Access Holdings, Nigeria’s largest lender, has reported a decline in net profit for the first half of 2024, despite achieving a new revenue milestone. According to its audited earnings report, the company’s post-tax profit stood at N281.3 billion, representing a 12.8% decrease from its gross earnings of N2.2 trillion.
The revenue surge was primarily driven by loan interest and investment income, which more than doubled to N1.3 trillion. However, a significant portion of this revenue, 65.1%, was consumed by depositors’ interest and borrowing costs, resulting in net interest income of N513.4 billion.
Despite the revenue growth, Access Holdings faced significant challenges in converting revenue into profit, partly due to problematic loans. The company set aside N122.7 billion to cover potentially unrepaid loans, triple the amount allocated for the same purpose last year. This impairment charge reduced the lender’s profit to N390.7 billion.
In contrast, Nigerian banks have benefited from central bank rate hikes since May 2022, enabling them to charge higher loan interest rates. Rivals, such as Guaranty Holding Company, have reported record profits, with Guaranty’s first-half profit reaching N905.6 billion.
Access Holdings also reported significant foreign exchange gains of N253.9 billion, driven by the naira’s devaluation in January. This surge in foreign exchange rates has boosted profits for lenders holding foreign currency securities.
The company has been expanding its operations, acquiring 97% of African Banking Corporation (Tanzania) Limited and African Banking Corporation Zambia Limited earlier in the year. Access Holdings’ total assets grew to N36.6 trillion, up from N26.7 trillion at the end of 2023.
Access Holdings’ performance reflects the challenges faced by Nigerian lenders in maintaining profitability amidst economic uncertainty. Despite revenue growth, the company’s weaker net profit highlights the need for effective cost management and risk mitigation strategies. As the banking sector continues to navigate these challenges, Access Holdings will need to adapt and improve its profitability to remain competitive.
