Bracing the odds, Access Bank plc defied the challenging operating environment to exercise its mandates to customers and investors, placing it above industry peers on many fronts and attracting accolades from within and outside the country, reports Kunle Aderinokun
In July 2013, just three and a half years ago, Access Bank plc, a Tier-1 bank operating in Nigeria, launched a bold and an ambitious five-year transformation strategy at the Nigerian Stock Exchange. At the time it presented this strategy, the bank was widely regarded as Nigeria’s corporate bank leader. And in this audacious strategy, the bank was aiming to move from this position of corporate bank leader to becoming the “World’s Most Respected African Bank” by 2018. In the intervening years since the bank began implementing this strategy, there has been a lot of turbulence in economies around the world, with the domestic Nigerian economy buffeted on all sides.
This turbulence has unsettled many an institution with any ambition, much more, becoming the world’s most respected African bank. The following scenarios characterised the turbulent climate under which Access Bank’s ambition has been pursued. And so, the global accolades that have come to the bank in the last couple of years, suggest that it is withstanding this turbulence and forging ahead with its ambition.
The oil and banking sectors of the Nigerian economy have long played a significant role in the life of the country. Oil for being the proverbial goose that lays the golden eggs and banking for being the provider of financing as well as the custodian of the returns, hence making the wheel of exchange truly go round. Indeed, there has always been a huge expectation on the banking sector, principally as an engine of economic growth and development. Bankers and their banks have perennially been expected to do much more than gather and keep deposits.
It is for this reason, and even more, that banks are often courted by all players in the economy. They create and disburse credit. Credit helps oil the engine of businesses and he who provides credit is king. Or used to be? Things are changing and they have changed to such an extent that resilience is a buzzword in the world of business and in the economy. After a few hiccups in the banking industry over the last few years, beginning with the global financial crisis of 2007/08, banks have particularly been cautious with regulators tightening what used to be loose ends, to keep the sector in check.
But we are in December, a really eventful year for domestic and global economies. 2016 is racing to a close. There are many who are wishing it races faster, with huge expectation that 2017 would come with much better tidings. Since 2014, when global oil prices collapsed on producers of the black gold, especially countries like Nigeria with a preponderance dependency on it for survival, the centre of their economies has not held. Local and international businesses have had a sorry tale to tell of their experiences working the business terrain for survival. Many organisations are closing their books almost with one eye shut, the other eye open just to ensure that they are putting in the figures in the right places, not because they are enthused to see the outcome of the figures they are putting together.
In Nigeria, as in Venezuela, Ecuador, Algeria, Brazil and other such oil dependent countries, economic recession, even depression, has become a street word, spoken by children in primary schools. Jobs are being lost across different business activities within national and regional economies. Public sector leaders and business owners and managers have been scrambling to lay their hands on their strategy roadmaps in search of ways to either help them cope, or just get them out of the mess that recession is causing.
Signs of hard times began showing up in 2014 following the reshaping of the global oil markets. Nigeria, which has always depended on oil for 85 to 90 percent of its foreign exchange earnings, began to see red and by 2015, it was clear that a cover up of the economic difficulty Nigeria was facing was not going to be possible, especially after the elections. The banking sector, faced with regulatory headwinds, found itself facing the difficulties that came with it. Chief executive of Origins Capital and former Managing Director of Diamond Bank, Emeka Onwuka, said in July in Lagos, at a book launch, of the impact of the regulatory headwinds that banks were dealing with:
“The Nigerian banking market is facing serious headwinds from slow GDP growth, falling FX reserves/ availability and regulatory pressures. The regulatory pressures on banks include: stricter regulatory oversight on SIBs (Systematically Important Banks) which increases the pressure to meet regulatory requirements (e.g. CAR); slower deposit growth fueled by lack of economic growth and public sector developments such as TSA; slowdown in lending with liquidity constraints and deteriorating macro environment; inflation and growing risk premium, which drives interest rates.”
The elections in 2015, with all the uncertainties it generated, piled more pressure on the economy. When the elections were over, banks began the real struggle of dealing with the challenging business environment they were operating in. 2016, therefore opened with much turbulence and it became clear that only the few banks with the right approach and strategy were going to claw their way into reckoning both in their balance sheet performances and in how they were viewed by the world.
The turbulence of the outgoing year has registered in terms of rising non-performing loans, erosion of public funds from banks’ vaults, as a result of a quasi-implementation of TSA. It was this year too that banks stopped charging COT, which some banks depended on for revenues, the stoppage of which created some concerns for the managements of these banks.
The sharp drop in oil prices affected operators in the upstream and downstream sectors. Banks, exposed to these operators, saw another round of crisis on their hands. As if this was not enough, the banking sector faced the resultant economic challenges of shortage of foreign exchange as well as what was initially described as ‘technical recession’. Added to these were the fall in the value of the naira, the huge US dollar denominated exposures, investors selling off of bank stocks, huge non-performing loan portfolio, a contracting economy and overall tough operating environment, which made it clear that only banks with the resolve, the confidence and an astute strategy for the times, would weather the storm and be able to raise their heads high throughout the year.
Access Bank Group Chief Executive Officer, Herbert Wigwe, and Chief Finance Officer, Seyi Kumapayi, in presentations at the bank’s 2016 investor day, described these as key macro themes challenging the banking landscape. But operating under these conditions, the bank continued to implement its transformation strategy and this year is proud to describe itself to investors as a “high-performing Nigerian diversified banking leader”, on its way to its set target of being the “World’s Best Respected African Bank.”
With every progress made since the bank began implementing the transformation strategy, it would seem that the world was taking notice. The accolades, the awards, the recognitions that have been bestowed on the bank since 2014 have been of such global significance that they are serving as an endorsement of the push towards the target set in 2013. This year, in particular, when the Nigerian banking industry has been hard hit and when the country had been officially confirmed as being in recession, the awards have come to support the progress being made by the bank.
Yet, two big global awards in 2015 signposted the fact that the efforts of the management of Access Bank, led by Wigwe, in pursuit of its transformation strategy, was receiving the world’s attention. First, The Banker Africa at its West Africa Awards, named Access Best Corporate Bank (Nigeria). This was followed by the award of Euromoney Magazine as the Best Flow House (Africa). Both awards came from globally recognised institutions with strong pedigrees and they seemed to set the stage for what was to come this year.
Access Bank is closing 2016 in what is easily on a high. This is the only way to describe an award coming from the prestigious global banking magazine, The Banker, a publication of the Financial Times Group of London, which last month named the bank, ‘Bank of the Year – Nigeria 2016’. Analysts describe this as the global endorsement of what a local newspaper, BusinessDay, had done earlier in September when it also named it ‘Best Bank of Year’ and its CEO, Wigwe, ‘Best Bank CEO’ at its own banking awards.
The different prestigious global awards, including The Banker’s, appear to have come in torrents. For instance, apart from being named ‘Bank of the Year’, other global awards have since followed. The EMEA Finance Magazine, this December, bestowed three prestigious global awards on the bank. These awards were in three categories awarded to financial institutions in the Pan-African Region: the ‘CEO of the Year’, awarded to the bank’s Group Managing Director and CEO, Herbert Wigwe; ‘Best Bank in Nigeria’ and ‘Corporate Social Responsibility’ award.
Wigwe, while responding to the award by the Banker, he received in London, said: “Winning this is recognition of our commitment to delivering banking excellence to our customers. We remain focused on the realisation of our strategic intent of becoming ‘Most Respected African Bank’ and continue to explore opportunities in markets and sectors across the continent that will enable us achieve this vision.”
He would emphasise this point again while receiving the EMEA awards by saying: “It is a testimonial to the hard work we have done in line with our five-year strategy to become the world’s most respected African Bank.
“2016 has been a remarkable year for the bank as we continue to receive both regional and international acclaim. I am extremely proud to be part of a profitable institution that is committed to delivering sustainable economic growth that is profitable, environmentally responsible and socially relevant. We have reaffirmed our status as innovative industry pioneers equipped to help our customers take tomorrow today,” Wigwe stated.
The CEO of EMEA Finance, Christopher Moore, particularly noted the power of Access Bank, when in presenting the awards said: “A repeat winner of our Best Bank in Nigeria award, Access Bank has become a Nigerian powerhouse, and one of the premier financial institutions in the country. Generating steep increases in revenues and profit growth over the past several years is no small feat, particularly with strong negative macroeconomic headwinds.”
“We are delighted to recognise Wigwe as our CEO of the Year in our African Banking Awards 2016 awards package,” Moore said. “Leadership requires ambition, and Wigwe possesses this quality and much more. His years of dedication and commitment to the development of Access Bank have helped it to attract over 8 million customers, to complete complex and strategically important financings, and to create an international presence,” he added, as Wigwe received the CEO of the Year award.
In what is now also widely acknowledge as a global endorsement of its transformative practices, Access Bank won the 2016 Euromoney’s Africa’s Best Bank Transformation award. It won this award in recognition of progress being made in enhancement of its operations through its ‘Wining with Service’ initiative, as well as its commitment to raising the standards of customer experience through its digital banking strategy.
At this award in London, Wigwe would allude to the five-year transformation strategy again, when he said: “It is a testimonial to the hard work we have done in line with our five-year strategy to become the world’s most respected African Bank,” adding, “It also confirms the transformation of the bank into a large diversified enterprise with enhanced retail structure as well as fast digital banking platform.”
Apart from these awards, there are three other awards, one from Germany, the 2016 Karlsruhe Outstanding Business Sustainability award, World Finance’s Best Sustainability Bank 2016 in London and the Chartered Institute of Bankers of Nigeria’s Best Bank Academy award that have all been bestowed on Access Bank this year in glaring endorsement of the progress that it has made, despite the challenging environment in which it is operating.
Yet, the progress is actually seen in the numbers. For instance, the bank currently serves over eight million customers; it has gained four million new customers since 2013. Shareholders’ funds now stand at N443 billion and is growing. It has also recorded growths in key performance indicators since 2013, with loan growth of 74 percent from N810.8 billion in 2013 to N1.41 trillion as at 2015 full financial year. Total assets have grown by 41 percent since the implementation of the transformation strategy began in 2013; from N1.84 trillion, it closed 2015 full year at N2.59 trillion. Customer deposits have risen 26 percent from N1.33 trillion to N1.68 trillion; profit before tax has grown by 72 percent from N43.5 billion in 2013 to N75 billion in 2015; Return on Equity grew by 560 basis points from 14.8 percent to 20.4 percent; while net interest income has risen by 36 percent from N77.7 billion to N105.4 billion at full financial year 2015.
From the bold but steady progress Access Bank is making in the numbers and the service that it is providing, it is clear why the global accolades are coming. Wigwe and his team will go into 2017 conscious that these confer even more responsibility. With the Nigerian budget released, there is some clarity that should help the bank position itself for the tasks ahead, especially the task of achieving more milestones in its transformation strategy.