As with other Nigerian banks, Access Bank Plc (ACCESS)’s operating conditions favoured non-interest earnings much to the detriment of interest earnings. Thus, while gross earnings grew by 14.81% YoY to NGN764.72 (the largest gross earnings size for a Nigerian bank in 2020FY), most of it was due to factors outside the bank’s control such as currency devaluation and relatively high prices of investment securities. We note that trading gains accounted for 134.57% of the increase in gross earnings. On the other hand, the generally depressed interest rate environment witnessed last year did not help interest income, which declined by 8.87% YoY. We are however encouraged by two factors: the bank’s robust earning assets base (+44.23 YoY % to NGN4.87trn as at 2020FY) and the rapid growth in its electronic transaction volumes. While most of its peers could not grow fee-based income due to the impact of the reduction in the Bankers’ Tariffs, ACCESS achieved a strong growth (27.06% YoY) on that front driven by significant transaction volume gains. In 2021FY, we expect interest income to come in stronger due to the uptrend in investment securities yield and higher loan pricing (Management guided on the high likelihood of repricing its risk assets during the year).
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