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Access Bank Plc.

Rating Report

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Access Bank Plc 2016 Credit Rating

Access Bank Plc

Rating Assigned:

A+

RATING RATIONALE Access Bank Plc’s (“Access Bank” or “the Bank”) rating is underpinned by

good asset quality despite the challenging macroeconomic environment

prevalent since November 2014. We note that the weak macroeconomic

climate which has affected growth of Nigerian banks is expected to

continue in the short to medium term. The Bank however continues to

ensure adequate levels of local and foreign currency deposits to fund

cautious growths in risk assets and maintain good liquidity levels. We

positively note the Bank’s risk management framework which has provided

adequate buffers, thus largely preserving asset quality. In the year ended

31 December 2015, Access Bank’s non-performing loan ratio stood at 1.5%.

This comparably low level has continued into Q1 2016 with an NPL ratio of

1.5% as at 31 March 2016.

Access Bank having acquired the erstwhile Intercontinental Bank in 2012

has strengthened its people, systems and processes through a series of

capital raising exercises and phased implementation of upgrades over the

years. Operating through over 300 branches in Nigeria, and over 60

branches internationally, the Bank has a 7 million customer base offering a

variety of corporate, commercial and retail banking services as well as

corporate finance and advisory solutions. Access Bank is the fourth largest

bank in Nigeria by total assets & contingents as at 31 December 2015.

Furthermore, the Bank is considered one of the eight strategically

important banks (SIB) in Nigeria. In 2015, the Bank renewed its retail

banking drive with a view to effectively compete with its peers at this

level.

Profitability in 2015 was largely as a result of foreign exchange gains, as

the Bank capitalised on exchange rate volatilities in the earlier part of

2015. In view of recent changes to the structure of the Nigerian foreign

exchange market, we expect earnings in this regard to be significantly

tempered, going forward. Access Bank’s bottom-line was impacted by an

increase in interest expenses especially on expensive tenored deposits and

foreign exchange debt service costs. This is in addition to increases in loan

Outlook: Stable

Issue Date: 22 June 2016

Expiry Date: 30 June 2017

Previous Rating: A+

Industry: Banking

Analysts:

Yomi Akinola

[email protected]

Yinka Adelekan

[email protected]

Agusto & Co. Limited

UBA House (5th Floor)

57, Marina

Lagos

Nigeria

www.agusto.com

2


loss expenses as warranted by both regulation and internal strategy.

Furthermore, the Bank’s profitability continues to be constrained by

consistently high operating expenses vis-à-vis income. Pre-tax returns on

average assets and average equity nonetheless strengthened to 2.6% and

20.5% respectively over the prior year. We note efforts to temper operating

expenses in 2016 with an improved CIR of 60.1% as at Q1 2016.

Given profitability levels in the year under review as well as a successful

rights issue in 2015, Access Bank’s capitalisation improved year on year

with core capital (Tier 1) totalling ₦360 billion, much higher than the

regulatory minimum of ₦50 billion for Nigerian banks licensed to operate

internationally. In addition, the Bank’s Basel II ratio was adequate at 18%,

above the regulatory minimum of 15%. Access Bank’s capital adequacy

ratio also remained above the newly recommended level of 16% for

strategically important banks. We expect the Bank to maintain satisfactory

capitalisation levels for its business risks upheld by retained earnings, and

contingent on continued effectiveness of its risk management framework.

Furthermore we consider the Bank’s liquidity profile to be good as well as

its ability to refinance if necessary.

Based on the above, we hereby retain our “A+” rating of Access Bank Plc.

Table 1: Background Information

Financial Data FY2015 FY2014

Total assets & contingents ₦2,722 billion ₦2,200 billion

Net earnings ₦194.6 billion ₦132.6 billion

Pre-tax return on average assets & contingents (ROA) 2.6% 2.2%

Pre-tax return on average equity (ROE) 20.5% 17.4%

•Good profitability

•Good asset quality

•Experienced management team

•Good industry position

Strengths

•High level of operating expenses

•Significant and unsustainable FX trading revenue

Weaknesses

•Cost reduction given expected inflationary pressures

•Ability to maintain asset quality in times of weak economicclimate

Challenges

3


PROFILE Access Bank Plc (“Access Bank” or “the Bank”) was incorporated in 1989 as a private limited liability company,

commencing operations in May of the same year. Access Bank converted to a public limited liability company

in March 1998 and subsequently listed its shares on the Nigerian Stock Exchange in 1998. In February 2001

Access Bank was granted a universal banking license by the Central Bank of Nigeria. Between 2002 and

2007, the Bank embarked on a growth strategy with a view to emerge as one of Nigeria’s leading financial

institutions. This growth strategy saw Access Bank raise capital aggressively starting with a successful public

offer which raised about ₦14.5 billion in 2004, then an Over-The-Counter Global Depository Receipts (GDR)

placement of US$250 million in July 2007 and a third public offer raising about US$1billion. In October 2011,

the Bank acquired 75% equity stake in Intercontinental Bank later merging with the erstwhile Bank in

January 2012. This acquisition enabled the Bank expand its retail banking business. In 2012, the Bank

successfully raised US$350million 5-yr Eurobond and a second $400 million 7-yr Eurobond in June 2014. In

Q1 2015, Access Bank Plc successfully raised ₦42 billion through a rights issue that was 79% subscribed.

Access Bank Plc principal activities includes corporate / commercial banking, retail banking, money market

products and services as well as corporate finance, equipment leasing and foreign exchange operations. As at

April 2016, Access Bank had approximately 7 million customers segmented under four strategic business

units (SBU) namely - Corporate & Investment Banking, Commercial Banking, Business Banking and Personal

Banking. Each of these units offers a variety of products and services in line with the Bank’s strategy to

emerge as “the world’s most respected African bank”. The SBUs are each headed by an Executive Director who

reports to the Group Managing Director.

The Bank carries out its business through 305 branches and service outlets across Nigeria as well as a total

of 66 branches and service outlets in the United Kingdom (2 branches) and other African countries – Ghana

(39 branches), Rwanda (7 branches), Zambia (6 branches), Gambia (6 branches), Democratic Republic of

Congo (2 branches) and Sierra Leone (4 branches). This is in addition to two representative offices located in

the United Arab Emirates and China. Access Bank has also deployed 1,437 Automated Teller Machines (ATMs)

and 9,098 point of sale (POS) terminals in all its operational regions. The Bank also has an offshore Special

Purpose Vehicle - Access Finance BV- for the issuance of the US$350 million 7.25% Guaranteed Notes due

2017 and the issuance of the US$400 million 9.25% Guaranteed Notes due June 2021 guaranteed by the

Bank.

Access Bank’s head office is located at 999C Danmole Street, Victoria Island, Lagos, Nigeria. The Bank

employed an average of 2,828 persons in the year under review. Junior staff accounted for approximately

81% of staff while middle and senior management account for 14% and 5% respectively. Subsequent to the

Bank’s year-end, the Bank expects to grow staff numbers by about 9% as part of expansion plans.

4


Subsidiaries & Associates

Access Bank’s foreign subsidiaries include Access Bank (Gambia) Limited, Access Bank (Sierra Leone) Limited,

Access Bank (Zambia) Limited, The Access Bank (UK) Limited, Access Bank (Ghana) Limited, Access Bank

Rwanda and Access Bank (D.R. Congo). As at 31 December 2015, Access Bank (Nigeria) accounted for 98% of

total assets of the Access Bank Group. The Bank’s subsidiaries were all profitable in the 2015 financial year

though we note that Access Bank Zambia recorded losses in the four years preceding 2015.

Table 2: Access Bank Plc’s Subsidiaries

Name Principal Business Status Ownership Stake

Access Bank (D.R. Congo) Banking Operational 74%

Access Bank (Gambia) Limited Banking Operational 64%

Access Bank (Ghana) Limited Banking Operational 92%

Access Bank (Sierra Leone) Limited Banking Operational 97%

Access Bank (Zambia Limited Banking Operational 92%

Access Bank Rwanda Banking Operational 75%

The Access Bank (UK) Limited Banking Operational 100%

Access Bank Plc has four associate companies in which it holds 10% or more equity stake and/or voting

rights. They include Stanbic IBTC Pension Managers Limited (17.7% equity stake), CRC Credit Bureau Limited

(13.6% equity stake), Africa Finance Corporation (10.2% equity stake) and Unified Payments Nigeria Plc (10%

equity stake).

Correspondent Banks

Access Bank Plc maintains international correspondent banking relationships, with 24 foreign banks.

These banks include:

Table 3: Access Bank Plc's Correspondent Banks

ABSA/Barclays Bank BNP Paribas

Access UK Byblos Bank

Bank of Beirut Citibank

Bank of China Commercial Bank of Dubai

Banque Libano Credit Agricole

Commerz Bank Credit Suisse Bank

Deutsche Bank First Bank Nigeria (UK)

First Rand Bank Sumitomo Mitsui Banking Corporation

JP Morgan KBC Bank

Mashreq Bank Societé Generale

Standard Bank Standard Chartered Bank

ICICI Bank Unicredit, United Bank of Africa

5


Technology

Access Bank Plc leverages on technology to drive its banking business as well as operations. The Bank’s IT

function is geared towards driving innovation, enhancing efficiency and improving stability. This is in

addition to securing its business against fraud through maintaining a watertight IT framework as well as the

operation of this framework. The Bank’s e-business platform accommodated 1,437 Automated Teller

Machines (ATMs) and 9,098 point of sale terminals (POS) as at 31 December 2015. In addition, 1.7 million

bank cards were issued while customers who actively use mobile and online banking channels totalled

900,000.

Access Bank processes all its banking transactions through Flexcube, its core banking application and utilises

a variety of other software for operations. In 2015, the Bank focused on improving all core banking software

utilised. This included an upgrade of Office 365, updating of its Enterprise Architecture to facilitate

enterprise-wide work flows/reporting as well as the introduction of two factor authentication and 2FA

protection. Furthermore innovative trade products were a feature in its technology advances in 2015

particularly as the Pay with Capture product was launched in response to an increasing technology reliant

populace.

Access Bank relies on software suites such as Primus for corporate internet banking, Fintrak for financial

reporting, Innovation for global trade & foreign transfer transactions, NEFT for bulk payments and SWIFT for

trade & foreign transfer transactions.

The Bank maintains connectivity within its branches through the use of fibre optics, VSAT links and radio.

This is in addition to two Tier 2 data centres in Lagos – Victoria Island and Ikeja, set up as a business

continuity measure. The Bank also upgraded its high speed network in 2015 and is improving its capabilities

for data warehousing without affecting transaction utilization of its connectivity platform.

Track Record of Financial Performance

Access Bank Plc’s total assets & contingents amounted to ₦2.7 trillion as at 31 December 2015, a 24%

growth over the prior year. Liquid assets totalled ₦487 billion accounting for 18% of the Bank’s total assets

& contingents while gross loans and advances totalled ₦1.3 trillion, 49% of the Bank’s asset base. Non-

performing loans stood at 2.4% as at 31 December 2015. Access Bank’s core capital stood at ₦360 billion,

more than 7 times the minimum ₦50 billion regulatory requirement for banks operating with an

international banking license. The Bank’s Basle II computed capital adequacy ratio stood at 18%, above the

newly prescribed 16% for banks who are strategically important.

The Bank recorded improved pre-tax return on average assets and average equity of 2.6% and 20.5%

respectively in FY2015. Subsequent to year-end, annualized returns on average assets and average equity

further trended up to 2.9% and 22.1% respectively, for Q1 2016.

6


CURRENT DIRECTORS

Shareholding

Mrs. Mosun Belo-Olusoga* Chairman Direct 0.013%

Mr. Herbert Wigwe Group Managing Director Direct & Indirect 8.9%

Mr. Obinna Nwosu Deputy Group Managing Director Direct 0.103%

Mr. Victor Etuokwu Executive Director Direct 0.047%

Mrs Ojinika Olaghere Executive Director Direct 0.067%

Mr. Elias Igbinakenzua Executive Director Nil

Mr. Roosevelt Ogbonna Executive Director Direct 0.097%

Mrs. Titilayo Osuntoki Executive Director Direct 0.099%

Mr. Oritsedere Otubu Non-Executive Director Direct & Indirect 0.184%

Mr. Emmanuel Chiejina Non-Executive Director Direct 0.033%

Mrs. Kemi Ogunmefun Non-Executive Director Direct & Indirect 0.003%

Mr. Paul Usoro Non-Executive Director Direct 0.004%

Dr. Ernest Ndukwe Independent Director Direct 0.002%

Dr. (Mrs.) Ajoritsedere Awosika Independent Director Nil

*Appointed effective July 2015

9.552%

SHAREHOLDING

Access Bank Plc is listed on the Nigerian Stock Exchange. As at 31 December 2015, the Bank had 820,964

registered shareholders, 978 of which are foreign shareholders who collectively hold 6.4% shareholding.

Significant shareholders however include the following:

Significant Shareholders Shareholding

14.8%

6.1% Stanbic Nominees, Nigeria

Blakeney GP, III Ltd

MANAGEMENT TEAM Mr. Herbert Wigwe is the Group Managing Director and Chief Executive Officer of Access Bank Plc. Mr.

Wigwe commenced his career with Coopers & Lybrand Associates. He later spent 10 years at Guaranty Trust

Bank Plc (GTBank) where he managed several portfolios including financial institutions, Corporates and

Multinationals. In March 2002, Mr Wigwe left GTBank as an Executive Director to join Access Bank Plc as

Deputy Managing Director.

Mr. Obinna Nwosu is the Deputy Group Managing Director of Access Bank. Mr Nwosu joined the Bank in

2004 as an Assistant General Manager (Regional Manager, East). Prior to joining Access Bank, Mr. Nwosu

held various roles at Guaranty Trust Bank Plc over an eight-year period spanning operations and commercial

banking.

7


ANALYSTS’ COMMENTS

ASSET QUALITY On the basis of total assets and contingents, Access Bank Plc is the 4th largest bank in Nigeria. Total assets

and contingents for Access Bank Plc grew by 24% to ₦2.7 trillion as at year-end 2015, upheld by increase in

capitalisation in the review period. Examining the Bank’s asset structure, liquid assets comprising cash and

equivalents, government securities and quoted investments accounted for 17.9% of total assets and

contingents while gross loans and advances accounted for 48.9%. Long-term assets comprising restricted

funds, Eurobonds held and other long term investments accounted for 15.6% while contingent assets

including letters of credit and other direct credit substitutes accounted for 11.4%.

Figure 1: Breakdown of Total Assets & Contingents

The Bank grew gross loans and advances by a strong 22% during the financial year ended 31 December 2015

to ₦1.33 trillion. This was higher than selected industry peers1 GTBank and Zenith whose loan portfolios

grew by 7% and 18% respectively in the same period. Excluding lending business carried out with the Central

Bank of Nigeria with respect to State Government bail-outs, organic growth of the Bank’s loan portfolio stood

at approximately 10%.

Considering the currency denomination of the Bank’s loan portfolio, we note that 43% of gross loans and

advances were in foreign currency (FCY) higher than the 41% recorded as at 31 December 2015. We believe

this increase is partly due to devaluation of the Naira which occurred in February 2015 which resulted in FCY

loans representing a higher percentage of total loans in Naira terms. Sixty-one percent of gross loans were in

local currency (LCY) at the same period. In view of the current difficult macroeconomic terrain, Access Bank

needs to continue to mitigate exposure to foreign currency obligors (via FX hedges and lending to corporates

1 We consider two industry peers alongside Access Bank Plc for the sake of this rating report. These peers are selected on the basis of

total assets and contingents as well as other performance parameters. The peers used are Guaranty Trust Bank Plc (GTBank) and Zenith

Bank Plc.

Liquid Assets

18%

Net Loans &

Advances

48%

OtherAssets

4%

Other Long-

term Assets

16%

Fixed Assets &

Intangibles

3%Contingent

Assets

11%

8


who have access to FX receivables, among other methods) given the stifled nature of accessing FX for

repayments, for some of its obligors. We however note that the Bank has reduced growth in its FCY lending

rather focusing on clearing existing letters of credit transactions based on maturity profiles. Furthermore, the

Bank converted a number of FCY loans to LCY in the period under review.

As at 31 December 2015, the Bank’s loan portfolio was 91% in favour of corporate and commercial

organisations. The Bank however adopted a bullish approach in 2015 geared towards promoting its retail

and personal banking business, starting with a structural realignment of its risk functions during the year.

This is in support of its 5-year retail business initiative. This realignment focuses on an overall value chain

model with a tailored risk management framework in this respect. Retail loans have grown from 2.2% of the

Bank’s loan book in 2014 to 3.7% as at 31 December 2015.

Figure 2: Breakdown of Loans by Sector (2015) Figure 3: Loans by Business Lines (2015)

Loans and advances to the Oil & Gas sector – Downstream, Services, Upstream and Refining accounted for

the largest share - 24% of the Bank’s 2015 lending activities. We note that the devaluation of the naira from

168/1$ to 197/1$ in February 2015 contributed to the seeming expansion of lending to the Oil & Gas sector

in naira terms by 11.9% year-on-year to ₦320.9 billion, particularly the downstream and services sub-sectors.

The Bank’s loan portfolio exhibits some degree of concentration with Oil & Gas, general commerce and

public sector accounting for approximately 47%. Retail loans and general commerce loans accounted for

approximately 14% while lending to a variety of manufacturing sub-sectors such as Flourmills & Bakeries,

Food Manufacturing, Cement, Steel Rolling Mills etc. cumulatively accounted for approximately 12% of the

Bank’s loan portfolio. Furthermore, notable growth was recorded in loans to State Government by 212% to

Agriculture

1%

Construction

6%

Finance &

Insurance

6%

General

4%

General

Commerce

10%

Public Sector

13%

Information &

Communication

9%

Manufacturing -

others

4%

Cement

2%

Conglomerate

1%Steel rolling

mills

4%Food

Manufacturing

1%

Real

Estate

8%

Transportation

& Storage

5%Power & Energy

1%Others

1%

Downstream

9%

Services

9%

Upstream

5%

Refinery 2%

Oil& Gas

24%

Corporate

42%

Commercial

42%

Retail

4%Governmnet

12%

9


₦168.6billion, as Access Bank supported the bail out of State Governments in 2015 with CBN guaranteed

loans. In addition, loans to the Real Estate sector grew by (52% to ₦100.1billion).

Figure 4: Year-on-Year Loan Growth by Sector

A review of the Bank’s loan portfolio by credit quality showed improvement in loan quality with 68.2% of

gross loans and advances in the investment grade scale as reported by the Bank’s internal risk model,

compared to 54.5% in 2014.

Access Bank’s non-performing loans (NPL) stood at ₦20 billion as at 31 December 2015. The Bank’s non-

performing loans to total loans ratio thus stood at 1.5%, lower than the CBN’s maximum of 5% and the

Bank’s internal limit of 3% (2014: 1.8%). In addition, the Bank’s NPL ratio was better than peers GTBank

(2.7%) and Zenith (2.2%). A breakdown of non-performing loans by lending sector reveal that impairment was

skewed towards the general commerce, oil & gas and construction sectors. The impact of impaired loans

remain moderated by a continued year-on-year growth in the Bank’s loan portfolio. Should the Bank not have

experienced significant loan growth during the year, its NPL ratio would have stood at 1.8%.

Further examining non-performing loans under the prudential approach, we note that NPLs comprising

substandard, doubtful and lost loans amounted to ₦31.6 billion translating to an NPL ratio of 2.4%. Sub-

standard loans accounted for 17.7% of NPLs while doubtful and lost loans accounted for 20.9% and 61.4%

respectively. Access Bank did not write off any impaired loans as uncollectable during the year, in

comparison with the ₦6.1 billion expunged from the Bank’s books in 2014. We however note efforts to

10.0%

-100.0%

37.8%

36.1%

-15.6%

97.1%

-9.9%

211.7%

9.5%

7.0%

18.1%

-8.3%

113.2%

-19.3%

-99.7%

-24.5%

51.9%

56.2%

-47.8%

219.4%

13.9%

6.6%

29.5%

-3.4%

10.3%

-150% -100% -50% 0% 50% 100% 150% 200% 250%

Agriculture

Capital Markets

Construction

Education

Finance & Insurance

General

General Commerce

Government

Information & Communication

Manufacturing - others

Basic Metal Products

Cement

Conglomerate

Steel rolling mills

Flourmills & Bakeries

Food Manufacturing

Real Estate

Transportation & Storage

Power & Energy

Professional, Scientific and Technical activities

Others

Oil& Gas Downstream

Oil& Gas Services

Oil& Gas Upstream

Crude Oil Refining

10


restructure substandard and doubtful loans. During the year under review, the Bank restructured 2.2% of its

loan book and converted some FCY loans to LCY loans in a bid to preserve asset quality given FX

accessibility constraints for some of its obligors.

In view of the macroeconomic environment and expected impairments particularly relating to oil & gas,

general commerce and manufacturing risk assets, Access Bank increased its loan loss provision to 2% of

gross loans (2014: 1.6%) and 134.6% of non-performing loans (2014: 85.2%). The increase in provisions was

largely on account of additional provisioning made for the general commerce sector, oil & gas – services,

upstream & downstream sectors as well as the construction, real estate, manufacturing and retail lending

sectors. This is in addition to the regulatory 2% additional provisioning for all performing loans effected by

the CBN in 2015.

We expect further asset quality pressures for all the Nigerian banks in the short to medium term.

Nonetheless, we consider Access Bank Plc’s asset quality to be good. We expect its risk management

framework to continue to keep asset quality within acceptable levels.

11


RISK MANAGEMENT The Bank’s risk management unit acts as a second line of defence after policies have been defined by the

Board of Directors where oversight of the Bank’s risk management function is domiciled. Access Bank’s Board

of Directors have demonstrated accomplishment in the areas of compliance, market risk, credit risk,

operational risk, reputational risk, strategic risk and general oversight. The Board is supported by the

management committees -Board Risk Management Committee, Board Committee of Human Resources, Board

Credit Finance Committee and Board Audit Committee. Access Bank’s Enterprise Risk Management

Framework designates a Head of Risk Management to each of its Strategic Business Units namely corporate

banking, personal banking, business banking and commercial banking divisions. The Heads of Risk

Management units report to the Chief Risk Officer who reports to the Group Managing Director and the

Board.

Access Bank Plc employs a robust risk management function which focuses on risk culture embedding, bank-

wide. Its risk management policies are frequently reviewed and realigned in accordance with the changing

operating terrain. In 2015, Access Bank executed a structural realignment of its risk functions in support of a

new 5-year retail business drive. This includes the establishment of dedicated risk management teams with

an overall value chain model perspective. Furthermore, the Unit has daily portfolio review meetings and fully

rolled out a risk based performance measurement initiative in 2015. This initiative includes charges for

concentrations in accordance with risk charge metrics already set. We also note the various electronic

banking platforms the Bank has deployed, including Access Mobile, Access Money, Online Banking, Primus

and Pay with Capture platforms thus making a healthy risk management profile imperative.

Credit Risk -The Bank adopts a risk appetite rating of ‘2’ on the Banks ‘1-4’ risk appetite scale, indicative of an

overall moderate risk appetite. An internal rating model guides this process in compliance with a portfolio

plan for each business unit that adheres to monitoring benchmarks and lending limits. Access Bank’s internal

rating model takes into account financial and non-financial parameters with different risk weightings

attached, as well as risk acceptance criteria. The Bank’s internal rating model is currently being upgraded to

align the bank’s strategy more closely with Basle provisions using the standardized approach. Lending limits

are also checked daily.

In 2015, efforts were particularly concentrated in portfolio planning, stress testing, steps to de-risk early,

tightening of collections and internal risk pricing as well as the conversion of FCY exposures. The Bank also

reinforced dual ownership of risk assets between relationship managers and the credit risk unit as well as

deployed a collateral management application that manages collateral in a centralized location accessible to

all authorised users.

Market Risk – Market risk functions are guided by limits and benchmarks approved by Executive Management

which are monitored regularly. Access Bank’s exposure to market risk applies particularly to its trading as

well as lending business. The Bank values its trading securities daily on a mark-to-market basis, utilising a

mark-to-model method where market prices are not available. The Bank employs various trading limits

12


which are monitored by the various risk management units in addition to internal control, treasury and

compliance who provide reports to Board and Management committees.

Operational Risk – Access Bank’s operational risk function in 2015 was characterised by the commencement

of full risk automation and integration. The Unit measures its operational risk using the value at risk (VaR)

methodology, regular and event driven stress testing as well as mark-to-market and sensitivity analyses. The

Bank reviews its operations policy at least annually. In the year under review, Access Bank was served

penalties totalling ₦408.9 million for various infractions most notably a penalty for the delay in remitting an

undisbursed loan under the Commercial Agriculture Credit Scheme. In addition non-compliance with

Regulation 13 of the Banks and Other Financial Institutions Act (BOFIA) with respect to cash ratio

requirement on equity investments and other Know-You-Customer (KYC) requirements attracted penalties.

We note a need to improve compliance in view of infractions penalised for, in the year under review

In the year under review, the Bank recorded 323 fraud incidences, particularly relating to ATM and e-banking

amounting to a ₦184.5 million loss to the Bank.

We also note improvements to the Bank’s automated risk reporting portal and collateral management

deployed in 2015 enhancing accessibility to information for authorised personnel. In addition, Access Bank’s

core banking application FlexCube was upgraded in the year under review alongside a variety of software and

connectivity updates. Access Bank continues to make significant improvements in the technology used to

drive its business thus mitigating the impact of operational losses.

We consider the Bank’s risk management framework to be acceptable.

13


EARNINGS Access Bank Plc recorded a net revenue from funds totalling ₦76.8 billion in the year under review. Net

revenue from funds was buoyed by a 15.3% growth in interest income from an enlarged loan portfolio.

However, a 32.6% growth in interest expense to ₦94 billion constrained net revenue from funds due to

increase in expensive tenored deposits. In addition, loan loss expense increased by 25.2% to ₦13.3 billion in

line with prudential requirements (2014: ₦10.6 billion). Access Bank Plc recorded a lower net interest margin

of 48.9% from 55.6% recorded in the prior year, lower than peers GTBank (70%) and Zenith (64%). This was

on the back of higher interest expenses caused in part by the higher cost of FX debt service, and lower

interest income due to its main exposure to low yielding assets such as government bonds and its exposure

to large corporates. The Bank faces intense competition in the corporate banking business segment which

continues to hamper its margins.

Figure 5: Breakdown of Total Revenue by Business Line

Access Bank’s profitability in 2015 was essentially based on the rise in non-interest income. Non-Interest

income jumped by a significant 116% to ₦117.9 billion for the 2015 financial year. This spike was driven by

fees and other income amounting to ₦91.9 billion as well as significant foreign exchange income which

grew from a ₦3.4 billion loss in 2014 to ₦23.2 billion profit in the year under review. Foreign exchange

income accounted for 11.9% of net earnings for the year as the Bank capitalized on naira volatilities in the

first half of the year. Access Bank engaged in derivative transactions with the Central Bank of Nigeria as well

as customers. This source of income arose as a result of efforts to protect customers and the Bank from naira

depreciation in foreign exchange terms by engaging in hedge transactions. In view of the recently released

foreign exchange market guidelines and as the currency markets stabilize, we expect this source of income

to be significantly tempered. Fees and commission income was also boosted by the issuing of corporate

cards which commenced in 2015.

Operating expenses trended up by 48% to ₦146 billion in the period under review. Most notably amongst

operating expenses was staff costs which grew by 39% to ₦35.7 billion on the back of an increase in the

number of staff by 172 persons. In addition, technology related expenses rose as the Bank upgraded a

number of its IT operating platforms in 2015. This is in addition to a growth in administrative expenses

39%

42%

39%

35%

8%

8%

14%

14%

0 50 100 150 200 250 300 350 400

2014

2015

₦ billion

Corporate & Investment Banking Commercial Banking Business Banking Personal Banking

14


particularly travel costs and marketing expenses with its new retail drive. Access Bank Plc’s cost-to-income

ratio (CIR) measured in operating expenses to net earnings, however stood at par with the prior year at 66.6%

Access Bank has traditionally recorded high overhead cost levels compared to its earnings. The Bank’s CIR

has consistently been higher than peers GTBank (41%) and Zenith Bank (57%). In our opinion, Access Bank

Plc must make concerted efforts to rein in operating expenses to preserve profitability. This is in view of

further inflationary pressures expected in 2016 on the back of adverse macroeconomic challenges currently

being experienced. Nonetheless, we note positively that the Bank is executing a cost reduction programme

to optimize its cost profile. The Bank’s CIR improved to 60.1% in Q1 2016.

The Bank recorded an overall improvement in profitability year-on -year. Pre-tax return on average assets

and average equity trended upwards to 2.6% and 20.5% respectively (ROA FY2014: 2.2%, ROE FY2014:

17.4%). These ratios were comparable to Zenith Bank but weaker than GTBank. We note that Access Bank’s

profitability profile in 2015 was largely upheld by strong foreign exchange income. Without this, ROA and

ROE would have deteriorated to levels lower than the previous year at 1.7% and 13.2% respectively.

Subsequent to year-end 2015, the Bank’s annualised pre-tax return on average assets and pre-tax return on

average equity strengthened to 2.9% and 22.1% respectively as at Q1 2016.

Figure 6: Profitability Ratios

We consider Access Bank’s profitability to be good. Nonetheless, we note that the Bank needs to strengthen

sustainable interest income.

2.2

%

17

.4%

55

.6%

65

.9%

2.6

%

20

.5%

48

.9%

66

.6%

4.1

%

29

.5%

70

.0%

41

.4%

2.5

%

21

.7%

63

.8%

57

.4%

ROA ROE NIM CIR

Access 2014 Access 2015 GTBank 2015 Zenith 2015

15


CAPITAL ADEQUACY Access Bank Plc’s majority shareholders include Stanbic Nominees Nigeria (14.8%) and Blakeney GP, III

Limited (6.1%). Core capital stood at ₦360.4 billion as at 31 December 2015, a 31.5% growth over the prior

year following a successful rights issue between January and March 2015 which saw the Bank raise ₦42

billion. The Bank’s capital base stood well above the ₦50 billion regulatory requirement for a Nigerian

commercial bank licensed to operate internationally. Core capital remained sufficient to fund 13.2% of total

assets and contingents compared to 12.5% in 2014. Tier 1 capital was 91.3% of adjusted capital, well above

the regulatory minimum of 50% while Tier 1 capital stood at 19.2% of risk weighted assets. We consider the

quality of the Bank’s capital to be good.

Access Bank’s Tier 2 capital amounted to ₦78.5 billion, as at 31 December 2015, the amortized cost of a

$400 million Eurobond Debt security issued in December 2014 for a 7-year period. The principal amount is

payable at maturity but interest payments are made semi-annually.

Despite expected pressures on capitalization for banks in view of higher credit risks due to the difficult

operating environment, the Bank’s Basle II ratio for the period under review improved to 18% from 17% in

the prior year. The marginal improvement in capital ratio reflected the conservative balance sheet growth,

increase in Tier 2 bonds as well as further internal generation of capital. This ratio is above the minimum

15% required for international commercial banks as at year-end 2015 and the newly prescribed minimum of

16% (effective July 2016) for strategically important banks, of which Access Bank is one. At this level the

Bank’s capital adequacy stood at par with selected industry peer GTBank (18%) but lower than Zenith (20%).

Figure 7: Capital Adequacy Ratios

We consider the Bank’s capital ratios to be adequate. We expect capitalisation to be upheld by internal

capital generation and conservative growth in risk-weighted assets in the short term.

18

.0%

17

.0%

18

.2%

17

.5%

20

.0%

19

.0%

15.5%

16.0%

16.5%

17.0%

17.5%

18.0%

18.5%

19.0%

19.5%

20.0%

20.5%

2015 2014

Access GTBank Zenith

16


LIQUIDITY AND LIABILITY GENERATION During the 2015 financial year, Access Bank’s total deposits grew by 8% to ₦1.6 trillion. Growth in total

deposits was tempered in the year under review partly impacted by the remittance of government funds to

the Treasury Single Account (TSA) domiciled with the Central Bank of Nigeria. Total deposits comprising

local currency deposits (67.7%) and foreign currency deposits (32.3%) were sufficient to fund 58.5% of the

Bank’s total assets and contingents and 119.6% of gross loans and advances. The Bank’s corporate business

serving multinationals and well-structured organizations with turnovers above ₦10 billon provided 27% of

total deposits. Its commercial banking business line serving organizations with annual turnovers between ₦1

billion and ₦10 billion as well as government organisations provided 40% of total deposits. The Bank’s

business banking business focusing on SMES with turnovers less than ₦1 billion accounted for 12% while

personal banking business largely retail, value chain and high net worth individuals accounted for 21% of

total deposits. We consider renewed efforts in driving its retail business focusing on a value chain model that

mirrors the strength of its corporate and commercial banking strategy and expect further growth in business

and personal banking deposits in 2016.

Figure 8: Breakdown of Deposits by Business Line (2015) Figure 9: Breakdown of Deposits by Region (2015)

We note continued skewness in the Bank’s LCY deposit mix in favour of expensive tenored deposits, a trend

identified over the last five years. Expensive tenored deposits accounted for 58.7% of total LCY deposit

liabilities as at 31 December 2015 vis-a-vis low cost demand and savings deposits. Thus, the Bank’s

estimated weighted average cost of funds (WACF) remained elevated at a high of 5.7% for the 2015 financial

year (2014: 4.6%). We believe that reliance on behaviourally long tenured deposits makes the Bank

vulnerable to repricing risks especially in periods of volatile interest rates. Given Access Bank’s size, we

remain concerned about its inability to significantly grow market share of retail funding, particularly savings

deposits, like some of its contemporaries in the Top 5 category.

The Bank’s FCY deposits continued on a growth trajectory in the 2015 financial year to ₦513.4 billion (2014:

₦451.4 billion). We believe this is partly due to customers’ balances awaiting naira devaluation.

Corporate &

Investment

Banking

27%

Commercial

Banking

40%

Business

Banking

12%

Personal

Banking

21%

Rest of Africa

8% Europe

1%

Nigeria

91%

17


Access Bank Plc’s liquid assets grew by 46.6% to ₦487.1 billion in the period under review making up

approximately 17.9% of total assets and contingents. This growth was on account of an increase in its

investment securities which consist mainly of available for sale government securities. Liquid assets to LCY

deposits increased to 47.5%, remaining well above the regulatory benchmark of 30%. The Bank has a good

reputation in the money market and we do not doubt its ability to refinance should the need arise. In

addition, Access Bank has a contingency funding plan in place to be used in periods of stress.

As at 31 December 2015, FCY borrowings totalled ₦199.8 billion, a combination of on-lending facilities and

the amortised cost of $400 million subordinate notes issued in December 2014 (₦78.5 billion) maturing

December 2021. The Bank also had confirmed standby lines of credit from its various correspondent banks

totalling $1.9 billion as at 31 December 2015.

We note a degree of mismatch in the maturity profile of deposit liabilities and loans, in that ₦690.6 billion in

loans mature over 360 days as compared with nil deposit liabilities in the same period. We are however

comforted by the Bank’s existing Eurobond as well as deposits which are behaviourally long dated often on a

rolling contractual basis. Typically, the Bank’s Eurobond proceeds have funded FCY loans maturing about the

same period as the Eurobond.

We consider the Bank’s liquidity position to be good with a sturdy reputation to refinance should the need

arise.

OWNERSHIP, MANAGEMENT & STAFF Access Bank Plc is a listed company on the Nigerian Stock Exchange (NSE) and had 820,964 shareholders as

at 31 December 2015. The Bank’s shareholding structure was as follows.

Table 4: Shareholding Structure

Shareholder % Shareholding 2015 % Shareholding 2014

Stanbic Nominees Nigeria Limited 14.79% 32.09%

Blakeney GP 6.08% 4.29%

Others 79.13% 63.62%

Stanbic Nominees is a nomineeship company holding the shares on behalf of a shareholder/shareholders

while Blakeney GP is an institutional investor like based in the United Kingdom but with historical presence

in Africa and the Middle East. Members of the Bank’s Board of Directors control (directly & indirectly) 11% of

the Bank’s paid up share capital while foreign shareholders account for 6%. We observe a degree of key man

risk in that the Group Managing Director controls an 8.6% direct/indirect stake.

Access Bank’s affairs are steered by a 14-member Board of Directors. Collectively the Board controls a 9.6%

equity stake and comprises seven executive directors and seven non-executive directors (including two

independent directors). The Chairperson, Mrs. Mosun Belo-Olusoga was appointed effective July 2015

18


following the retirement of Mr Gbenga Oyebode as Chairman, having completed the regulatory maximum

tenure.

Mr. Herbert Wigwe is the Group Managing Director and Chief Executive Officer of Access Bank Plc. Mr.

Wigwe is a Chartered Accountant and commenced his career with Coopers & Lybrand Associates. Mr. Wigwe

then joined Guaranty Trust Bank Plc in 1991 where he managed several portfolios including financial

institutions, Corporates and Multinationals over an 11 year period. Mr. Wigwe left GTBank in March 2002, as

an Executive Director to join Access Bank Plc as Deputy Managing Director. Mr. Wigwe is supported by a

Deputy Group Managing Director and five members of senior management.

Access Bank employed an average of 2,828 persons in 2015 (2014: 2,721 persons). As a result, gross

employee expenses trended upwards by a significant 39% to ₦35.7 billion due to an increase in the number

of staff. In the same vein, the Bank’s staff cost per employee grew to ₦12.6 million from ₦9.4 million

recorded in the prior year, indicative of changes to the organization’s remuneration structure. Net earnings

per staff improved considerably to ₦68.8 million (2014: ₦48.8 million). The Bank’s net earnings per staff was

better than peers GTBank (₦57.8 million) and Zenith Bank (₦43.1 million).

We consider positively the breadth of the Bank’s management and note relentless efforts to ensure an

efficient operating structure, leveraging on cutting-edge technology to facilitate operations. Thus, in our

opinion, Access Bank’s performance is good and its management team experienced.

MARKET SHARE Access Bank Plc ranks fourth among the 24 banks in the Country on the basis of total assets. Access Bank had

until 2015 focused on corporate and commercial banking business but has now renewed its drive to grow its

retail business as part of a 5-year strategic project. Maintaining an overall moderate risk appetite towards

asset creation and liability generation, the Bank has consistently grown market share particularly over the

last 3 years with respect to total assets and contingents, LCY deposits, loans & advances as well as net

earnings and pre-tax profit.

Table 5: Market Share Indicators

Name Access 2015 Access 2014 GTBank 2015 Zenith 2015

LCY Deposits 7.8% 6.8% 8.4% 12.6%

Total Assets & Contingents 9.2% 7.2% 9.4% 13.5%

Total Loans & Leases (net) 11.0% 9.1% 10.7% 14.5%

Net Earnings 11.3% 7.1% 11.2% 13.3%

Profit before Tax 13.8% 7.4% 24.0% 24.5%

We consider Access Bank’s market share to be good.

19


OUTLOOK

Access Bank Plc’s strategy which has seen the Bank steadily enhance its brand equity through customer

satisfaction, continues to be reflected in consistent improvements to the Bank’s financial performance over

the last three years. Subsequent to year-end 2015, the Bank recorded a further enhanced annualized pre-tax

return on average assets of 2.9% and an annualized pre-tax return on average equity of 22.1%. In addition,

the Bank’s cost –to – income ratio of 60.1% was better than the 66.6% recorded for FY2015. The Bank’s NPL

ratio of 1.5% as at 31 December 2015 remained at this level in Q1 2016.

Looking ahead, the Bank expects to focus on transaction based lending thus buoying fee income, as well as

grow on-lending for state governments and continually improve credit risk mitigation techniques. Whilst

pressures are expected in business with the oil & gas, general commerce and manufacturing sectors, the

Bank bullishly looks to grow retail and SME lending, though targeted at the value chains of its corporate and

commercial customers as well as export businesses.

We expect profitability to be satisfactory upheld by good asset quality despite prevailing difficult economic

conditions in Nigeria. We note that the Bank must prudently ensure cost reduction in line with its target of a

15% year-on-year decline in operating expenses, in order to preserve profitability. We also expect the Bank’s

capital to remain adequate, upheld by retained earnings, baring no significant adverse changes to asset

quality.

We hereby attach a stable outlook to Access Bank Plc.

20


FINANCIAL SUMMARY

ACCESS BANK PLC

31-Dec-15 31-Dec-14 31-Dec-13

STATEMENT OF FINANCIAL POSITION AS AT ₦'000 ₦'000 ₦'000

ASSETS

1 Cash & equivalents 131,704,943 4.8% 58,606,339 2.7% 134,430,561 7.1%

2 Government securities 355,346,495 13.1% 273,635,719 12.4% 258,866,374 13.7%

3 Stabilisation securities 59,123,792 3.1%

4 Quoted investments 63,979 0.0% 79,440 0.0% 104,918 0.0%

5 Placements with discount houses

6 LIQUID ASSETS 487,115,417 17.9% 332,321,498 15.1% 452,525,645 23.9%

7 BALANCES WITH NIGERIAN BANKS 26,111,216 1.0% 36,965,179 1.7% 89,433,649 4.7%

8 BALANCES WITH BANKS OUTSIDE NIGERIA

9 Direct loans and advances - Gross 1,330,545,199 48.9% 1,092,698,163 49.7% 761,598,821 40.2%

10 Less: Cumulative loan loss provision (26,915,169) -1.0% (17,012,478) -0.8% (13,249,429) -0.7%

11 Direct loans & advances - net 1,303,630,030 47.9% 1,075,685,685 48.9% 748,349,392 39.5%

12 Advances under finance leases - net

13 TOTAL LOANS & LEASES - NET 1,303,630,030 47.9% 1,075,685,685 48.9% 748,349,392 39.5%

14 INTEREST RECEIVABLE

15 OTHER ASSETS 89,026,988 3.3% 73,077,452 3.3% 44,399,035 2.3%

16 DEFERRED LOSSES 10,180,832 0.4% 10,128,537 0.5% 9,847,853 0.5%

17 RESTRICTED FUNDS 248,182,477 9.1% 255,603,361 11.6% 171,944,537 9.1%

18 UNCONSOLIDATED SUBSIDIARIES & ASSOCIATES 45,439,246 1.7% 40,120,572 1.8% 39,551,804 2.1%

19 OTHER LONG-TERM INVESTMENTS 131,379,563 4.8% 89,456,305 4.1% 82,177,299 4.3%

20 FIXED ASSETS & INTANGIBLES 70,878,292 2.6% 68,597,141 3.1% 65,864,798 3.5%

21 TOTAL ASSETS 2,411,944,061 88.6% 1,981,955,730 90.1% 1,704,094,012 90.0%

22 TOTAL CONTINGENT ASSETS 309,707,958 11.4% 218,053,005 9.9% 189,806,599 10.0%

23 TOTAL ASSETS & CONTINGENTS 2,721,652,019 100% 2,200,008,735 100% 1,893,900,611 100%

CAPITAL & LIABILITIES

24 TIER 1 CAPITAL (CORE CAPITAL) 360,428,904 13.2% 274,155,786 12.5% 245,181,997 12.9%

25 TIER 2 CAPITAL 78,516,655 2.9% 73,155,391 3.3%

26 Foreign Currency Borrowings 302,919,987 11.1% 146,345,767 6.7% 120,342,026 6.4%

27 Demand deposits 315,979,951 11.6% 236,042,594 10.7% 372,484,100 19.7%

28 Savings deposits 127,786,239 4.7% 121,351,057 5.5% 106,197,345 5.6%

29 Time deposits 632,818,563 23.3% 586,973,213 26.7% 455,231,840 24.0%

30 Inter-bank takings 1,522,968 0.1% 72,171,314 3.3% 7,161,530 0.4%

31 TOTAL DEPOSIT LIABILITIES - LCY 1,078,107,721 39.6% 1,016,538,178 46.2% 941,074,815 49.7%

32 Customers' foreign currency balances 513,449,947 18.9% 451,366,313 20.5% 337,397,330 17.8%

33 TOTAL DEPOSIT LIABILITIES 1,591,557,668 58.5% 1,467,904,491 66.7% 1,278,472,145 67.5%

34 INTEREST PAYABLE

35 OTHER LIABILITIES 78,520,847 2.9% 20,394,295 0.9% 60,097,844 3.2%

36 TOTAL CAPITAL & LIABILITIES 2,411,944,061 88.6% 1,981,955,730 90.1% 1,704,094,012 90.0%

37 TOTAL CONTINGENT LIABILITIES 309,707,958 11.4% 218,053,005 9.9% 189,806,599 10.0%

38 TOTAL CAPITAL, LIABILITIES & CONTINGENTS 2,721,652,019 100% 2,200,008,735 100% 1,893,900,611 100%

Proof

BREAKDOWN OF CONTINGENTS

39 Acceptances & direct credit substitutes 218,053,005 8.0% 218,053,005 9.9% 189,806,599 10.0%

40 Guarantees, bonds etc..

41 Short-term self liquidating contingencies

21


ACCESS BANK PLC

STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31-Dec-15 31-Dec-14 31-Dec-13

₦'000 ₦'000 ₦'000

42 Interest income 184,047,834 61.0% 159,578,184 74.5% 127,710,965 71.7%

43 Interest expense (94,001,878) -31.1% (70,911,063) -33.1% (61,025,846) -34.3%

44 Loan loss expense (13,287,613) -4.4% (10,609,300) -5.0% 7,508,216 4.2%

45 NET REVENUE FROM FUNDS 76,758,343 25.4% 78,057,821 36.4% 74,193,335 41.7%

46 ALL OTHER INCOME 117,875,166 39.0% 54,591,795 25.5% 50,384,996 28.3%

47 NET EARNINGS 194,633,509 64.5% 132,649,616 61.9% 124,578,331 70.0%

48 Staff costs (35,699,471) -11.8% (25,611,051) -12.0% (25,937,818) -14.6%

49 Depreciation expense (9,086,366) -3.0% (8,337,641) -3.9% (7,780,207) -4.4%

50 Other operating expenses (84,808,733) -28.1% (53,432,874) -24.9% (61,629,925) -34.6%

51 TOTAL OPERATING EXPENSES (129,594,570) -42.9% (87,381,566) -40.8% (95,347,950) -53.5%

52 PROFIT (LOSS) BEFORE TAXATION 65,038,939 21.5% 45,268,050 21.1% 29,230,381 16.4%

53 TAX (EXPENSE) BENEFIT (6,253,169) -2.1% (6,201,296) -2.9% (5,153,552) -2.9%

54 PROFIT (LOSS) AFTER TAXATION 58,785,770 19.5% 39,066,754 18.2% 24,076,829 13.5%

55 NON-OPERATING INCOME (EXPENSE) - NET 138,975 0.0% 874,372 0.4% 2,135,015 1.2%

56 PROPOSED DIVIDEND (15,241,014) -5.0% (13,729,777) -6.4% (19,450,480) -10.9%

57 GROSS EARNINGS 301,923,000 100% 214,169,979 100% 178,095,961 100%

58 AUDITORS PWC PWC PWC

59 OPINION CLEAN CLEAN CLEAN

KEY RATIOS 31-Dec-15 31-Dec-14 31-Dec-13

EARNINGS

60 Net interest margin 48.9% 55.6% 52.2%

61 Loan loss expense/Interest income 7.2% 6.6% -5.9%

62 Return on average assets 2.6% 2.2% 1.6%

63 Return on average equity 20.5% 17.4% 12.1%

64 Operating Expenses/Net earnings 66.6% 65.9% 76.5%

65 Gross earnings/Total assets & contingents 12.3% 10.5% 9.9%

EARNINGS MIX

66 Net revenue from funds 39.4% 58.8% 59.6%

67 All other income 46.1% 41.2% 40.4%

LIQUIDITY

68 Total loans & leases - net/Total lcy deposits 55.5% 41.3% 39.1%

69 Liquid assets/Total lcy deposits 47.5% 31.5% 57.3%

70 Demand deposits/Total lcy deposits 29.3% 23.2% 39.6%

71 Savings deposits/Total lcy deposits 11.9% 11.9% 11.3%

72 Time deposits/Total lcy deposits 58.7% 57.7% 48.4%

73 Inter-bank borrowings/Total lcy deposits 0.1% 7.1% 0.8%

74 Interest expense - banks/Interest expense 7.4% 4.8% 4.4%

75 NET FOREIGN CURRENCY ASSETS (LIABILITIES) (513,449,947) (451,366,313) (337,397,330)

22


ACCESS BANK PLC

KEY RATIOS CONT'D 31-Dec-15 31-Dec-14 31-Dec-13

ASSET QUALITY

76 Performing loans (₦'000) 1,310,548,292 1,072,731,642 743,674,642

77 Non-performing loans (₦'000) 19,996,907 19,966,521 17,924,179

78 Impaired Credits/Total loans - Gross 1.5% 1.8% 2.4%

79 Loan loss provision/Total loans - Gross 2.0% 1.6% 1.7%

80 Loan loss provision/Non-performing loans 134.6% 85.2% 73.9%

81 Risk-weighted assets/Total assets & contingents 65.9% 66.7% 59.9%

CAPITAL ADEQUACY

82 Adjusted capital/risk weighted assets 17.2% 19.9% 17.0%

83 Tier 1 capital/Adjusted capital 91% 89% 120%

84 Total loans - net/Adjusted capital (Times) 29% 27% 26%

85 Capital unimpaired by losses (₦'000) 350,248,072 264,027,249 235,334,144

CAPITAL ADEQUACY STRESS TEST

86 Total shareholders' funds (N'000) 292,625,254 193,120,787 193,120,787

87 Cumulative loan loss provision (actual reserves) 17,012,478 13,249,429 13,249,429

88 Equity before all provision (line 86 + line 87) 309,637,732 206,370,216 206,370,216

89 Required reserves* 87,690,000 68,503,273 68,503,273

90 Equity after required reserves (line 88 - line 89) 221,947,732 137,866,943 137,866,943

91 Equity after required reserves/risk weighted assets 15.1% 12.1% 12.1%

STAFF INFORMATION

86 Net earnings per staff (₦'000) 68,824 48,750 50,621

87 Staff cost per employee (₦'000) 12,624 9,412 10,540

88 Staff costs/Operating expenses 27.5% 29.3% 27.2%

89 Average number of employees 2,828 2,721 2,461

90 Average staff per branch 9 9 8

OTHER KEY INFORMATION

91 Legal lending limit(₦'000) 70,049,614 52,805,450 47,066,829

92 Other unamortised losses(₦'000) NONE NONE NONE

93 Unreconciled inter-branch items (₦'000) DR/(CR) NONE NONE NONE

94 Number of branches 305 310 310

95 Age (in years) 27 26 25

96 Government stake in equity - - -

Actual Actual Actual

MARKET SHARE OF INDUSTRY TOTAL 2015 2014 2013

97 Lcy deposits (excluding interbank takings) 7.8% 6.8% 6.7%

98 Total assets & contingents 9.2% 7.2% 7.0%

99 Total loans & leases - net 11.0% 9.1% 8.0%100 Net earnings 7.1% 7.5% 7.5%

101 Profit before tax 7.4% 6.1% 6.1%

102 Cash dividend 7.3% 8.3% 8.3%

100 Non Interest Income 17.9% 7.8% 8.8%

101 Net Interest Income 6.3% 6.6% 5.3%

*: *This is calculated as 100% of non-performing loans, 5% of performing loans (including direct credit substitutes disclosed

as contingent assets) and 1% for all other assets excluding cash, federal government obligations, placements with

discount houses and balances at CBN.

23


RATING DEFINITIONS

A "+" (plus) or "-" (minus) sign may be assigned to ratings from Aa to C to reflect comparative position within

the rating category. Therefore, a rating with + (plus) attached to it is a notch higher than a rating without the

+ (plus) sign and two notches higher than a rating with the - (minus) sign.

Aaa A financial institution of impeccable financial condition and overwhelming capacity to meet obligations as

and when they fall due. Adverse changes in the environment (macro-economic, political and regulatory) are

unlikely to lead to deterioration in financial condition or an impairment of the ability to meet its obligations

as and when they fall due. In our opinion, regulatory and/or shareholder support will be obtained, if required.

Aa A financial institution of very good financial condition and strong capacity to meet its obligations as and when

they fall due. Adverse changes in the environment (macro-economic, political and regulatory) will result in a

slight increase the risk attributable to an exposure to this financial institution. However, financial condition

and ability to meet obligations as and when they fall due should remain strong. Although regulatory support is

not assured, shareholder support will be obtained, if required.

A A financial institution of good financial condition and strong capacity to meet its obligations. Adverse changes

in the environment (macro-economic, political and regulatory) will result in a medium increase in the risk

attributable to an exposure to this financial institution. However, financial condition and ability to meet

obligations as and when they fall due should remain largely unchanged. In our opinion, shareholder support

should be obtainable, if required.

Bbb A financial institution of satisfactory financial condition and adequate capacity to meet its obligations as and

when they fall due. It may have one major weakness which, if addressed, should not impair its ability to meet

obligations as and when due. Adverse changes in the environment (macro-economic, political and regulatory)

will result in a medium increase in the risk attributable to an exposure to this financial institution.

Bb Financial condition is satisfactory and ability to meet obligations as and when they fall due exists. May have

one or more major weaknesses. Adverse changes in the environment (macro-economic, political and

regulatory) will increase risk significantly.

B Financial condition is weak but obligations are still being met as and when they fall due. Has more than one

major weakness and may require external support, which, in our opinion, is not assured. Adverse changes in

the environment (macro-economic, political and regulatory) will increase risk significantly.

C Financial condition is very weak. Net worth is likely to be negative and obligations may already be in default.

D In default.

www.agusto.com

© Agusto&Co.

UBA House (5th Floor)

57 Marina Lagos

Nigeria.

P.O Box 56136 Ikoyi

+234 (1) 2707222-4

+234 (1) 2713808

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Email: [email protected]

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access bank plc. - fmdq group · successfully raised us$350million 5-yr eurobond and a second $400...

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