successful acquisitions over the last ten that included two of Nigeria’s leading retail lenders in the defunct Intercontinental Bank PLC and Diamond Bank, the desire to extend its footprints within and outside the shores of the country has been quite compelling.
That perhaps explains why Access bank became one of the financial institutions from Africa and the Middle East to express interest in the acquisition of majority stake in Union Bank Plc and other African assets of Atlas Mara Group, a Pan-African banking group, and thereby setting the stage about its readiness to compete at the global stage.
Atlas Mara Limited, the London Stock Exchange-listed pan-African banking group founded by Mr. Bob Diamond, has been receiving offers for its 49.97 per cent holding in Union Bank of Nigeria.
As one of the five largest banks in Nigeria in terms of assets, loans, deposits and branch network; Access bank’s current expansion drive has been driven by a robust long-term approach to client solutions – providing committed and innovative advisory services to the Nigerian and African business community.
Riding on that outstanding culture of innovativeness, the bank has over these years, built strength and niche markets in corporate banking and is now applying that expertise to the retail and business banking platforms it acquired from Nigeria’s Intercontinental bank in 2012 and Diamond bank in 2019.
As part of its growth strategy, the management has focused on mainstreaming sustainable business practices into its operations, on the understanding that quality personalised financial services can be delivered to customers in a sustainable profitable, environmentally responsible, and socially relevant manner.
Since taking over from his friend and business partner, Wigwe has relentlessly driven the dream of making African a key component of its organic growth by financing the operations and development of some of Africa’s biggest companies in the construction, telecommunications, energy, oil and gas sectors.
The briefing about Access Bank’s interest in Union Bank broken a day after it announced the completion of regulatory procedures for the renaming of Grobank Limited as Access Bank South Africa Limited, indeed shows that the Lagos-based financial institution is not ready to slowdown on its management desire to offer customers more than just banking services.
With the conclusion of acquisition of Grobank Limited, Access Bank South Africa Limited appears set to capture the East and Southern African markets.
At the official closing ceremony in Sandton recently for instance , Senior executives of the two banks were upbeat about new opportunities for clients, particularly against the backdrop of the unfolding African Continental Free Trade Agreement, assuring that the bank will continue to support all its stakeholders, while opening doors to growth opportunities both in the short and long term.
For the Access Bank boss, the South African acquisition signaled the Nigerian lender’s commitment to delivering the strategic aspiration of becoming Africa’s gateway to the world in line with its vision to be the ‘World’s Most Respected African Bank.’ We look forward to the many opportunities our collective experience and deep understanding of the African market brings to our valued clients, and the journey ahead being one of great promise for our institution and the continent,” he said.
For his part, CEO of Grobank Bennie van Rooy said, “This is an extremely exciting day for the South African banking industry. Our corporate customers will now have increased access to trade finance, treasury, international payments and loans through the wider distribution network offered by Access Bank’s presence in the key trade corridors that connect Africa to the rest of the world.
Banking with Access Bank South Africa means greater security as well as access to more products and services through a best-in-class digital platform, and a full retail banking suite will soon be on offer.”
Only recently the bank had endorsed a definitive and binding agreement with ABC Holdings Limited to acquire 78.15 per cent shareholding in African Banking Corporation of Botswana Limited (BancABC Botswana). The transaction, which is subject to regulatory approvals and customary conditions precedent, is expected to close before the end of this quarter.
ABC Holdings is a subsidiary of London Stock Exchange listed group – Atlas Mara Limited.
The South African country is renowned for its quality sovereign credit rating and stability.
Access Bank’s market entry in the country as well as the sub-region, is expected to further solidify its strategy as, “a strong banking partner in key verticals across retail and corporate banking, including especially supporting trade in payments across southern Africa and Sub-Saharan Africa more broadly.”
Also commenting on the deal, Wigwe, said: “We remain committed to a disciplined and thoughtful expansion strategy in Africa, which we believe will create strong, sustainable returns for our shareholders and stakeholders at large, over the medium and long-term.
“The establishment of Access Bank through this acquisition in the Republic of Botswana will position the bank to deliver a more comprehensive set of banking solutions to its active clients in and across the SADC and COMESA regions.
“This transaction complements our recent strategic growth acquisitions in South Africa, Zambia and Mozambique. We are building a bank of the future that Africans across Africa and the world would be proud of and look forward to welcoming the employees, customers and other stakeholders of BancABC Bostawana to Access Bank.”
In the string of expansion across the African continent – including Cameroon (operating license), Kenya (Transnational Bank), Zambia (Cavmont Bank), among others, the bank has said it intends to leverage the African Continental Free Trade Area agreement (AfCFTA) to expand its footprint to 20 countries across the continent.
According to Wigwe, the Nigerian lender have enormous business opportunities across Africa, for expansion to high-potential markets, leveraging the benefits of AfCFTA.
He argued that AfCFTA, among other benefits, would expand intra-Africa trade and provide real opportunities for businesses on the continent, stressing that the bank would use its office in London to expand representative offices in India, Lebanon and China.
He stated that the plan was for the bank to establish its presence in 22 African countries so as to diversify its earnings and take advantage of growth opportunities across subsahran Africa.
“Africa has enormous potential and there are opportunities for an African bank that is well run, that understands compliance and has the capacity to support trade and the right technology infrastructure to support payments and remittances, without taking incremental risks.”
“We believe that we are best positioned to basically do all of that. Our focus is to become an aggregator in Africa and we are building a global payment gateway and providing trade finance support and correspondent banking across the continent. We are focusing on the key markets.
The approach would always be that in the country we wish to go to, that we have the right skills. We would not just be a drop in the country in which we are present, we would make sure that we have an impactful presence in each of the major countries in which we are present.
“In doing this, we are also mindful of the country we are going to so as to make sure that it is of benefit to the bank. As we do this, we are working with our friends and partners. We are diversifying our earnings away from volatile markets as well and we are orchestrating our operations from the global payments gateway and ensuring that using Access Bank UK, providing corresponding services from digital platforms, the overall profitability of our franchise,” he explained.
Commenting further, on AfCFTA, he said the bank would use its digital framework to benefit from the deal.
“Coming to Nigeria, we think we need to continue to entrench ourselves in the local market because there is still so much work to be done. So, we are doing everything possible to satisfy our customers and also to ensure that our channels are adequately secured. We are also ensuring that our staff are very efficient,” the Access Bank CEO said.
Leveraging opportunities that exist in the market, Access Bank recently disclosed plans to transit to a holding company (HoldCo) structure, having received the Approval-In-Principle from the Central Bank of Nigeria for the restructuring that will consist of four subsidiaries in order to tap into market opportunities available in the consumer lending segment, electronic payments industry and retail insurance market.
Access Bank Group will consist of Nigeria, Africa and international subsidiaries, while the payments subsidiary will leverage the strong suite of the bank’s assets, Wigwe said.
“Going into the fourth year of our 5-year cyclical strategy, our focus remains on consolidating our retail momentum and expanding our African footprint in a sustainable manner,” Wigwe said.
With regard to its financial performance, Access Bank delivered strong results in the first quarter (Q1) ended March 31, 2021 with gross earnings at N222.1 billion, up six per cent above the figures posted in the corresponding period of 2020. PBT rose by 30 per cent to N60.1 billion, from N46.2 billion, while Profit After Tax (PAT) grew by 28 per cent to N52.6 billion compared with N40.9 billion in 2020 on the back of a 13 per cent growth in operating Income and a 16 per cent reduction in interest expense.
That performance according to the CEO showed the strong capacity of the business to generate sustainable earnings on the strength of their balance sheet, diverse revenue streams and their dedicated people.
“As a result of effective implementation of our cost reduction strategy, operating expenses remained flat, despite the inflationary environment and increased regulatory cost. Our retail banking business also showed steady growth with a 112 per cent increase in revenue to N57.5 billion and a 941,631 new customer sign-on via our financial inclusion drive during the quarter. This improvement is evidenced by the consistent and robust savings account growth to N1.3 trillion , leading to a significant reduction in our cost of funds,” he said. He said the increased adoption of digital channels and the growing customer base, the bank recorded a 29 per cent growth in USSD transaction value and 40 per cent increase in mobile and internet banking transaction value.
“In line with our risk appetite and efficient risk management, our asset quality continued to improve as guided with NPL Ratio of4.0 per cent (Dec. 2020 4.3 per cent), as we intensified our recovery efforts.
“Likewise, we expanded our loan portfolio cautiously as reflected by the marginal growth in our net loans and advances to N3.65 trillion year-to-date (Dec 2020: N3.61trillion).
Furthermore, we maintained a robust capital and liquidity positions, well above regulatory levels with a Capital Adequacy Ratio of 22.2 per cent and a liquidity ratio of 48.3 per cent, positioning us to support our customers across various markets and adequately execute our expansion strategy.”
Therefore, it is expected that the bank’s aggressive expansion drive will see it contribute positively in rebuilding economies in Africa that have been ravaged by the pandemic through its support to micro, small and medium scale enterprises, corporates as well as households.