Durrant Pate/ Contributor

Despite recording a double-digit dip in net profits for its half-year, micro-financier, Access Financial Services (AFS) seems poised for growth.

That’s the word from development economist and financial analyst Dr Chris Stokes, who articulated that the publicly listed company has been making the right moves, the latest indicative that the management is repositioning the firm for continued growth.

AFS reported less than favourable six-month financial returns with net profits dropping 26 per cent.

However, Stokes reasons: “The indication that some substantial investment in IT infrastructure will be made and that the strategy of geographic and business segment diversification will be deepened suggests a repositioning of the firm for continued growth.”

Moving forward, the development economist and financial analyst is expecting there to be a sustained period of interest rates higher than what they have been in recent years, explaining that AFS’ first line of defence is its governance structure and risk management practices. Continuing, Stokes posited that the systems and leadership to navigate what may come exists within AFS.

AFS able to overcome current challenges

He pointed to other tangible factors such as profitability, capitalisation and liquidity give the company elbow room to arm itself for present and future challenges.

According to Stokes, “debt financing will become more expensive and continued write-offs in the consumer loan business may be expected to accelerate consistent with what we have seen in other financial institutions”.

He made reference to lessons “learned from Scotiabank in the 1990s’ financial crisis that loan policy matters and that when one must choose between balance sheet growth and containing loan risk, the latter will prove better sooner or later. We will have to see how disciplined AFS is in this regard”.

Stokes opined that the new licensing requirement for micro-lenders could work in favour of Access, which became the first in the micro sector to get central bank approval in July this year. Pointing to the triple B rating AFS received from regional credit ratings agency Caribbean Information and Credit Rating Services (CariCRIS), Stokes stated that the rating was considered adequate and indicates that AFS has a moderate credit risk.

CariCRIS reported that the outlook for AFS was stable noting its assessment was “based on our expectation that over the next 12 to 15 months, AFS will continue to record good financial performance and maintain all its key credit drivers including good asset quality as well as adequate capitalisation and liquidity metrics”.

Unedited financial statement details

AFS’ unaudited financial statement published on November 1 this year reported a seven per cent increase in operating revenue over the same six-month period in 2021, in line with what the company said was a growing loan portfolio.

However, the financial statement showed operating costs had increased by 14 per cent, due to increases in staff costs, non-recurring debt financing expenses and loans written off.

Total assets amounted to J$6.31 billion as at September 30, 2022, representing an 11 per cent increase over the same period in 2021. AFS remains among the leading lenders in the micro-finance sector.

During the September quarter, the company raised J$2.05 billion in corporate bonds to replace existing debt and provide financing for loan disbursements and IT capital expenditures.