Loss of Junior Market tax concession hits Access yearly profit
Loans provider Access Financial Services Limited (AFS) reported on Friday last (January 31), a consolidated after-tax profit of $369 million for the nine months ended December 31, 2019, representing a 37 per cent decline in net profit year-on-year.
This decline, according to Chief Executive Officer Marcus James, was influenced by lower interest margins and increased allowances for credit losses in keeping with the significant growth in loan portfolio.
The performance of the period under review was also impacted by increased income taxes as the 10-year Junior Market tax concession has expired, alongside the performance of Embassy Loans Incorporated, which was acquired in 2018.
Net operating income for the nine-month period amounted to $1.69 billion, an increase of $363 million, or 27 per cent with the consolidation of Embassy Loans.
The company experienced year-on-year growth in loan disbursements, with AFS and Embassy Loans achieving 32 per cent and 29 per cent increases, respectively.
In addition, allowance for credit losses increased with the growth in Access’s loan portfolio, the inclusion of Embassy Loans, and the change to the expected credit loss model, which is required to comply with International Financial Reporting Standards (IFRS) 9.
The IFRS provides a common global language for business affairs so that company accounts are understandable and comparable across international boundaries. IFRS was developed by the International Accounting Standards Board, an independent, non-profit organisation.
As of December 31, 2019, the group’s asset base stood at $5.87 billion, reflecting an increase of 17 per cent or $869 million, while total liabilities increased by $839 million year-on- year to $3.4 billion.
Earnings per share ended at $1.34, a decrease when compared with the $2.13 recorded in the corresponding prior period.