Access Holdings mulls additional capital to support five-year strategic plan

Access Holdings Plc said it will raise more capital outside of its internally  generated capital to fund its strategic 5-year (2023-2027) growth plan.

The Chief Executive Officer of Access Bank, Mr Roosevelt Ogbonna, disclosed this during the presentation of the Access Corporation’s corporate strategy 2023-2027.

Ogbonna noted that the corporation needs to work with its DFI partners and international financial markets to achieve the capital raise.

He said, “We’ve done our capital plan. We’ve shared that capital plan with the central bank, but we cannot share it in an open forum like this. But I can give context and I can give colour as to what exactly it is.

“The capital plan suggests that on a go-forward basis, we will need beyond internally generated capital, we will need to work with our Development Finance Institutions (DFI) partners, as well as our international financial markets. To raise both, senior debt, as well as quasi-equity to support our growth.”

Meanwhile, the Group Managing Director of Access Holdings Plc, Mr Herbert Wigwe, said that by 2027, the group expects the Nigerian subsidiary would be contributing about 52 per cent of revenues compared to the 82 per cent  revenue it contributed to group revenue as of Q3 2022.

He added that the new verticals will also be contributing 12 per cent of total revenues, as revenues from African Subsidiaries are expected to double over the next five years.

He noted that PBT contributions from Nigeria Bank are expected to reduce from 63 per cent (9M’22) to 33 per cent, while the new verticals are expected to contribute 19 per cent of the profitability by 2027, while African Subsidiaries will contribute 20 per cent as its footprint grows across the Continent.

Wigwe said the Net Interest Margin (NIM) is expected to be at least 6 per cent in 2027, according to him the growth in NIM will be driven by increased lending within the core Bank and by the growth in LendCo’s business which will typically have higher margins on average.

“Healthy ROE returns expected over the next 5 years as we continue to maximise returns for shareholders. ROE along with ROA is expected to grow, as a result of improvements in CIR and an increase in footprint across higher efficiency locations,” he said.

African opportunities: Wigwe noted that across Africa, there is an opportunity for Access to extend financial services to the unbanked and deepen its financial services offerings to banked customers.

“370 million Africans do not have access to financial services; up to 60 million in Nigeria, additionally, banked customers are demanding a deepening of financial services including loans, payments, insurance.

“We will capitalise on our strong M&A capability and ability to build organically to create value with each expansion, prioritising countries with better sovereign ratings and complementary business landscapes.

“Our Africa strategy is supported by our presence in key international markets which enable us to diversify our earnings away from the volatile operating environments in Africa, orchestrate operations as a global payments gateway, manage our risk and exposures to soft currencies and enhance our profitability without excess risk,” he said.

Last 5-year scorecard: He noted that during the 2018 – 2022 retail banking growth & wholesale bank, consolidation showed that retail has grown to 52 million customers surpassing the original aspiration of 35 million.

He said gross revenue grew 25 per cent to N907 billion (from 9M’18 to 9M’22) adding that there has been steady growth across all income lines.

“Strong and diversified revenue growth has been driven by expansive retail banking growth and increased velocity of transactions, optimising value chain of wholesale banking customers, prioritising margin growth through efficiencies, among others.

“We have maintained and continue to carry forward a residual dividend policy which ensures we keep our investors in mind as well as provide sufficient capital to fund investment and growth, maintaining a sustainable dividend policy. The dividend declared from the group grew from N18.803 billion in 2017 to N35.545 billion in 2021,” he said.