The combination of factors such as high inflationary environment, exchange rate movement, and the enlarged franchise from recent acquisitions triggered a 14% surge to N371 billion in Access Bank’s total operating expenses for 2021 compared to the N326 billion amount spent in 2020.
This is according to the bank’s 2021 investors and analyst presentation which breaks down its economic results and business plans.
From the presentation, Access Bank stated that the operating expenses from the new subsidiary in Guinea and recent acquisitions in Botswana, Mozambique, South Africa and Zambia was N25.3 billion triggering the operating expenses to go up by 6% year on year to N345.8 billion
Similarly, it states that operating expenses at bank-level was up marginally by 2% year on year, showcasing the effectiveness of cost-cutting measures whilst also noting that FX rates on the Interbank market continued upward trend by 6% year on year to stand at N424 per dollar mainly driven by rate adjustments and lean supply
Meanwhile, the tier one bank stated that in spite of the increase in operating expenses, its Cost to Income ratio reduced significantly by 454bps year on year to 58.8% from 63.4% in 2020 while the Cost of Risk also grew by 25 basis points year on year to 2%, on the back of the increase in impairments on loan
Key points to note
- The bank spent N100.6 billion on personnel, recruitment and training in 2021 against N78.2 billion in 2020, reflecting a 29% increase.
- Regulatory costs increased by 22% to N62 billion in 2021 from N50.9 billion in 2020
- Depreciation and Amortisation cost increased by 12% to N42.1 billion in 2021 from N37.5 billion the previous year.
- IT and E-business expenses went up by 38% to N25.8 billion from N18.7 billion.
- Amount spent on administrative expenses was 20.1 billion in 2021, a 29% rise against the 15.5 billion in 2020
- Premises and Equipment Costs was N18.3 billion, a 17% high from N15.6 billion in 2020
- Outsourcing cost declined by 16% from N25.1 billion to N21 billion.
- Other operating expenses dipped by 4% to N81.3 billion from N84.9 billion.
In case you missed it
Nairametrics reported that Access Bank recorded a profit of N160 billion in 2021, a 51.13% increase year on year.
The bank also reported earnings per share of N4.58, a 52.16% growth from the N3.01 reported a year earlier in 2020.