Access Bank: Connecting African markets to drive integration

 Access Bank: Connecting African markets to drive integration

We have identified Africa to be a vast pool of opportunities with over 370 million unbanked adults, $9.2 billion in remittances and cross border payments, 89 cities of over 1.3 billion inhabitants by 2025 and the overall African financial ecosystem.

The African Continental Free Trade Agreement (AfCFTA) is a continent-wide initiative aimed at driving  integration of African countries into the global economy and enhancing their bargaining power in international trade negotiations.

Thus the trade pact is designed to  tear  down barriers to commerce among African countries. It is focused on trade liberalisation across the continent and provides for progressive elimination of tariff and non-tariff barriers and development and promotion of regional and continental value chains.

A critical requirement for the achievement of these objectives is the availability of  banking institutions that connect the key markets across the continent and also facilitate payment for goods and services for African businesses.

The creation of such banking connections across the continent received a major boost this month when Access Bank completed its acquisition of GrobankLimited  in South Africa and renamed the new entity Access Bank South Africa Limited. The deal was finalized after Access Bank’s acquisition of controlling shares in the former Grobank Limited, South Africa and  the completion of all regulatory procedures.

The bank explained that acquisition among other things positions it to deliver a robust banking operation that connects key African markets.

Expressing optimism on the opportunities created by the deal for customers, Chief Executive Officer,  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.”

Similarly speaking, Group Chief Executive Officer, Access Bank, Herbert Wigwe, said: “Today’s ceremony in South Africa seals our commitment to delivering our strategic aspirations of becoming Africa’s Gateway to the World, in line with our 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.”

AfCFTA Opportunities

The creation of Access Bank South Africa is furtherance of the bank’s African Expansion strategy which is geared towards achieving its growth objectives by  leveraging opportunities provided by  AfCFTA.

In this regard, the bank recently unfolded plans to expand to eight more African countries.

The countries are Morocco, Algeria, Egypt, Ivory Coast, Senegal, Angola, Namibia and Ethiopia. Presently, the tier-one bank operates in 12 countries.

According to Wigwe, across Africa, there is an opportunity for the bank to expand to high-potential markets, leveraging the benefits of AfCFTA.

He further noted that, AfCFTA, among other benefits, would expand intra-Africa trade and provide real opportunities for Africa.

Wigwe said the bank would use its office in London to expand representative offices in India, Lebanon and China.

He stated that the plan is for the bank to establish its presence in 22 African countries so as to diversify its earnings and take advantage of growth opportunities in Africa.

According to him, 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 CEO said.

Sustaining Growth Performance

In 2020, Access Bank merged with Diamond Bank Plc in 2019. The deal was driven by the bank’s vision  “to be the world’s most respected African bank.”

Following the merger, Access Bank became one of Africa’s largest retail banks by retail customer base.

With over 900,000 shareholders, the bank has enjoyed what is arguably Africa’s most successful banking growth trend since 2009 12 years. This is reflected in the bank’s latest financial performance, which shows that Access Bank Plc is on its way to becoming one of the dominant banking institutions on  the African continent in the very near term.

According to the audited financial statements of the bank, gross earnings increased by 15 per cent, to ₦764.7 billion in 2020 from N666.75 billion in 2019.

The bank recorded 13 per cent growth in Profit Before Tax (PBT) to ₦125.9 billion in 2020 from  ₦111.9 billion in 2019.

The above led to 22 per cent growth in the bank’s total assets which grew to ₦8.68 trillion  in December 2020, from ₦7.14 trillion in December 2019.

This performance according to Wigwe reflected the effectiveness of the bank’s focus on retail banking, which led to the acquisition of   5.8 million new customers while  Customer deposits grew by 31 per cent  to ₦5.59 trillion in 2020 from  ₦4.26 trillion in 2019, with Savings Deposits rising 66 per cent to N1.3 trillion in 2020 from N789 billion in the previous year.

The growth in the bank’s retail banking in 2020 was enhanced by the  expansion of its electronic banking offerings leading to significant increase in transaction value across its various e-payment channels.

These include:  116 per cent growth in USSD transactions to N1.9 trillion in 2020 from N891 billion in 2019; 55 per cent growth in POS transaction to N798 billion from N515 billion; 24 per cent growth in ATM transactions value to N3.09 trillion from N2.49 trillion; and 40 per cent growth in Mobile & Internet transaction value to N24.03 trillion i 2020 from N17.2 trillion in 2019.

Addressing shareholders at the annual general meeting of the bank recently held in Lagos, Wigwe assured shareholders of sustained healthy dividend payout saying the bank is well positioned to achieve significant growth in profitability and pay higher dividend.

He said the shareholders should expect a better dividend that would be sustained given the various strategies put to grow the business.

According to him, Access Bank is best positioned to maximize the identified opportunities in Africa on the back of a growing customer base and the move to a cashless economy.

“We have identified Africa to be a vast pool of opportunities with over 370 million unbanked adults, US$9.2 billion in remittances and cross border payments, 89 cities of over 1.3 billion inhabitants by 2025 and the overall African financial ecosystem. We also see opportunities coming from the new African Continental Free Trade Area (AfCFTA), as it is expected to expand intra-Africa trade to 53 per cent by 2022, eliminate tariff on qualifying trade and increase financial flows,” he said.

Wigwe also highlighted opportunities in the domestic market noting that Nigeria presents several opportunities due to its large population, huge payments and remittance flows, and an emerging insurance market.

“To capture these opportunities, Access Bank will transition into a holding company structure that will enable it tap into the market opportunities that are available in the regulated banking and consumer lending market, electronic payments industry and retail insurance market. Through the restructuring, we will create new product revenues without taking incremental risks for the enterprise, ensure diversification of earnings, and support outside of Africa,” he said.

Looking ahead

Also speaking at the AGM on plans to sustain the upward trend in the bank’s performance, Chairman of Access Bank, Dr. Ajoritsedere Awosika, said “Access Bank would grow its businesses and continue to invest in IT capacity until it becomes an incredibly strong bank for retail and wholesale customers around the world.

“As we continue to consolidate the gains from our decisive approach to pushing our retail franchise, we have identified several opportunities within Africa and beyond, for Access Bank to deepen its financial services offerings to banked customers as well as extend financial services to the unbanked,” she stated.”