By Durrant Pate

Micro lender Access Financial Services Group has seen its profits shrink considerably due to COVID-19, only managing to record consolidated net profit after tax of $62 million for the six months ended September 30, 2020.

This is way below the $280 million recorded for the similar period in 2019, representing a decline of 78 per cent.  The performance of the micro credit group reflects the impact of COVID-19 over the past six months.

However, the group, in its latest half yearly unaudited financial review, says it continues to manage the effect of the global pandemic with its customers to resume economic activity. Loan disbursements have shown improvement during the second quarter, as the micro lender executed it successful ‘Back to School’ campaigns in both Jamaica and Florida.

This campaign sought to digitally equip Access Financial customers’ children for the new learning environment. As at September 30, 2020, the Group’s asset base stood at $5.47 billion, reflecting an increase of three per cent or $159 million year over year.

Managing liquidity during the pandemic

Cash and cash equivalents amounted to $683 million for the period under review, reflecting higher than normal levels to manage liquidity risk during the pandemic. Loans and advances now stand at $3.9 billion, a reduction of 11 per cent year over year based on the lower level of disbursements.

Net operating income for the half-year period amounted to $887 million, a decrease of $224 million or 20 per cent compared to the corresponding period last year. However, there was an increase in net operating income of $27 million or six per cent over the last quarter, as customers increased their level of borrowing.

The increase over the last quarter was due in part to the group’s successful execution a number of delinquency management strategies to collect on outstanding bad debts. On the negative side, net interest income and net fee and commission income was lower year-over-year based on the reduction in disbursements for the period but stable quarter over quarter.

Operating expenses slightly down

Operating expenses for the six-month period was $805 million, slightly lower than $825 million recorded in the prior year. Excluding the allowance for loan losses, operating expenses for the period decreased by $13 million or two per cent year over year, due to the implementation of measures to increase operational efficiency.

Allowance for credit losses increased over the last quarter due to higher delinquency levels stemming from the impact of COVID-19, albeit slightly improved when compared to the prior year. The 78 per cent decline in net profits to $62 million resulted in earnings per share for the period of $0.22 compared to $1.02 for the prior year.

11% reduction in loans and advances

Regarding loans and advances, the news wasn’t good, as this segment of the business registered an 11 per cent decline year-over-year to $3.9 billion. The decline since March of this year was 13 per cent, as a result of the lower level of disbursements during the year.

In its report to shareholders, Access Financial states, “we continue to monitor our delinquency levels which have improved quarter over quarter, as some customers have resumed meeting their loan commitments. We have also seen an improvement in the results from our collections strategies implemented during the quarter.”

Total assets as at September 30, 2020 amounted to $5.47 billion, compared to the restated amount of $5.31 billion as at September 30, 2019. Total liabilities increased by $25 million or one per cent year over year to $3.19 billion as at September 30, 2020 and declined by $356 million or 10 per cent since June 30, 2020.

Access reports that during the quarter funds were used to settle the maturity of its J$200 million corporate bond in August 2020 and US$1 million senior secured notes.

The month of September 2020 marked Access Financial 20th anniversary with the group boasting about its role in providing financial services to micro-entrepreneurs and individuals across Jamaica. To mark the milestone, the micro-finance group launched the Access Yes! Education Scholarship Programme, which will make educational grants totaling $800,000 available to its customers.