Access Holdings paid £36.7 million for UK Lender Zempler as falling earnings and 92% Cost Ratio raise concerns.
NewsOnline Nigeria reports that Access Holdings Plc’s acquisition of UK digital lender Zempler Bank Ltd. has delivered an immediate N27.28 billion accounting gain, but the target’s declining earnings, rising impairment charges and high operating cost ratio raise questions about the transaction’s potential contribution to the Nigerian banking group’s long-term profitability.
Access Bank UK Ltd., a subsidiary of Access Holdings, acquired 100 per cent of Zempler Bank on February 27, 2026, for £36.75 million in cash, equivalent to N67.70 billion or $49.61 million, according to the group’s financial disclosures.
The transaction involved no deferred or contingent consideration.
Based on the disclosed figures, the purchase translates to approximately N1,842 per pound and N1,365 per dollar, according to calculations by MoneyCentral.
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However, the acquisition comes as Zempler faces pressure on its earnings and operating efficiency, with its latest annual results showing declining profitability despite growth in customer deposits, lending and account numbers.
Formerly known as Cashplus Bank, Zempler is a London-based digital lender focused on microbusinesses and small businesses.
City A.M. reported in February that the bank was sold for approximately £3.45 per share, less than half the £80 million valuation attached to its 2020 funding round.
Zempler’s Earnings Decline Despite Deposit and Loan Growth
Zempler’s annual report for the year ended March 2026 shows that its pretax profit declined by 19 per cent to £4.23 million, while profit after tax also fell by 19 per cent to £2.78 million.
Gross revenue remained flat at £67.97 million, indicating that the bank’s earnings growth has not kept pace with the expansion of its balance sheet.
Customer deposits increased by 14 per cent to £713.3 million, while net loans rose by 38 per cent to £35.1 million, largely driven by card lending.
The number of open customer accounts also increased by 9.4 per cent to 186,364.
Despite the growth in deposits and lending, Zempler’s cost-to-income ratio deteriorated to 91.9 per cent from 90.7 per cent, suggesting that the bank is spending a larger proportion of its income on operating expenses.
Impairment charges also increased by 73 per cent to £6.53 million, pointing to higher credit-related costs during the reporting period.
Its Common Equity Tier 1 (CET1) capital ratio, however, improved to 21.7 per cent.
Zempler said it had opened more than 2.2 million accounts since its launch in its 2024 results, reflecting its established presence in the UK’s digital banking market.
Access Paid 13 Times Annual Profit for Zempler
At the £36.75 million purchase price, Access effectively paid approximately 13.2 times Zempler’s latest annual profit after tax.
The consideration also represents about 1.0 times the bank’s reported book equity of £36.79 million and approximately 5.2 per cent of its £713.3 million customer deposit base, based on MoneyCentral’s calculations.
Zempler’s return on equity stood at approximately 8 per cent, while its annual profit translates to roughly N5.12 billion at the exchange rate implied by the acquisition.
That contribution remains relatively small compared with Access Holdings’ nine-month profit after tax of N474.17 billion.
The bank’s balance sheet also raises questions about how effectively its deposits are being deployed into lending and other income-generating activities.
Zempler lends approximately 5 per cent of its customer deposits, while about 92 per cent of its acquired assets are held in cash and securities.
This structure means its earnings are significantly influenced by interest income from liquid assets and securities, making its returns sensitive to movements in UK interest rates.
With interest rates falling, the bank could face pressure on income generated from its cash and securities portfolio unless it improves lending activity, diversifies revenue or strengthens operating efficiency.
N27.28 Billion Bargain Purchase Gain Lifts Access’ Profit
One of the most significant features of the acquisition is the N27.28 billion bargain purchase gain recognised by Access Holdings.
The group recorded acquired net assets of N94.97 billion against the N67.70 billion cash consideration, resulting in the accounting gain.
The gain was recognised in the income statement and contributed to the group’s reported nine-month profitability.
However, the acquisition accounting remains provisional, with the valuation of customer deposits, receivables, other intangible assets and deferred tax yet to be finalised.
The disclosed valuation includes a N15.16 billion core deposit intangible, N16.16 billion in software and technology assets, and N730 million attributed to the Zempler brand.
Together, these intangible assets amount to approximately N32.04 billion.
Excluding these intangible assets, Zempler’s tangible net assets stood at N62.93 billion, below the N67.70 billion purchase consideration.
This means the reported bargain purchase gain depends heavily on the valuation of intangible assets recognised by Access.
The accounting treatment does not represent cash generated from the acquisition. It is a non-cash gain arising from the difference between the purchase consideration and the fair value of the identifiable net assets recognised in the transaction.
The provisional nature of the valuation also means the amount could change when the purchase price allocation is completed.
Acquisition Gain Masks Underlying Profit Growth
The N27.28 billion accounting gain has also influenced the interpretation of Access Holdings’ nine-month financial performance.
Without the gain, the group’s pretax profit of N667.36 billion would have increased by approximately 3.9 per cent year-on-year, rather than the reported 8.3 per cent growth.
This distinction is important for investors assessing the quality and sustainability of the group’s earnings.
While the acquisition has immediately boosted reported profit, the accounting gain does not demonstrate that Zempler has generated additional operating cash flow or improved its underlying profitability.
Investors will therefore need to monitor the contribution of the acquired bank to Access Holdings’ recurring earnings in subsequent reporting periods.
What the Zempler Acquisition Means for Access Holdings
The acquisition gives Access Holdings a foothold in the UK’s digital banking market and access to an established customer base, technology infrastructure and deposit franchise.
Zempler’s more than 186,000 active accounts, growing deposits and established microbusiness lending operations could provide opportunities for expansion under Access Bank UK’s ownership.
However, the financial profile of the acquired bank presents several challenges.
Its declining profits, nearly 92 per cent cost-to-income ratio and rising impairment charges suggest that Access will need to improve operational efficiency and manage credit risks before the acquisition can deliver stronger returns.
The bank’s relatively low loan-to-deposit ratio also presents an opportunity to expand lending, although doing so will require careful credit underwriting and risk management.
For Access Holdings, the transaction should ultimately be judged by its ability to generate sustainable earnings, improve returns on capital and strengthen the group’s international banking operations.
The immediate N27.28 billion accounting gain has improved reported profitability, but the more important test will be whether Zempler can turn its customer base, deposits and technology assets into stronger recurring income.
Until that happens, the acquisition’s headline accounting benefit should be distinguished from the operating performance of the business Access has purchased.
