Explainer: Why Access Bank has the lowest profit among its peers

Among Nigeria’s top-tier banks—First Holdco, Access Holdings, UBA, Zenith Bank, and GTCO—Access Holdings posted the lowest net income in 2024.

Access Holdings reported a net income of N642.2 billion for the year, reflecting a modest 3.7 percent increase from the N619.3 billion recorded in 2023. This was achieved on gross earnings of N4.88 trillion, yielding a profit margin of 13.2 percent, down sharply from 23.9 percent in 2023. This represented the weakest profit margin among the five largest banks in the country.

Despite this, Access Holdings commands a dominant position in terms of size. The group is Nigeria’s largest publicly listed company by total assets, which rose significantly to N41.5 trillion in 2024—a 55.5 percent surge from N26.7 trillion in 2023. Yet, size has not translated into superior profitability.

Access Holdings vs others

In terms of Return on Assets (RoA), Access Holdings trailed its peers with a RoA of just 1.9 percent in 2024. In contrast, UBA, with N30.3 trillion in assets, posted a net income of N766.7 billion, translating to a 3 percent RoA. GTCO delivered a strong performance with a N1.02 trillion profit on N14.8 trillion in assets, resulting in an RoA of 8.3 percent. Zenith Bank achieved a 4.1 percent RoA on N30 trillion in assets, while First Bank (First Holdco) earned N663.5 billion in net income on N26.5 trillion in assets, equivalent to a 3.1 percent RoA.

Access Holdings also underwhelmed on Return on Equity (RoE), reporting a 21.6 percent RoE for 2024—a sharp decline from 36.2 percent in the prior year. This places the group well behind First Holdco’s 29.2 percent, UBA’s 28 percent, Zenith Bank’s 32.5 percent, and GTCO’s sector-leading 48.9 percent.

Paradoxically, Access Holdings recorded the highest gross earnings among its peers in 2024—N4.9 trillion. Yet, its net interest income of N1.27 trillion was relatively weak, surpassing only GTCO’s N1.06 trillion. In comparison, UBA, Zenith, and First Holdco each posted stronger results, with net interest incomes of N1.53 trillion, N1.73 trillion, and N1.40 trillion, respectively.

A key drag on performance was Access Holdings’ elevated interest expense, which stood at N2.21 trillion—the highest by a wide margin. For context, GTCO, Zenith, UBA, and FirstHoldco reported significantly lower interest expenses of N283.2 billion, N992.5 billion, N839.3 billion, and N996.1 billion, respectively.

Access Holdings and the cost of expansion

A deeper look into Access Holdings’ cost structure reveals further challenges. The group reported the highest cost-to-income ratio among its peers in 2024, a reflection of the heavy costs associated with its ambitious expansion programme.

Its cost-to-income ratio jumped to 58.3 percent, up from 46.9 percent in 2023. This compares unfavourably with First Holdco’s 44.9 percent, UBA’s 55 percent, GTCO’s 23.3 percent, and Zenith’s 33.3 percent—underscoring the strain on operational efficiency.

In 2024, Access Holdings accelerated its pan-African and international growth strategy, completing a series of landmark transactions across multiple markets. The group finalised the acquisition of Standard Chartered’s operations in Angola and Sierra Leone, while also announcing the takeover of Afrasia Bank, a Mauritian bank. In addition, it secured regulatory approval-in-principle to establish a banking presence in Namibia. It also completed the acquisition of a Tanzanian bank, marking its official entry into Tanzania.

The expansion drive continued with the commencement of two more strategic transactions: the acquisition of National Bank of Kenya and a bid to acquire a majority stake in Uganda’s Finance Trust Bank.

Domestically, Access Holdings also concluded the merger between Access Pensions and ARM Pension Managers, consolidating its presence in Nigeria’s growing pension industry under the unified brand, AccessARM Pensions.

In total, the group initiated or completed expansion activities in seven countries. These moves did not happen without significant implications for its cost structure and profitability. As of the end of FY 2024, Access Bank now exists in 14 African countries, with the holding group owning five other subsidiaries.

The cost implication of scale is becoming increasingly evident. Each expansionary move has carried substantial financial weight, from the N30.56 billion tied to the acquisition of Access Bank Tanzania to the N159.8 billion invested in the ARM Pension transaction. These are not one-off charges; they also trigger long-term integration costs—technology harmonisation, brand consolidation, cultural alignment, and regulatory compliance across multiple jurisdictions—all of which weigh heavily on the group’s cost-to-income ratio.

A key driver of Access Holdings’ rising expenses is the interest cost on its interest-bearing borrowings. In 2024, the group recorded a total interest expense of N2.21 trillion, of which N207.8 billion was attributable specifically to borrowings. As of year-end 2024, Access Holdings’ total borrowings stood at N2.4 trillion, marking a notable increase from N1.9 trillion in 2023.

Compared to its peers, Access Holdings is notably more leveraged. First Holdco reported borrowings of N1.6 trillion, UBA N1.4 trillion, Zenith Bank N2.05 trillion, and GTCO a relatively conservative N310 billion. This heightened debt level signals the funding intensity of the group’s expansion efforts and places further strain on its profitability.

Moreover, while the bank’s expansion has been largely funded through aggressive lending, growth in non-interest income has not kept pace, leaving the group increasingly vulnerable to the pressures of a debt-driven strategy. In 2024, lending-based activity accounted for 71 percent of gross earnings, up from 64 percent in 2023.

Strategic trade-offs

Access Holdings finds itself at a strategic crossroads. Its ambition to become Africa’s most connected and influential banking group is evident. From acquisitions spanning Angola to Mauritius and plans for expansion into Kenya, Uganda, and Namibia. But while this aggressive push builds scale and market presence, it has come at a cost: compressed margins, rising borrowings, and the weakest profitability metrics among Nigeria’s tier-1 banks.

The numbers tell a clear story. With the highest cost-to-income ratio, the largest interest expense, and a heavy reliance on lending, Access Holdings is navigating a growth path that prioritises market capture over near-term profitability.

Group CEO Roosevelt Ogbonna offered a glimpse into that long-term vision when he stated in 2024: “By 2025, Access Bank will be in the top 10 banks across its markets in Africa, excluding Kenya and South Africa.” It’s a statement of intent that reflects the bank’s strategic posture—not just to grow, but to dominate across key African markets.

BusinessDay