Access Holdings: A Tale of High Interest Expenses and Inefficient Cost Management
Access Holdings, one of Nigeria’s leading financial institutions, has been struggling to claim the industry profitability leadership despite its impressive gross earnings. The bank’s high interest expenses and inefficient cost management have been cited as major contributors to this decline.
In 2024, Access Holdings’ interest expenses increased to N2.21 trillion, weighing heavily on its profitability. This high interest expense reduced the bank’s ability to generate strong net interest income (NII), which is essential for its profitability. Despite its impressive gross earnings of N4.878 trillion in 2024, the bank’s profit after tax (PAT) was only N642.22 billion.
The trend continued in Q1 2025, with Access Holdings’ interest expenses outpacing its interest income growth. The bank’s interest income surged by 58.62% to ₦964.57 billion, driven by higher yields on loans and investment securities. However, interest expenses also increased sharply by 71.32% to ₦760.47 billion, resulting in a 20.13% decline in net interest income to ₦220.21 billion.
The bank’s cost-to-income ratio (CIR) has also been a major concern. In 2024, the bank’s operating costs, including staff costs, regulatory costs, and premises costs, were high, affecting its profitability. Although the bank’s CIR improved significantly to 60.05% in Q1 2025 from 70.76% in Q1 2024, it still indicates that a significant portion of its revenue is being absorbed by operating expenses.
The combination of high interest expenses and inefficient cost management has impacted Access Holdings’ profitability. Despite its impressive gross earnings of ₦1.38 trillion in Q1 2025, the bank’s PAT growth was muted. The bank’s PAT rose by 14.73% to ₦182.75 billion, which is lower than expected given its strong revenue growth.
To regain its profit leadership position, Access Holdings needs to focus on reducing its interest expenses and improving its cost management. The bank can achieve this by optimizing its funding costs, improving its asset-liability management, and implementing cost-saving initiatives. Additionally, Access Holdings needs to focus on generating more fee-based income, which is less volatile and can help improve its profitability.
By addressing these challenges, Access Holdings can improve its net interest income, reduce its operating expenses, and increase its profitability. Until then, the bank will continue to struggle to claim the industry profitability leadership.
