Access Financial rebounds in first quarter, but gaps remain
Published:Friday | August 6, 2021 | 12:10 AM
Microfinance company Access Financial Services Limited, AFS, has closed some of the gap from the fallout in the early stages of the health crisis, but its first quarter earnings are still tracking below pre-pandemic levels.
Access made net profit of $89 million for the April-June 2021 quarter, which was 171 per cent higher than the $33 million in earnings reported in the comparative 2020 period. But relative to 2019, profit was down 46 per cent.
The microfinancier’s core revenue, interest income from loans at $388 million, was also back on the upswing, though marginally relative to 2020, but also underperformed the pre-pandemic inflow of $407 million.
“These results reflect an improvement in the operating environment as economic activity continues to increase following the relaxation of the COVID-19 containment measures,” said Chairman Marcus James in the preamble to the company’s quarterly report.
James, the founder of Access Financial and its CEO since the company’s formation, was appointed executive chairman on June 3. The job of CEO was passed to Frederick Williams, who was promoted to the position from within.
COVID-19 has battered the microfinance sector locally. With the rise in unemployment, and the limitations on business from the measures to fight the virus, loan repayments have been pressured.
Microlenders responded by lowering loan caps, targeting loans to specific ‘safe’ sectors, implementing measures to get borrowers back on track in servicing their debt, and safeguarding cash for business continuity as uncertainties lingered around how long the pandemic would persist.
AFS itself had booked $29 million in allowance for credit losses last June due to higher delinquency levels, and had built a cash pile of $857 million in June 2020, up from $530 million the prior year.
Improvement in delinquencies
But as business slowly rebounds from the relaxing of COVID-19 measures, the company is reporting signs of improvement in delinquencies.
“Excluding the allowance for loan losses, operating expenses for the period decreased seven per cent year over year, as we implemented measures to improve our operational efficiency. Allowance for credit losses also decreased by $7 or 10 per cent year over year due to improved delinquency management,” James said.
The company’s loan portfolio has improved by three per cent to $4.15 billion in the June quarter. Access now holds cash of $354 million, less than half the levels of the year-prior period, while its total assets is also down by seven per cent to $5.37 billion.
The senior management and board-level changes in June came amid the transitioning of the microlending sector to central bank oversight, which is to happen by the middle of next year. The previously unregulated microfinancing firms will now need permits from the Bank of Jamaica to do business, under the new Microlending Act passed in January.
James has said Access Financial sees opportunities within the microfinance space as a result of the sector’s reformation, which requires robust record keeping and reporting to the central bank and adherence to new regulations, but hasn’t been clear on whether those include acquisitions.