July 05, (THEWILL) – In recognition of its outstanding performance, Access Holdings PLC has been named the leading Tier-1 Bank in the 2024 Proshare Bank Strength Index (PBSI) report.
THEWILL reports that Tier 1 describes an institution’s core capital or the core asset holdings of a bank. These assets are usually the most stable and liquid assets a bank possesses, with high-risk aversion. Tier 1 capital includes shareholder equity and retained earnings.
The PBSI, which evaluates banks based on a comprehensive set of financial metrics derived from audited financial statements for the Financial Year 2023, underscores Access Holdings’ significant strides in the banking sector.
Proshare’s latest report places Access Holdings at the forefront, alongside other prominent institutions such as Zenith Bank, FBNH, Ecobank, UBA and GTCO.
As the Nigerian banking sector evolves, Access Holdings stands out for its proactive approach to addressing macro and microeconomic risks. The report draws parallels to the challenges faced by United States banks, such as Silicon Valley, First Republic, and Signature Banks, in 2023, due to poor asset and liability management (ALM).
With the Central Bank of Nigeria’s ongoing banking sector recapitalisation programme, the report highlights the importance of investment in financial technology, customer service scalability 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 further highlighted Nigeria’s economic trajectory, noting, “Nigeria’s GDP in 2005 was N38.78trillion and rose to 77.94trillion, roughly two times in 2023, suggesting an average annual growth rate of 3.55 percent in the last two decades. However, between 2000 and 2005, bank equity sizes grew over ten times or by 1,150 percent from N2 billion to N25 billion. In other words, for a decade and a half, banks have used ten times more equity in their businesses than before 2005, yet the country’s GDP growth has been modest.”
It, however, clarifies that simply raising Nigerian banks’ equity base is not a guarantee for economic growth and development.
“Transforming bank equity into drivers of economic growth requires more than money; it requires a coordinated public and private sector plan, with what Proshare analysts have repeatedly called a whole-of-government approach to policies, programmes and processes”, the report stated.
Reviewing bank performances in 2023, Proshare analysts observed that banks were pursuing increasingly aggressive approaches to acquiring digital market share while supporting lower operating (costs and lower cost-to-income ratios (CIRs)).
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