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Access Bank Grows Profit Amid Headwinds

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  • Access Bank Grows Profit Amid Headwinds

Mixed reactions had followed the devaluation of the Naira in June 2016. Reacting to what the impact might be for banks, Renaissance Capital had said: “We see a three-fold impact on Nigerian banks from a Naira devaluation: capital, foreign exchange income and asset quality.”

On its part, Fitch Ratings said: “Banks’ ability to continue to generate solid performance indicators largely depends on developments in asset quality and loan impairment trends.”

With the above comments and similar ones on how the naira devaluation would impact banks’ performances, investors have been trending cautiously. While the first half of year results to June 30, 2016 did not reflect significant effect of the devaluation on banks’ results, investors were more apprehensive over the outcome of nine months results of banks.

And when the banks made their corporate earnings available for the nine months to September 30, 2016, it was mixed performance. Some banks reported growth in profit, while some ended with lower bottom-lines.

However, Access Bank Plc is among the banks that recorded improved results for the nine months, thereby raising shareholders’ hopes for higher returns on investments at the end of the current financial year.

Revenue and Profitability

Access Bank reported gross earnings of N274.5 billion, showing an increase of seven per cent compared with N257.6 billion posted in the corresponding period of 2015. An analysis of the gross earnings indicates that interest income rose 17 per cent to N181.2 billion, from N155.4 billion in 2015. The growth was realised on the back of continued growth in the bank’s core business. Non-interest income stood at N92.9 billion, down from N102.2 billion in 2015. Operating income grew by 12 per cent to N199.3 billion, from N178.1 billion in the corresponding period of 2015. Access Bank posted a profit before tax (PBT) of N72 billion, showing a growth of 19 per cent from N60.4 billion posted in the same period in 2015. Similarly, profit after tax (PAT) rose by 19 per cent from N48.1billion to N57.1 billion in 2016. Return on average equity stood at 18.8 per cent, as against 20.4 per cent in 2015.

Balance sheet

In terms of balance sheet size of Access Bank as at September 2016, the bank closed the period with loans and advances of N1.84 trillion, up by 30 per cent from N1.41 trillion in as at December 31, 2015. The Access Bank brand continued to be attractive to the customers leading to a growth of 25 per cent in customer deposits. Specifically, customer deposits grew from N1.68 trillion in December 31, to N2.1 trillion in September 30, 2016. Total assets improved by 31 per cent to N3.39 trillion, up from N2.59 trillion. Capital adequacy ratio stood at N19 per cent, which is well above the regulatory minimum.

Asset Quality/operational efficiency

Looking at the asset quality of the bank, the percentage of non-performing loans(NPL) to gross loans stood at 2.1 per cent, up from 1.7 per cent, which reflect the effect of the devaluation of the naira but remained also showed a stable asset quality. NPL coverage ratio remained strong at 209.5 per cent as against 216.4 per cent as at December 31, 2015. Impairment charges rose to N12.3 billion. From N11.6 billion in 2015, while cost of risk improved from 1.0 per cent in 2015 to 0.9 per cent in 2016.

In terms of operational efficiency, cost of funds improved to 4.0 per cent in 2016, from 5.6 per cent in 2015. Similarly, cost to income ratio improved from 59.6 per cent to 57.7 per cent in 2016. However, net interest margin rose to 6.5 per cent, from 6.0 per cent in 2015.

GMD/CEO explains performance

Explaining the results, the Group Managing/Chief Executive Officer of Access Bank, Mr. Herbert Wigwe said the bank’s performance in the first three quarters of this year remained strong and consistent, reflecting a stable business with the capacity to deliver sustainable returns, particularly during a period underlined by significant macro headwinds.

“The Group recorded a 19 per cent growth in pre-tax profits to N72.0 billion and a net interest income growth of 40 per cent to N106.4 billion, benefiting from enhanced business efficiency as a result of the effective execution of our long-term strategy.

Against the macro economic backdrop, we maintained stable asset quality, recording NPL and cost of risk ratios of 2.1 per cent and 0.9 per cent, respectively. Our capital and liquidity position remained adequately above regulatory levels, as we continued to implement a disciplined capital plan, ensuring sufficient levels of profit retention to support our growth.”

He said that in addition to capital enhancement, the recently concluded $300 million senior unsecured debt issue allows the bank to optimise and enhance its foreign currency funding capacity whilst strengthening its balance sheet.

“We remain committed to our cost containment plan, as we strive to balance operational efficiency with earnings growth in a constrained environment. The bank will remain resilient in the achievement of its strategic imperatives; maximising our strong market position and solid capital base, while leveraging digital innovation to improve service touch points as we sharpen our retail play with emphasis on cheaper funding sources,” he said.

$300m Eurobond boost

Access Bank Plc successfully raised US$300 million via a Eurobond from the international bond market recently, a development expected to boost its operations going forward. The successful issue made Access Bank the first Nigerian bank to raise a bond from the international market this year despite the country’s macroeconomic headwinds.

The bank’s management explained that the successful outcome of the bond demonstrated the strength, resilience and international endorsement of Access Bank Plc.

Access Bank currently has two series of Eurobonds in issue – the $350 million maturing in July 2017, at a coupon of 7.25 per cent, and the $400 million (9.25 per cent) maturing in June 2021 – as part of a $1 billion global medium-term note programme.

Commenting on the bond, Wigwe said: “The bond will be for working capital, for lending to investment-grade names, including Nigerian companies seeking to expand their exports.”

He emphasised that the process signified a significant moment in the bank’s journey to entrench itself as one of Nigeria’s top three banks by 2017.

“It also ensures that we keep our promise of speed, service and security to our customers as we target Africa’s fastest-growing industrial sectors”, he added.

Access Bank is now one of the top three banks in Nigeria and ranked among the top 500 global banks, according to a 2015 report by The Banker magazine and is aiming to be Africa’s top bank.

The bank recently won the Best Branch Automation Project in the 2016 Asian Banker Awards; the 2016 Karlsruhe Outstanding Business Sustainability Award; 2016 Euromoney Africa’s Best Bank Transformation Award; and the EMEA Finance ‘Best Bank of the Year’ and CEO of the Year.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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USAID/Power Africa Announces $2.6m in Healthcare Electrification Grants to Solar Energy Companies in Nine Countries in Sub-Saharan Africa

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 Power Africa, through the United States Agency for International Development (USAID), announces grants totaling $2,620,650 to solar energy companies to provide reliable, affordable off-grid electricity to nearly 300 healthcare facilities in sub-Saharan Africa.

Nearly 60 percent of all healthcare facilities in sub-Saharan Africa have no access to electricity, and of those that do, only 34 percent of hospitals and 28 percent of health clinics have reliable, 24-hour access.  Energy is critical for powering essential devices, medical and sterilization equipment, diagnostics, cold storage for vaccines and medication, information technology, and lights to enable the delivery of continuous health care services. Efficient health services and responses to diseases – including COVID-19 – depend on reliable access to electricity.

In support of the accelerated provision of off-grid solar energy to healthcare facilities in sub-Saharan Africa, Power Africa is awarding grants to the following solar energy companies: 

  • Havenhill Synergy Ltd. (Nigeria)
  • KYA-Energy Group (Togo)
  • Muhanya Solar Ltd. (Zambia)
  • Nanoé (Madagascar)
  • OffGridBox (Rwanda)
  • OnePower (Lesotho)
  • PEG Solar (Ghana)
  • SolarWorks! (Mozambique)
  • Zuwa Energy (Malawi)

These companies will utilize Power Africa funding to provide off-grid solar electricity solutions to 288 healthcare facilities across the nine countries represented.

“Solar energy holds great potential to expand and improve health care delivery in sub-Saharan Africa, and off-grid solar technology offers a clean, affordable, and smart solution to electrify healthcare facilities located beyond the reach of national electricity grids,” said Mark Carrato, Power Africa Acting Coordinator. “Power Africa’s experience shows that off-grid solar energy systems can be rapidly deployed to even the most rural facilities.”

“These awards demonstrate what we can accomplish when the public and private sectors join together to break down the barriers to reliable electricity for rural healthcare facilities,” said Chris Milligan, Counselor to USAID, on September 22, 2020 during a virtual event announcing the grant awardees.

ABOUT THE GRANTEES AND HOW THEY WILL POWER HEALTHCARE IN RURAL COMMUNITIES

Havenhill Synergy will electrify 21 rural healthcare facilities in Oyo State, Nigeria, using an energy-as-a-service business model. The facilities are mostly within peri-urban communities with limited reliable electricity access. Havenhill will provide long-term operation and maintenance of the solar energy systems.

KYA-Energy Group will electrify 20 health centers in Togo. In addition to electricity access, KYA will provide automated solar hand washing stations for infection prevention and solar phone charging stations for generating additional income.  

In partnership with the Churches Health Association of Zambia, Muhanya Solar Ltd. will provide electricity access to seven rural health facilities in Zambia. Muhanya will also electrify staff housing to generate revenue for the operation and maintenance of the solar systems installed at the health facilities. 

Nanoé will electrify 35 rural health facilities in the Ambanja and Ambilobe districts of Madagascar. The company will deploy nano-grids with the health facilities as anchors and connections running to staff housing. Electricity will be sold to the surrounding communities to generate income for the operation and maintenance of the nano-grids. 

With their containerized solution, OffGridBox will provide renewable energy and clean water to six rural clinics in Rwanda. The company will also set up a pay-as-you-go (PAYGO) business model, selling electricity and clean water to the surrounding communities.

OnePower will electrify seven rural health facilities in Lesotho, using the facilities as anchor loads for mini-grids. In addition to powering the health facilities, the mini-grids will provide electricity access for rural communities served by the facilities. 

PEG Solar will provide electricity access to 91 rural community healthcare facilities in Ghana. PEG will adopt a private sector approach to energy service delivery for public health facilities, enabling rapid electrification of the facilities while significantly reducing the upfront financial burden of transitioning to solar energy. 

SolarWorks! will electrify 92 rural healthcare facilities in Mozambique’s Sofala province. To ensure sustainability of the systems beyond the grant implementation period, SolarWorks! will cover operational and maintenance costs of the solar energy systems for five years.

Zuwa Energy will install solar energy solutions in nine health facilities in Malawi. Electricity access will enable the facilities to provide higher-quality health services throughout the day and more comprehensive services at night. Additionally, Zuwa will electrify staff housing with the aim to increase staff wellbeing and retention rates.

“Through these grants, USAID is investing in a set of pilot projects that demonstrate how healthcare electrification can be delivered in a commercially sustainable manner, with strong private sector involvement,” said David Stonehill, the Lead for Power Africa’s Beyond the Grid initiative.  “These grants demonstrate the Power Africa model in action:  We use a modest amount of public funding to de-risk transactions, thus opening the door for private investment.”

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Market Cap of Five Largest Hotel Chains Decline by $25.2bn Amid Coronavirus Crisis

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World`s Five Largest Hotel Chains Lost $25.2bn in Market Cap Amid Coronavirus Crisis

The coronavirus outbreak has affected every sector across the globe, but the hotel industry is among the hardest hit. Although hotels implemented increased safety and sanitation measures and cautiously reopened for the summer travel season, recovery to pre-COVID-19 levels could take years.

According to data presented by Stock Apps, the combined market capitalization of Wyndham Hotels and Resorts, Choice Hotels International, Marriott International, Intercontinental Hotels Group, and Hilton Worldwide Holdings, as the five largest hotel chains in the world, hit $79.2bn in September, a $25.2bn plunge since the beginning of 2020.

Marriot International Witnessed the Biggest Market Cap Drop in 2020

To curb the spread of the virus, countries across the world have imposed lockdown rules, leading to thousands of canceled vacations, and closed hotels between March and May. Although many of them lifted off travel restrictions in the last three months, the first two quarters of the year produced colossal revenue and market cap drops to the largest hotel chains globally.

The market cap of Wyndham Worldwide, the biggest hotel chain in the world by the number of hotels, stood at $5.89bn in December, revealed the Yahoo Finance data. By the end of March, this figure dropped to $2.93bn. Although the second and third quarter of 2020 brought a recovery, the combined value of stocks of the U.S. corporation, which owns 8,092 hotels, stood at over $5bn in September, an $870 million plunge since the beginning of the year.

The second-largest hotel chain globally, Choice Hotels International, lost $440 million in market capitalization amid the coronavirus crisis. In December 2019, the total value of stocks of the company that owns 7,118 properties amounted to $5.76bn. During the last nine months, this figure dropped to $5.32bn.

However, statistics indicate that Marriot International, the third-largest hotel chain with 5,974 hotels in more than 110 countries, witnessed the most significant drop in market capitalization since the beginning of the year. In December, the combined value of stocks of the Washington-based corporation stood at $49.51bn. By the end of the second quarter, it halved to $24.25bn. Although the company’s market cap recovered to $33.86bn in September, this figure still represents a 31% plunge since the beginning of 2020.

Intercontinental and Hilton Lost $8.3bn in Total Stock Value

Intercontinental Hotels Group ranked as the fourth largest hotel chain globally, with 5,070 hotels across nearly 100 countries. Statistics indicate the market capitalization of the British multinational hospitality company amounted to $12.3bn in December 2019. After falling to $6.2bn in March, it rose to $9.7bn in September, a 21% plunge amid the coronavirus crisis.

The total value of Hilton Worldwide Holdings stocks, the fifth-largest chain of hotels globally, dropped by $5.66bn since the beginning of 2020. In December, the market cap of the hotel group that generated around $9.45bn in revenue last year stood at $30.94bn. After a sharp drop caused by the Black Monday crash, it recovered to $25.28bn in September. Nevertheless, the figure represents an 18% fall since the beginning of the year. Statistics show two hotel groups lost $8.3bn in combined market capitalization amid the coronavirus crisis.

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Premier League Brand Value Hit €8.5bn, Bigger than La Liga and Bundesliga Combined

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Brand Value: Premier League Worth €8.5bn, More than La Liga and Bundesliga Combined

The revenues of the big five European football leagues have soared in the last twenty years, reaching €17bn in the season 2018/2019. However, English Premier League convincingly tops the list of professional football competitions in Europe, both in terms of profit and brand value.

According to data presented by Safe Betting, Premier League hit €8.5bn in brand value in 2020, 19% more than La Liga and Bundesliga combined.

€1.5 bn Higher Revenue than Other Top Football Leagues

Besides leading in brand value, the Premier League also generates the highest revenue of all the European football leagues and has the highest operating profit. Although the coronavirus outbreak caused a massive financial hit to England’s top division teams, Premier League clubs are still expected to generate at least €1.5 bn more than their counterparts in Germany and Spain, revealed the Deloitte Annual Review of Football Finance 2020.

The reason for that is broadcasting rights. Statistics indicate the Premier League clubs are set to reach €2.4 bn in revenue from broadcasting rights this season. Commercial revenues are forecast to hit €1.7bn value in 2020, a €139 million increase year-on-year. Matchday profits follow with €614 million in revenue this season.

Manchester United tops the list of the professional football clubs in England, with over €1.3bn in brand value in 2020, revealed the Brand Finance Football 50 – 2020 survey. Statistics show the club generated €627 million in revenue last year, while its wage costs amounted to €352 million. The 2019 Global Sports Salaries Survey also revealed that Manchester United’s first-team players earned an average of €6.8 million last season, ranking as the second leading football club in Premier League and seventh globally.

Liverpool FC hit over €1.2bn brand value this year, the second-largest among all Premier League clubs. Deloitte’s Annual Review of Football Finance 2020 showed the club generated €533 million in revenue in season 2019/2020, while its first-team members earned an average of €6.1 million last year. Liverpool also represents the second most-expensive football team globally, with €1.02bn in the combined market value of its 30 players.

Manchester City ranked as the third most valuable football brand in England, with over €1.1bn in brand value in 2020. However, statistics show the club, which generated €538 million in revenue last season, tops the list of the highest-priced football teams in 2020, with €1.04bn in the combined market value of its 31 players. In the 2019/2020 season, Manchester City had an average annual first-team member salary of €7.7 million, the highest among all Premier League clubs.

La Liga Has the Most Valuable Football Club Brands

Although La Liga ranked as the second leading European football league with almost €4bn in brand value in 2020, statistics show the two top Spanish clubs represent the most valuable football brands globally.

Real Madrid and FC Barcelona both hit over €1.4bn in brand value this year, accounting for 70% of the total brand value of the highest-leveled Spanish football league.

Statistics show the first-team players of Real Madrid, the world’s largest football brand, earned an average of €9.45 million this season. At the same time, their combined market value hit €930.3 million, ranking them as the fifth most-expensive football team in the world.

FC Barcelona, the second most valuable football brand in the world, tops the list of European football clubs with a €10.4 million average annual player salary in the season 2019/2020. The club’s players also represent the third most expensive football team globally, with €1bn in their combined market value. Moreover, the Spanish football giant hit a record revenue of €813.3 million in the season 2018/2019 and ranked as the biggest cash-generating football club for the first time.

With €3.2bn in brand value or 2.6 times less than Premier League, Bundesliga ranked as the third most valuable European football league. The leading German football club and the sixth globally, FC Bayern München, accounts for one-third of that figure, with over €1bn in brand value this year.

Italy’s Serie A and French Ligue 1 follow, with 1.8bn and 1.2bn in brand value, respectively.

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