Access Bank is aiming high for the second-half of 2023, with expectations that its non-performing loans (NPL) ratio will continue to decline – falling further below the current three percent.
This comes alongside the bank’s aim to push its loan-to-deposit ratio beyond 40 percent by year-end, Managing Director Olumide Olatunji has said.
During a recent ‘Facts Behind the Figures’ session hosted by the Ghana Stock Exchange (GSE), Access Bank’s head expressed confidence in these targets; attributing his optimism to the bank’s performance in first-half of the year and restoration of stability in the broader economy.
“Looking at our first-half 2023 numbers, we are convinced we will meet many, if not all, of these targets,” Mr. Olatunji told stakeholders in Accra.
The bank is also projecting a capital adequacy ratio (CAR) exceeding 30 percent, a Net Interest Margin above 10 percent, and a cost-to-income ratio under 35 percent.
As at the end of June 2023, the GSE-listed bank reported a 65 percent growth in revenue; soaring from GH¢622 million the previous year to GH¢1.3billion, with an income of GH¢710million. Furthermore, its post-tax profit reached GH¢334million; a 65 percent improvement over the first-half of 2022, as indicated by unaudited results.
The financial report highlighted a 19.3 percent surge in total assets totalling GH¢10.36billion while total liabilities reached GH¢9.02billion, with deposits contributing GH¢7.34billion. Access Bank is also focused on reducing its funding cost from six to seven percent to a range of three to four percent on the back of increased customer deposits, its MD said.
An expansion in gross advances from GH¢1.57billion in June 2022 to GH¢2billion in 2023 led to a decrease in the NPL ratio, from 3.49 percent to 2.93 percent. A closer look at the NPLs revealed a significant concentration in the general commerce sector, accounting for 92 percent of outstanding NPLs.
“The numbers are a testament to the way we conduct ourselves, and an endorsement of our moderate risk approach. While we continue to grow our loan book, we will not take unnecessary risks,” the Access Bank boss emphasised.
Loans were primarily distributed across various sectors, with 26.9 percent in general commerce followed by agriculture and cocoa trading at 14.7 percent, and the public sector at 14.6 percent. Local currency facilities accounted for 75 percent compared to 77 percent in June 2022.
Access Bank’s CAR decreased to 27.62 percent from 37.23 percent in June 2022, primarily due to losses incurred in 2022. However, it remained comfortably above the regulatory minimum of 10 percent…suggesting no need for imminent recapitalisation.
While the Domestic Debt Exchange Programme caused the bank’s impairment line to rise to GH¢1.2billion at the half-year juncture from GH¢104million during the comparable period of 2022, there is no need for provisions in 2023 with impairments amounting to GH¢4.8million compared to GH¢30.4million in 2022.
Access Bank’s share price began the year at GH¢4.01; but it has since experienced a 29.7 percent decline in value with a 14 percent drop in the stock’s value in August, ending the month at GH¢2.82.
Mr. Olatunji however expressed confidence that the bank’s strong fundamentals and results will ultimately translate into a more favourable market price.