ASO Savings & Loans Plc has posted a modest profit after tax of ₦89 million for the financial year ended December 31, 2023, a slight improvement from the ₦85 million profit recorded in 2022. The performance signals continued resilience in Nigeria’s competitive mortgage banking and savings and loans sector, despite rising operational challenges.
According to its audited financial statements, recently released, the mortgage institution’s interest income for 2023 stood at ₦1.16 billion, while interest expense amounted to ₦1.01 billion, resulting in a net interest income of ₦146 million. This reflects a thin margin, highlighting the tight spread environment for lenders amid macroeconomic uncertainties and rising funding costs.
In addition to interest-based earnings, the bank recorded ₦38 million in net fee and commission income and ₦216 million in other income, bringing its total operating income for the year to ₦400 million.
However, profitability was weighed down by high personnel expenses of ₦933 million and credit loss allowances totalling ₦132 million, suggesting that the firm continues to grapple with non-performing loans and wage pressures.
Balance Sheet Growth and Lending Expansion
Despite the slim profit margin, ASO Savings & Loans grew its total assets to ₦79.46 billion at the end of 2023, up from ₦73.37 billion in 2022, marking a ₦6.09 billion increase. The firm also reported an increase in loans and advances to customers, which rose to ₦9.19 billion from ₦8.38 billion — an indication of improved lending activity.
On the liabilities side, customer deposits climbed to ₦25.54 billion, suggesting growing public confidence and deposit mobilisation. However, borrowings also increased significantly to ₦16.85 billion, which could reflect rising financing costs or increased capital requirements to support lending.
While total equity dropped to ₦34.77 billion from ₦38.60 billion in 2022 — a decline of ₦3.83 billion — the company still maintains a relatively strong capital base to support ongoing operations.
Sector Context and Outlook
ASO Savings’ performance in 2023 reflects broader trends in Nigeria’s financial services and mortgage sector, where operating costs, regulatory challenges, and credit risk continue to impact profitability. Nonetheless, the company’s ability to stay profitable — albeit marginally — amid these headwinds is seen as a testament to operational resilience and prudent risk management.
Analysts note that while high personnel costs and loan impairments dented margins, the growth in assets, loans, and customer deposits presents a path for future earnings improvement, especially if the firm can control overheads and improve loan recovery rates.
As a key player in the Nigerian mortgage banking landscape, ASO Savings & Loans is expected to leverage its asset base and market presence to expand its housing finance portfolio, especially amid the federal government’s push for affordable housing and financial inclusion.
The management has yet to release forward-looking guidance, but stakeholders will be keenly watching how the company manages its cost structure, credit quality, and capital adequacy going into 2024.
