Recently, Access Bank Plc engaged its investors on its ambitious plans to further cement its hold on Nigerian, African and global markets at a period when other Nigerian players are still grappling with the challenges of COVID-19 on business and economy. In this report, Festus Akanbi examines the plans laid before investors and finance industry operators

It is indeed a tough time for all the sectors of the economy globally. In Nigeria, it is tougher for service providers, who have to endure the growing customers’ frustration amidst a biting economic recession.

And for the Nigerian banks, and other providers of essential customer-driven products and services, the pressure is in many folds, no thanks to the devastating effects of COVID-19 which are forcing government and private sector operators to keep adjusting their plans and processes.

In the Nigerian banking industry, it is like a fresh beginning as operators are forced not only to safeguard the lives of their workforce and customers, but also to comply with all the safety protocols issued by the Nigerian authorities.

Even if the frequency of customer traffic into the banking halls are seriously curtailed, it does not reflect in the volume of tasks and processes taking place in the banks every day.

As events continue to unfold, a number of operators in the Nigerian banking industry have succeeded in reshaping their institutions in such a way that will not only to make them relevant in the emerging scheme of things in the Nigerian industry, but to also make their impacts felt in other parts of the African continent and beyond.

To these group of banks, it is time to fully explore all the available opportunities that will guarantee good returns on investment.

Industry analysts believe that as thoughts turn to a world beyond the immediate crisis, a strong banking sector will be needed for a strong banking environment that will emerge post-COVID era.

They therefore argued that it’s necessary for banks to continue playing a significant role in shaping the recovery and helping their customers rebuild their financial security and business health.

Access Bank Investors Engagement Forum

This was the message the board and management of Access Bank Plc, one of the front runners in the Nigerian banking industry, pushed before its current and prospective investors at the bank’s Investors’ Engagement Forum penultimate Tuesday.

The bank, which has kick-started its robust re-organisation process, has cleverly studied emerging business opportunities in Nigeria and Africa, where it already has heavy presence. It also plans to make the best of other promising regions of the world.

According to the Group Managing Director/Chief Executive, Access Bank, Herbert Wigwe, the bank is best positioned to maximise the opportunities, given its significant traction in Nigeria.

A confident Wigwe told investors that Access Bank’s strategy is supported by the bank’s experience and presence in key international markets, which enable the bank to diversify its earnings away from the volatile operating environments in Africa; Orchestrate operations as a global payments gateway; Manage its risk and exposures to soft currencies and enhance its profitability without excess risk.

He explained that Access Bank’s outside Africa subsidiaries will be anchored out of Access Bank UK.

Opting HoldCo Structure for Better Efficiency

Having identified the immense opportunity in playing at the global stage, the bank felt the next thing to do was to transit to a more formidable structure. “We will therefore re-organise to capture these opportunities by transitioning to a HoldCo structure.

Through this re-organisation, we will create new product revenues without taking additional risk for the enterprise, ensure diversification of earnings, and support outside of Africa expansion,” Wigwe said.

The HoldCo will include, Access Bank Group, Payments Business, Consumer Lending and Agency Banking and an Insurance Brokerage. Wigwe explained that the scope of Access Bank Group will consist of Nigeria, Africa and International subsidiaries.

Venturing into Insurance Business

The bank’s board, having seen a growing potential in the Nigerian insurance industry did not hesitate in approving the plan to venture in that industry.

As opportunity for increased capacity and assurance of high profit margin beckons in the insurance industry, Access Bank is poised to register its presence in a big way.

Wigwe told investors that the insurance subsidiary will adopt a dynamic and creative approach to deliver value-added services focused to meet customer insurance needs.

Already, Bancassurance Access Bank is in partnership with Coronation Insurance to offer insurance products to the Access Bank’s customers. He disclosed that Access Bank-Coronation Insurance bancassurance is already available in Nigeria and Ghana.

“Access Insurance Brokerage would adopt a dynamic and creative approach to provide a value-added insurance broking services focused to meeting customers’ insurance protection needs,” Wigwe said.

He said the bank is poised to take advantage of its presence in other African countries by capturing from the insurance industry of the host countries.

The Spread

Nigeria International Access Bank Group will include Access Bank Sierra Leone, Access Bank Gambia, Access Bank Kenya, Access Bank Zambia and Access Bank Rwanda.

Others include, Access Bank South Africa, Access Bank Mozambique, Access Bank D.R. Congo, Access Bank UK, Access Bank Lebanon, Access Bank China, Access Bank India, Access Bank Ghana, Access Bank U.A.E, and Access PFC Diamond Finance B.V. Access Bank.

Justifying the rising appetite for the market on the African continent, Wigwe said, “Our Africa expansion strategy is deliberate and disciplined, with a targeted focus and approach, supported by key enablers.”

The focus, according to him is to “become an aggregator in Africa by 1) building a global payments gateway, 2) offering holistic trade finance support and 3) offering correspondent banking.”

The bank therefore plans to focus on key markets to support regional trade by targeting new opportunity markets and positioning the Access Bank as a trade and payments gateway to the world.

The bank also plans to transform payments and remittances using cheap FX from international remittances to feed trade, leveraging Access Africa connections to wallets and payment platforms.

Economies of Scale

Wigwe told shareholders, investors and stockbrokers that Access Bank will approach target scale in countries of presence, targeting an impactful presence, reaping economies of scale, and leveraging digital and access to cheap funding sources.

The bank also plans to diversify risk and earnings, taking advantage of the expansion strategy to diversify its earnings and risk—that said, Nigeria will remain its largest market.

To this end, the banks will build on partnerships, modelling expansion strategy on partnerships with financial investors, DFIs, etc. and providing strategic support to protect and grow partners’ value.

The bank’s chief said the Africa Franchise will be complemented with strategic global locations anchored out of the Access Bank UK subsidiary.

Tapping from Gains of AfCTA

By design, the African Continental Free Trade Area (AfCTA) was due to commence on January 1, 2021. AfCTA is intended to accelerate intra-African trade and boosting Africa’s trading position in the global market by strengthening Africa’s common voice and policy space in global trade negotiations. The AfCFTA lowers trade barriers and promotes regional economic integration.

It was the profound necessity for modern and efficient banking services needed for smooth borderless trade activities under AfCTA model that the board and management of Access Bank seek to explore.

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

He said that Africa presents a market opportunity of over 1.3bn people. It is only a bank, which has sufficiently proved its capabilities at all fronts at home that can offer its service to a continent with such a large population.

The board of the bank are not oblivious to the fact that for such a humongous number of potential customers to be targeted, its digital operation has to be adopted.

The bank said it wants to be the clear-cut digital leader in Africa. Consequently, it has begun the process of digitising customer journeys, digitising products, digitising marketing and sales and digitising customer engagement.

The bank also plans data management and deepening data architecture. It is working to put data governance in place.

Already, it’s in the process of digitising subsidiaries. It is also embarking on clear operating model technology deployments.

Consistent Growth Trajectory

Access Bank has been consistent with its growth trajectory. For instance, its gross earnings were put at N592.8billion in its nine months result in 2020, a 15 per cent rise from its 2019 performance, where it posted N513.6billion in nine months.

Similarly, its operating income rose by 29 per cent, having declared N397.7billion in its first nine months in 2020 as against N307.9billion in the corresponding period of 2019.

Access Bank recorded a profit before tax of N116.6billion in its nine months result in 2020, a 16 per cent rise from its 2019 figure of N100.8billion, while its profit after tax was put at N102.3billion, whereas it posted a PAT of N88.4billion in the same period of 2019, a 16 per cent increase.

Wigwe said the bank has focused on generating sustainable revenue across all income lines.

The Managing Director explained that the revenue figures for 9M 2019 reflect revenue of Access Bank 3 –month standalone and 6-month period as a combined entity, whereas 9M 2020 revenue figures reflect revenue for the combined entity for the 9-month period.

More to Offer

Wigwe promised that the bank has more to offer through expansive retail banking growth and increased velocity of transactions; prioritising margin growth through efficiencies and by optimising value chain of wholesale banking and customers payments.

He explained that despite investment in organic and inorganic growth in the past, the bank has improved its capital ratios, given optimum capital structure (tier 1 and tier 2), adding that emphasis will continue to be on capital retention and strengthening the bank’s capital position.

Having laid its plan before the stakeholders, the time has come for the board and management of the bank to move into actions. Analysts said the bank has what it takes to put smile on the faces of its investors and customers as it enters the stage of implementation of this ambitious plan.