Access Bank’s impressive gross earnings of ₦1.38 trillion may seem like a testament to its success, but a closer look at its business model reveals a different story. Despite its size and reach, the bank’s weak profitability and high operating costs suggest that its business model is flawed. The company’s high dependence on interest income, inefficient operations, and inability to effectively manage costs have led to a decline in profitability indices, such as return on equity (ROE) and return on assets (ROA). This raises questions about the sustainability of Access Bank’s business model and its ability to generate long-term value for its shareholders.
Access Bank’s business model has several weaknesses that impact its profitability and competitiveness. The company’s high dependence on interest income makes it vulnerable to changes in interest rates and reduces its ability to generate income in a low-interest-rate environment. Additionally, the company’s inability to effectively manage its costs has led to a decline in profitability indices, such as return on equity (ROE) and return on assets (ROA). The cost-to-income ratio (CIR) is also a major concern, as it indicates that the company is not operating efficiently.
Furthermore, Access Bank faces significant threats in the form of economic volatility, fintech competition, cybersecurity risks, and regulatory changes. The rise of fintech companies presents a competitive threat, potentially eroding Access Bank’s market share. Increasing digital transactions and cybercrime costs pose a significant risk to the company’s reputation and financial stability.
Despite these challenges, Access Bank has shown resilience and adaptability in the face of adversity. The company’s effective treasury and trading activities have helped to cushion the decline in interest margins, with fair value and foreign exchange gains leaping by +79.81% to N214.39bn in Q1 2025. The company’s diversified income streams, including net fee and commission income, have also helped to mitigate the decline in net interest income.
To move forward, Access Bank needs to address its weaknesses and mitigate the threats it faces. The company needs to diversify its revenue streams and reduce its dependence on interest income. It also needs to effectively manage its costs and improve its operational efficiency. By doing so, Access Bank can achieve sustainable growth and maintain its position as a leading financial institution.
Overall, Access Bank’s business model is effective in generating revenue, but it needs to address its weaknesses to improve its profitability and competitiveness. With the right strategies and initiatives, Access Bank can navigate the turbulent waters and emerge stronger and more resilient. Effectiveness score: 7/10.
