This publication recently spoke to the CEO of Access Bank UK, part of the Nigerian banking group Access Bank.
One of the lessons of recent years in banking is that size of assets under management is not necessarily the best measure of success. Profit margins, loyalty of clients and quality of service, by contrast, are what count.
And if you are a bank with roots in a part of the world that unfortunately carries the burden of a reputation for weak governance and corruption, the business of establishing a rock-solid track record is even more critical, and therefore, it is even less important to go after AuM growth at all costs.
In the case of Access Bank UK, this business, part of Nigeria’s Access Bank group, is looking to grow steadily. It forms part of a narrative that this publication has been tracking now for some time – the slow but sometimes under-appreciated potential of Africa as a wealth management market. (To view more on this topic, click here.)
This publication recently caught up with Jamie Simmonds, the chief executive of Access Bank UK. It is a role he has held since January 2008. His career has been varied: he’s held director roles at National Westminster; Coutts; Royal Bank of Scotland; Close Brothers and Gerrards.
Access Bank UK achieved regulatory clearance from the-then Financial Services Authority in the summer of 2008; the most up-to-date figure for assets under management (end-December 2013) is £28.4 million ($47.7 million) and is part of Nigeria-incorporated Access Bank, one of the four largest banks in that country. (The parent bank was listed in Nigeria in 1998.) Access Bank UK serves clients from the UK and Africa.
“We were particularly keen to make progress in private banking and from the results [to the end of 2013 published recently] we are continuing to make good progress and grow that business,” Simmonds told WealthBriefing in an interview.
A few weeks ago, Access Bank UK said profits rose by 30 per cent to £2.3 million. Net fee and commission income rose 10 per cent year-on-year. Banking transactions rose by 39 per cent. The cost/income ratio has tightened due to a 5 per cent hike in income during 2013, while costs rose by 2.5 per cent. While from a low base, such growth rates are impressive.
“We have deliberately taken it slowly, avoided risk and wanted to build up a solid track record before actively marketing our services,” Simmonds continued. “Portfolios continue to give good returns. Operating a low-risk approach for clients since investment portfolios were established, the average performance across the dollar portfolios has seen them rise by 15 per cent per annum before fees over the last five years,” he said.
“We have been very careful from the outset that we were going to be a relationship-based bank, not a transactional one. We have been delivering that consistently. It has meant that funds under management doubled in the year to December 2013 and we expect them to increase by 30 to 40 per cent for the next five years,” he said.
“Clients who were with us from our launch in October 2008 are still with us. It means we can manage risk better because we can understand clients better.”
The bank caters to banks in Nigeria, Ghana and the UK, and customers in countries where the Access Bank group operates, namely Rwanda, Congo, Zambia, Sierra Leone and Gambia.
Asked about how the problems in Access’s home country of Nigeria should be viewed – news reports have been full of horrific stories of ethnic violence in the north of this populous country, Simmonds said through a large part of Nigeria, the business climate is positive.
“Business continues to be good; we continue to provide trade finance to keep the inflow of goods coming to Nigeria and that propels the economy,” he said. He said that on some measures, the size of the Nigerian economy has already overtaken that of South Africa.
“If you look at GDP growth in Nigeria over the last 10 years, it has grown at an average rate of 7.5 per cent,” he said.
“As many of our individual clients have commercial and trading interests in the UK and other OECD countries, they benefit from being able to use our trade finance and commercial banking services.
Philanthropy and outreach
Simmonds and colleagues are keen to point out how the bank and its Nigerian parent firm support philanthropic organisations in Africa. Access supports UNICEF, for example, through the Access Bank Charity Shield polo matches in Nigeria that have run for the past five years in conjunction with Fifth Chukker.
Three years ago these events were extended to the UK – on 14 June, Access UK hosts the UK leg of the UNICEF and Fifth Chukker “Access Bank Challenge Day” at Ham Polo Club, near Richmond.
By comparison with some organisations, Access Bank UK may be small, but it is plainly one to watch out for.