Access Holdings PLC has demonstrated resilience in the first quarter of 2025, reporting a pre-tax profit of N222.78 billion, a notable 9.89% increase compared to the corresponding period in 2024. This growth underscores the financial institution's ability to navigate a complex economic landscape characterized by rising funding costs.
A significant driver of this performance was a substantial surge in interest income, which climbed by an impressive 58.28% year-on-year to reach N980.68 billion. This expansion was primarily fueled by income generated from loans and advances to both customers and other banks, alongside increased earnings from investment securities. Specifically, income from loans constituted 63.29% of the total interest income, a slight increase from 61% in the first quarter of the previous year, while investment securities contributed 34.14%, marginally up from 33.89%.
However, this robust growth in interest income was significantly tempered by a sharp 71.32% increase in interest expenses, which soared to N760.47 billion. This substantial rise in the cost of funds, particularly the over 80% jump in interest paid on customer and interbank deposits (amounting to N696.89 billion) and an increase in expenses on borrowings and debt instruments to N63.58 billion, led to a contraction of over 20% in net interest income, settling at N220.21 billion.
This performance highlights the considerable pressure Access Holdings faced in managing its funding costs during the quarter, with the bank retaining only 22.45% of its interest income after accounting for these expenses – a figure considerably lower than peers like GTCO (80.11%) and Zenith Bank (70.58%).
Despite the squeeze on core profitability from escalating funding costs, Access Holdings' diversified earnings base proved to be a crucial strength. Strong growth in non-interest income provided a vital cushion. Net fee and commission income witnessed a substantial increase of 68.35% to N146.22 billion, driven by significant contributions from credit-related fees and commissions (up by 70.11% to N75.52 billion) and electronic banking income (a 44.83% rise to N48.35 billion).
Furthermore, the bank recorded impressive gains from fair value adjustments and foreign exchange transactions, which nearly doubled to N214.39 billion, significantly bolstering overall earnings.
A review of the balance sheet reveals a slight contraction in total assets, which decreased by 5.81% to N39.09 trillion. This reduction was primarily attributed to lower balances in loans, investment securities, and cash held with the Central Bank.
Nevertheless, Access Holdings demonstrated a strong ability to attract and retain customer deposits amidst tight market liquidity. Customer deposits saw a healthy increase of N507.56 billion during the quarter, reaching a total of N23.03 trillion. This growth in deposits provides essential balance sheet stability and supports the bank's liquidity position.
In conclusion, Access Holdings' first-quarter performance in 2025 showcases a financial institution adept at generating strong revenue growth, particularly in interest income. However, the results also underscore the significant impact of rising funding costs on core profitability. The Group's ability to leverage non-interest income streams, driven by fees, commissions, and FX gains, proved instrumental in sustaining overall profit growth during the period.
While the balance sheet experienced a slight contraction in total assets, the robust growth in customer deposits highlights the bank's continued strength in this critical area. This performance provides valuable insights into Access Holdings' strategic navigation of the current economic environment and its diversified approach to revenue generation.