Notably, interest income declined by 7.34% arising from the low-interest-rate environment despite growth in credit volumes. The surge in loan impairment charges by a whopping 222.71% also contributed to a fall in Access Bank’s net interest income after impairment owing to increased credit risk environment triggered by COVID-19 and aggressive drive to meet LDR requirements from CBN.
Specifically, impairment charges advanced from N10.61bn in Q3-2019 to N34.24bn in the current period while net interest income net of impairments declined by 18.82% from N199.61bn to N162.03bn.
Operating Income Shielded By Fees & Commission And Other Income
A 28.26% and 210.59% upsurge in fee and commission and other non-interest income cushions the effect of lower interest income as operating incoming advanced by 22.24% to N363.49bn.
Specifically, a 24x surge in Net gains on financial instruments to came from gains recorded on fixed-income trading derivative instruments and fair value gain on equity investments while increased fees and commission income was majorly driven by improvement in credit-related commission and e-channels fees.
A total of N28.36bn was generated from credit-related fees compared to the N 24.40bn recorded in Q3-2019 with account maintenance charges stable at N10bn.
Increased Cost Moderated Bottom Line Performance
Following the 22.24% increase in operating income, Access Bank’s operating expenses advanced by 25.60% reducing the increase in PBT to 15.69%. Notably, operating expenses advanced from N196.55 to N246.87 on the back of increased wages and salaries and other personnel expenses. Consequently, Profit after Tax rose by 15.67% from N88.44bn to N102.30bn while earnings per share (EPS) improved to N1.16 from the N0.80 realized in Q3-2019.