Staying the course

With a parent being one of Africa’s top banks, The Access Bank UK, is enjoying both positive results and a position where its lending and balance sheet assets are relatively risk free. Jamie Simmonds, Chief Executive Officer and Managing Director at The Access Bank UK Ltd talks to MEA Finance about the progress of the bank and why they are on course to meet their strategic plan

As The Access Bank UK enters the third year of its current 5 year strategic plan, tell us more about the bank’s processes, strategies, and systems moving forward? What are your main areas of focus?

There are six core values that underpin everything we do: Excellence, Innovation, Professionalism, Empowered employees and Leadership to deliver our Passion for Customers. Our success is founded on the strong relationships we have developed with our customers, which has helped us to better understand and anticipate their individual needs and, in turn, reduce the operational risk to the Bank. This relationship-based approach contributed to a 20% year-onyear increase in 2019 income and has continued to drive growth in the third year of the bank’s current five-year plan.

One of our core measurements of operational efficiency, our cost income ratio, further improved in 2019, to 32.9% from 37.9% in 2018. Profit before tax increased 30% year on year to reach US $57.2 million in 2019 and our pre-tax return on average shareholder equity grew to 19.8% from 18.3% in 2018.

We continue to benefit from the strong support of our parent, which invested a further $30.7 million during the course of 2019, which, combined with a policy of reinvesting profits in the bank, led to a 29% increase in share capital at $327 million.

What do you see as the greatest challenges to the bank’s ability to meet its liabilities as they fall due?

The principal risks that we face include credit risk, documentary risk, anti-money laundering & know your customer (AML/ KYC) risk and liquidity risk. All risks are formally reviewed by the Board Risk and Audit Committee, together with the Board Credit Committee, with appropriate processes put in place to manage and mitigate these risks. The bank has adopted the ‘Three Lines of Defence Risk Management Framework’ that is familiar in the UK’s financial services environment. We have significantly mitigated any adverse impact from material movements in the value of Sterling by changing our functional currency into US Dollars.

Furthermore, the bank is predominantly focused on trade finance, and our balance sheet assets are primarily short term in duration, with 85% having a maturity date of one year or less. In addition, the bank’s lending to corporate and retail customers is typically secured.

The bank has flexibility to change its loan book in a relatively short time, both in terms of counterparties, and the underlying goods being financed, and therefore the bank does not consider that it has a significant structural exposure to climate change.

Jamie Simmonds, Chief Executive Officer and Managing Director at The Access Bank UK Ltd

The Access Bank UK in London

Framing these challenges, would you do things differently?

I would not make any significant changes to our approach given our focus on the delivery of relationship management. The key learning as a result of COVID-19 is that you can never be too close to your customers and on occasions need to encourage them to ask for assistance before small issues grow to a bigger concern.

Considering the current micro- and macro-economic conditions, what kind of risks do you anticipate the business to face across the markets in which you are present? Does The Access Bank UK have the adequate financial and capital resources to shield its operations as well as business from the risks to which it is exposed?

In Africa, as elsewhere, the COVID19 outbreak is impacting economic prospects. The African Development Bank estimate is that the continent’s GDP could contract by as much as 3.4% in 2020, compared with earlier projected growth of around 4.0% this year.

This will create some challenges in the short-term for Africa’s economy, but the continent still offers an abundance of opportunities for both local and overseas investors focused on the long term. Africa is currently home to 1.3 billion people, and in the next 30 years, its population is projected to almost double. As the number of people living on the continent increases to two and a half billion by the middle of this century, there will be an increasing demand for new goods and services, energy and infrastructure.

CHANNEL INNOVATION IS NO LONGER ABOUT BOLTING ON YET ANOTHER TOUCH POINT.

What is your approach on technology for the bank? What digital transformation efforts have The Access Bank UK carried out and where do you plan to go from here?

At the outset the Bank secured a modern technology platform which has been the subject of continuous investment and enhanced to ensure a flexible platform unconstrained by legacy issues. This has proved its worth when we became direct members of the UK Sterling system.

We are confident that this approach will provide a continued competitive advantage and will prove invaluable in the continued development of customer propositions.