Access Holdings’ bad loan charges jump 113% despite higher profit

By Chukwuma Umeorah

Access Holdings Plc recorded a sharp rise in credit risk charges in 2025, with impairment expenses more than doubling to N523.6 billion, even as the group delivered strong earnings and crossed the N1 trillion profit before tax mark.

Impairment charges are provisions banks set aside to cover expected losses from loans that may not be fully repaid. According to its financials filed on the Nigerian Exchange Limited (NGX), the 113.4 per cent increase in impairment charges represents one of the most significant cost pressures in the year under review, tempering an otherwise solid financial performance that saw profit before tax rise 16.2 per cent to N1.01 trillion, while profit after tax grew 15.7 per cent to N743.05 billion.

The spike in loan loss provisions comes amid a still-fragile operating environment, suggesting elevated credit risks across segments, despite signs of macroeconomic stabilisation.

Beyond the impairment pressures, the group’s earnings were supported by strong growth in non-interest income and trading gains. Net fee and commission income rose by 40.9 per cent to N585.1 billion, while fair value and foreign exchange gains surged 152.5 per cent, contributing significantly to total operating income, which increased 23.9 per cent to N3.17 trillion.

Interest income growth remained modest at 1.9 per cent, reflecting tighter yield conditions, although net interest income still expanded by 7.0 per cent to N1.36 trillion.

On the balance sheet, Access Holdings maintained strong expansion, with total assets rising 24.3 per cent to N51.57 trillion, driven largely by a 53.4 per cent surge in customer deposits to N34.56 trillion. The growth in deposits underscores sustained customer confidence and provides a low-cost funding base for the group’s operations.

However, returns showed some moderation. Return on average equity declined to 18.4 per cent from 21.6 per cent in the previous year, while return on average assets eased to 1.6 per cent, indicating that earnings growth has yet to fully translate into stronger shareholder returns.

Cost efficiency improved during the period, with the cost-to-income ratio dropping to 51.7 per cent from 56.7 per cent, reflecting tighter cost controls and operational discipline.

Commenting on the results, Group Managing Director/Chief Executive Officer, Innocent C. Ike, said, “Our 2025 performance reflects both the resilience of the Access franchise and the strength of the institution we have built. In a dynamic operating environment, we delivered strong earnings supported by diversified income streams, disciplined execution, and a continued focus on balance sheet optimization. “We have now entered a more deliberate optimization phase, with a stronger focus on returns on capital, earnings quality, and long-term value creation.”

The group said its strategy is shifting from rapid balance sheet expansion to improved capital efficiency, with emphasis on strengthening earnings quality, deepening cost discipline, and expanding fee-based income streams.

While the banking subsidiary remains the dominant contributor, accounting for about 97 per cent of revenue, Access Holdings continues to build out its non-banking businesses, including pensions, insurance, and digital financial services, as part of efforts to diversify income sources. Looking ahead, the Access Holdings noted it expects a more supportive environment, citing improving economic conditions, stronger capital flows, and increased financial system activity as potential drivers of credit growth and transaction volumes.