Access Holdings secures top spot in bank strength index ranking

Business a.m.

Access Holdings PLC has emerged as the leading Tier-1 bank in the 2024 Proshare Bank Strength Index (PBSI) report, a testament to its exceptional performance and growing influence in Nigeria’s banking industry.

The PBSI, which ranks banks based on a comprehensive set of financial metrics derived from their audited financial statements for the Financial Year 2023, highlights the strides that Access Holdings has made in the banking sector. 

Proshare’s latest report placed  Access Holdings to the forefront of the Nigerian banking landscape, recognising the bank as an industry leader alongside other established institutions such as Zenith Bank, FBNH, Ecobank, UBA, and GTCO.

In the ever-changing Nigerian banking landscape, Access Holdings has proven to be a trailblazer, adopting a proactive approach to mitigate macro and microeconomic risks.

This proactive stance is particularly significant in light of the report’s comparison of the challenges faced by Access Holdings to those encountered by American banks like Silicon Valley, First Republic, and Signature Banks, which were largely due to poor asset and liability management (ALM) in 2023.

The recent report by the financial market intelligence provider underscores the significance of the Central Bank of Nigeria’s recapitalisation programme for the banking sector, especially in terms of its impact on future investments in financial technology, scalability of customer service, and digital asset engineering between 2024 and 2026.

The analysts emphasise that, “With higher capital levels, banks must use the larger amounts of cash available to improve shareholder returns and customer service experiences. Many banks will get cut at the knees by lacking a deliberate strategy to transition from cash flow to value creation.

The report also examined Nigeria’s economic trajectory, underscoring the contrast between the country’s GDP growth and the growth in bank equity sizes over the past two decades.

Despite the Nigerian economy growing at an average annual rate of 3.55 percent between 2005 and 2023, banks have been allocating ten times more equity to their businesses than they did prior to 2005.

This highlights a crucial disparity between the growth of the banking sector and the overall economy, which may signal a need for greater alignment between the two for sustainable long-term growth.

Although increasing the equity base of Nigerian banks has the potential to spur economic growth and development, the report emphasises that it is not a silver bullet solution.

Transforming bank equity into drivers of economic growth, the report notes, necessitates more than just financial capital; it requires a concerted effort between the public and private sectors to devise and implement a comprehensive plan that considers the entirety of the Nigerian economy’s needs and challenges.

The review by Proshare analysts found that banks were becoming more aggressive in their pursuit of digital dominance, often accompanied by a drive to lower their operating costs, as reflected in lower cost-to-income ratios.