To some observers, the spate of big, bold acquisitions embarked upon by Access Bank in the last few years was , at a point in time , nothing but like treading where the angel feared . However , the bank has proved the bookmakers and pessimists wrong , leveraging on its spate of acquisitions to position itself as the biggest bank by assets, deposit , loans and revenue generation .
Currently , it is second only in terms of profitability after Zenith Bank by small margin . All things being equal , some analysts believed , there is every possibility for this bank to clinch the profitability leadership in the current financial year .
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To beat others and hit those records ,no doubt , has been highly demanding. But some analysts believed the resilience from its management against pessimism over its strategic choice of acquisition and unmatched intellectual energy deployed to combat its challenges remains the key of its success .
Those opposed to its spate of acquisitions could not be blamed ; they justified their views with empirical facts: First , they argue: “it’s not news to anyone that few acquisitions actually benefit the shareholders of the acquiring company”. For them , the senior executives behind this initiative are too intellectually lazy to think through the future of the firm’s “core” business and too unimaginative to discover new ways of deploying existing resources. Moreover , some analysts often see a major acquisition as the only escape route from a business that has become hopelessly mature. In fact , research-based position is that over 70% of mergers and acquisitions destroy shareholder value.
But while the above views may be empirically true , these do not make an acquisition as a strategic method of corporate growth untenable .Truly, the initiative is paved with high cost and risks ,setting up the acquiring entity for failure. Acquisitions are believed to be like gambling into a risky and uncertain terrain with heavy negative potentials that could set the acquiring entity for an untold failure.
The costs of acquisitions could be too heavy to allow the acquiring entity to deliver better value for money or return for its shareholders. This makes many potential acquiring entities to distant themselves from the initiative like a leper .
Generally ,when two organizations struggle to merge their operations, systems, and processes, it can lead to operational disruptions, inefficiencies, and conflicts. This can drain resources and reduce the overall value of the deal.
However, the management of Access Bank ,from all indications, could not be intimidated. No success could be registered without certain challenges .Moreover , every operating environment is littered with opportunities and threats . However , a corporate organization’s strategic capability determines each company’s ability to exploit such opportunities and tame the the threats, whether it could outperform or or under perform in any operating environment . For the leadership of Access Bank , an acquisition as a strategic choice is not for the dilettantes or the merely intellectually curious . But for it , from all indications , it is content to follow. . Its management had resolved to rewrite the rules of the game ,to be unafraid of orthodoxy, to be more inclined to build than to cut , more concerned to make the difference than making career and absolutely committed to staking out the future first ; it has consistently followed its gut to pursue acquisitions as its growth strategy .
In the last two years , bank has ,indeed, has followed the above initiatives and executed them to the letters. to prove the pessimists and bookmakers wrong. Year by year , Access Bank,indeed , is proving both them wrong ,treading where the angel feared most but bringing in the fortunes to its stakeholders at a speed unmatched by any in the history of Nigerian banking industry .
This bank’s current strategic success could be traced to its capability to identify certain Critical Success factors, .CSFs, ,in banking and setting its targets for performance linked to those critical factors.
A look at banking business and the exploits of Access Bank in what are considered the critical success factors confirmed the bank has performed impressively as it is leveraging its acquisition project with certain core competencies ..
Its major critical success is in satisfying the shareholders .The shareholders require maximum or adequate returns on their investments in order to remain invested in the bank and to be willing to continue to provide additional resources and when needed .In this regards , the bank has not become profitable but competitively and resourcefully so .Its gross earnings stood at N2.6trilion, an increase of 87% from N1.4trillion in the previous year , out of which it delivered a profit after tax of N619.32 b .This makes the bank the biggest revenue generating bank and the second most profitable . Most importantly, with its cost to income ratio standing at 44% , the bank’s profit engine has remained one of the best in the industry . This further manifest in the improvement of its profit margins and earning per share .
. Another critical success factor where the bank has displayed its industry leadership is in the surplus units from which it borrows or the depositors .These units demand the best possible term in rates of interest and maturity structures and the maximum liquidity to enable them to have the funds back when they want them , or as agreed .The has continued to live up to the depositors’ expectation as its garnered the biggest deposits from the customers in the industry .Its deposits from customers and the banks hit N19.8trillion, the biggest in the industry
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Also to the deficit units which borrow from the banks , Access Bank deployed the loans in the financial year 2023 . . This is to satisfy that want to borrow when they need the funds and as cheaply as possible . This is a very challenging responsibility as the lenders ,the borrowers impose the obligation of maximum liquidity on the banks to enable them to obtain funds when they need them . Despite the macroeconomic environment that is very demanding ,its loans and advances to customers stood slightly above N8 trillion. This is the biggest volume of loans extended to customers by any bank in the 2023 financial year .
Despite the increase in risk with the size of its loans deployed and the less conducive macroeconomic environment where it operated , Access Bank’s nonperforming loan ratio still stood with the regulatory minimum By this the bank did not undertake excessive risks as it operated prudently and within stipulated regulatory requirements.
.Finally, bank has demonstrated a strong social responsibility to the community where it is operating at large .It has remained a good corporate citizen, capable of maximizing the exploitation of the opportunities available and minimizing the threats in the environment .
Access Bank has performed impressively and lived up to every critical success factor highlighted above as it leveraged on its spate of acquisitions to boost its capability .
Living up to the expectations of the stakeholders by delivering the above critical success factors is a function of the strategic capability of a corporate entity which is made up of resources and competences that an organization needed for its survival and prosperity .
Access Bank has , indeed, built competitive resources to translate its industry leadership’s dream to reality .It has a wealth of resources of every kind— from the tangible resources which are the physical assets of an organization such as buildings , people and finance to intangible resources that are non-physical assets such as information, reputation and knowledge the bank could not be found wanting . These resources, accumulated over decades, are the rewards of past and current industry leadership .
A peep into the bank’s financial position showed that total assets have grown tremendously within a short period of time The bank remains the biggest brand in the industry with a total assets of N26.7 trillion in 2023, a 78% increase , compared to N15 trillion in 2022.This is the first and the most visible value gained from its acquisition spree.
But while such resources are certainly important, however how it employs and deploys these resources matters at least as much as what resources it has. There would be no point in having state-of-the-art technology or valuable knowledge or a valuable brand if they were not used effectively. The efficiency and effectiveness of physical or financial resources, or the people in an organization, depends on not just their existence but how they are managed, the cooperation between people, their adaptability, their innovatory capacity, the relationship with customers and suppliers, and the experience and learning about what works well and what does not.
The bank has been deploying the above initiatives to gain competitiveness better than before .To effectively compete, the bank has been adjusting its internal strengths to the environmental opportunities. Its managers have continued to identify, combine, re-combine, and manage their resources, competencies and capability to explore its potential and perform competitively on the customer needs, preferences ,and desires satisfaction.
Consequently, its advantage consists in identification of the internal core competences, mainly based on knowledge assets and intellectual capital, that align with the key success factors of the market that delivers competitive advantage, better performance and better market position.
