FCMB Group Plc (FCMB) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to today's FCMB Group First Quarter 2021 Result Webcast and Conference Call. [Operator Instructions] I must advise that the conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Ladi Balogun, Group Chief Executive of FCMB Group. Please go ahead, sir.

Our Q1 2021 investor and analyst presentation. I would like to introduce others who are in the room with me today, which I will introduce in order of which they will be speaking. First of all, I have Kayode Adewuyi, who is the CFO of FCMB Group, the holding company. He will be taking us through the results overview after my introduction. We also have in the room today the Acting Managing Director of the bank, Mrs. Yemisi Edun, who'll be taking us through the commercial and retail banking review. And we have Mr. Femi Badeji, who is the Corporate and Investment Banking Director and will be taking us through the Corporate and Investment Banking performance review after Yemisi. Standing in for Mrs. Toyin Olaiya, who is currently unavailable, is Mrs. Bimpe Odunuga, and she will be talking us through the risk management review. Finally, we will be given a review of our investment management activities and performance by Mr. James Ilori, who is the Managing Director and CEO of FCMB Asset Management. Also with us today is Ori Rewane, our Head of Investor Relations. So moving on to Slide 4. I'd want to give a quick summary of the results and highlights and maybe just touch on the broad themes that we are seeing and pursuing. If we look at the results highlights, I think, certainly, what stands out is that there was a decline in profitability in Q1. Year-on-year, we saw a drop of 22% to NGN 4.2 billion in profit before tax. This consequently had an adverse impact on our return on equity, which dropped by 300 basis points. That being said, we did see that most of our customer-driven indices witnessed growth. We saw customers rising to 14 -- to 8.5 million, a 14% growth from where we were this time last year. Digital customers grew by 40% to 7.2 million, relative to where we were last year, 40%. And consequently, we've seen deposits and loans grow by 32% and 16%, respectively, year-on-year, and also assets under management grow by 16% year-on-year. So what we've really witnessed is while customer-driven revenue has actually been moving at a fairly strong pace, I think what we've seen is a nonrecurrence of foreign exchange revaluation gains as well as the drop in yields that we were enjoying this time last year, although we are beginning to see a recovery in those yields in Q2. Those 2 factors were, by and large, the most significant drivers of the reduction in profit. As a result, if I move to the next slide, on Slide 5, we are maintaining a strategic focus on driving innovation, our Retail Banking business, Investment Management and also turning around the Corporate & Investment Banking business. And I'll take each one of those one by one. What we're really trying to do as far as innovation is concerned is to make digital the most significant revenue and value driver in our banking activities. It goes without saying that most banks today are pursuing a not-too-dissimilar objective. Some of the key results that we are seeing is that our commissions in terms of payments or what some may call e-banking commissions that we're focusing it just on the mobile ones, which is where our focus is in terms of growth, we've seen that rise 8% quarter-on-quarter and 66% year-on-year with about NGN 714 million. So it was a transaction volume that rose by that much, but the actual revenue that we're earning rose by 21% quarter-on-quarter and 66% year-on-year. We're also focused on driving our SME and personal banking loans digitally. And this -- our digitally originated loans now represent about 119 billion -- NGN 113.9 billion. This is about 31% of our retail loan sales and -- by value and about 87% of the count. And finally, as mentioned in the earlier slide, our digital customers, which are those that basically use our mobile channels, which is USSD on the app, has risen 40% year-on-year. This has largely been due to effective digital marketing, an introduction of new products. So we can now -- our customers can now make investments through our app and also a simplified onboarding process. If we move on to Retail Banking specifically, where what we are doing here is to sustain a rapid and cost-efficient level of profit growth. And this has again largely been achieved through digital. And that's where we're seeing the cost efficiencies come in where we don't need to be adding more and more relationship managers, sales staff and potentially branches to grow our franchise. So in this regard, we've seen 18% year-on-year growth in retail deposits, many of this coming from the customers that we're onboarding. Many of these onboardings are happening digitally now. We've seen 30% year-on-year growth in retail risk assets, which is SME and Personal Banking. Again, as mentioned earlier, about 31% of the value of the loans being sold is now happening digitally. We believe by the end of this year, this will be more than 50%. And in terms of count, it's about 87% of the count, as mentioned earlier. Those ratios are actually higher if we're looking purely at Personal Banking, which has moved almost entirely to digital. In terms of profits, Retail, which is looking at a profit after full allocation of overheads of head office and so on, is now -- has seen about a 31% year-on-year growth in profitability to about NGN 3.8 billion. We think this momentum will continue during the year and could potentially accelerate as more products come onstream digitally and more and more of our customers are transacting with us via mobile channels. And our customer strength, as mentioned again, is at 8.5 million in total, of which 7.2 million are digital. Another critical aspect of our activities of the group is to drive our Investment Management business. And this has really been done by leveraging the group's customer base to grow and also our distribution to grow a more capital-efficient form of earnings. And in this regard, we've seen 23% year-on-year growth in our Investment Management activities, which is split between pensions and regular asset management. This has accounted for about 14% of our group profits, and we've seen about 16% year-on-year growth in assets under management. And finally, Corporate & Investment Banking, where we're very much in the process of turning around what has been an unprofitable corporate banking business for a couple of years largely because of a large drag of nonperforming loans. We are basically seeing there as well much sharper focus, where we're growing our wallet share of high-quality corporates and doing so in a more capital-efficient manner with focus on investment banking as well as transaction banking solutions, and by transaction banking, specifically value chain financing and technology-enabled payment solutions to drive this growth and achieve the objectives. So what we did see was that year-on-year there was a modest increase in profit, about 6%. Assets grew significantly by 29%. The net interest income constantly grew by 12% year-on-year, but there was a decline of about 1% in noninterest income in that side of the business, which Mr. Badeji will be talking us through that later. I'll now hand you over to Kayode Adewuyi, the group CFO, just to walk us through the overview of the results in a little bit more detail.

Thank you, Ladi. Good afternoon, ladies and gentlemen. I'll be speaking from Slide 7 to 9, which provide a summary of the group performance. Slide 7 provides a summary of the key ratios for the group. As we've mentioned before, overall, quarter performance dipped because of lower yields on earning assets, reduced revaluation gains and dip in FX income. But we saw some positive news in some aspects of the business. Fees and commission income increased. Retail lending and loan recovery all improved during the quarter. And we expect them to gather momentum for the rest of the year. Our capital adequacy ratio and liquidity ratio, though they dipped slightly in the quarter, are still above the minimum regulatory requirements. We grew risk assets by 16% and deposits by 32% year-on-year. Assets under management grew 16% year-on-year, though it remained slightly flat quarter-on-quarter. We'll provide more details on that one in investment management review. Slide 8 provides a snapshot of our profit or loss statement. Profit before tax dipped 22% year-on-year because, as I mentioned before, of a decrease in net interest income and FX income. Operating expenses increased slightly by 3% due likely to increase in regulatory charges and inflationary pressures. Regulatory charges was responsible for the increase we saw year-on-year growing by 28%. Our impairment charges dropped significantly during the quarter by about 51%. Slide 9 summarizes the contribution of our different investment groups to the overall group's profit. Investment Management and Corporate & Investment Banking groups showed improvement year-on-year. We see greater contribution from our Investment Management business as its profit is increasing and its contribution to overall group profitability keeps increasing as well. I will provide some more color on that Investment Management review. I'll now hand over to Mrs. Yemisi Edun to take us through the Commercial and Retail Banking numbers.

Thank you, Kayode. Good day, ladies and gentlemen. I'll be picking from slides 11 to 21, which is on the review of Commercial and Retail Banking business for Q1 2021. I'll start with Slide 11, which looks at Commercial and Retail Banking major authorities for 2021 with the overall objective of leveraging technology and innovation to improve financial performance. Among the various initiatives being embarked upon in the bank, we focused on these 3 priorities in the year to enhance customer experience across personal and SME lending, payments, remittances, customer acquisition, and low-cost deposit group. The first is on leveraging data to improve the quality and quantity of digital credit origination in consumer and SME lending. The second is about maintaining positive trajectory on electronic fees and commission for revenue diversification. And the third is on leveraging our digital competencies to increase customer acquisition, low-cost deposits and digital adoption. With that said, I'll move on to the numbers and start on Slide 12, which speaks to Retail Banking segment performance as following. Personal Banking contributed 50.3%, a 9% quarter-on-quarter growth from the last quarter, as we remain on course with our strategy of using innovation and technology to enhance retail transactions. The segment has always retained a strong deposit base with a stable low-cost mix, which has positioned the business for sustainable growth and profitability. We're also seeing the acceptance of our innovative propositions designed with a customer-first approach and digital agility. We remain committed to the core pillars of using product innovation and technology to grow transaction volumes, improve cost efficiencies and enhance customer experience. On the SME business, the segment contributed 32% to net revenue from growth in net interest income, supported by the automation of SME lending platform and collaborative partnerships with DFIs to provide long-term affordable funding to SMEs across different sectors of the economy. The Commercial Banking segment contributed 2%; institutional banking, 4%; while FCMB U.K. Limited contributed 3.5% to net revenue, respectively, during the quarter. Moving on to Slide 13, which contains the review of the Commercial and Retail Banking performance for the quarter. We saw PBT decline 10.5% quarter-on-quarter and 21.5% year-on-year from the reduction in net interest income, noninterest income and increase in operating expenses. Net interest income declined 26.5% quarter-on-quarter and 10.5% (sic) [ 10.6% ] year-on-year, reflecting the low-yield environment. Our noninterest income declined 24.4% quarter-on-quarter and 6.4% year-on-year. This was attributable to a decrease in gains from FX and securities tradings as well as reduction in our FX revaluation gains. The operating expenses increased 17.8% quarter-on-quarter. This was a result of nonaccrual of regulatory costs in quarter 4 as our policy is to accrue under levy over 3 quarters of the year prior to our interim audit. We, however, recorded 2.5% year-on-year growth in OpEx. Risk Assets grew 14.3% quarter-on-quarter and 29% year-on-year, while our deposits also increased 4.1% quarter-on-quarter and 29% year-on-year, respectively. On Slide 14, which contains noninterest income analysis for the quarter. Net fees and commissions increased 59.6% quarter-on-quarter and 23.7% year-on-year from growth in account maintenance charges, contingents and increased transaction volumes on our electronic banking platforms. Trading income increased 8.4% quarter-on-quarter from increase in trading activities in government-backed securities. It, however, declined 18.3% year-on-year. Our FX income declined 87% quarter-on-quarter and 46.5% year-on-year as a result of minimal revaluation gain. Moving on to Slide 15 for the review of interest income and earning assets in the quarter. Total earning assets decreased by 0.8% quarter-on-quarter and grew 23% year-on-year, while our Interbank placements also grew quarter-on-quarter as well as year-on-year, respectively. On our gross loans and advances, we recorded a growth of 14.3% quarter-on-quarter and 29% year-on-year. Our gross loans represent 42% of our total earning assets. Our investments in government and corporate securities declined by 22.9% quarter-on-quarter from increased CRR outflows, but it, however, grew 18% year-on-year through our customer deposits group. Slide 16 looks at gross loans distribution by segment. We have maintained our strategy on loan growth for 2021 and witnessed 14.3% growth quarter-on-quarter across all segments and 29% growth year-on-year. Personal and SME banking remains a strategic focus area for quality loan growth in line with our business plan. Moving on to Slide 17, which is on deposit distribution by segment. Retail deposits, that is personal and SME banking, constitutes about 79% of total deposits. It was -- and this segment was flat quarter-on-quarter but grew 18% year-on-year. Looking at total deposits by distribution type for the quarter in -- on Slide 18. The total deposits rose 4% quarter-on-quarter and 29% year-on-year from CASA deposits as a result of our sustained focus on retail banking. And the low-cost deposits, which now accounts for 77% of our total deposits, was flat year-on-year but dropped 93% (sic) [ 3% ] quarter-on-quarter. Slide 19 looks at OpEx analysis for the quarter. Operating expenses increased 17% quarter-on-quarter and 2.5% year-on-year. As mentioned earlier, the quarter-on-quarter increase was due to nonaccrual of regulatory costs in quarter 4 and last year as we take our -- as our policy to take on the business chart over 3 quarters in the year. Slide 20 and 21 looks at the performance of our digital channel during the quarter. We see on Slide 20 the consistent adoption of our mobile channel, 7.2 million out of 7.8 million customers are now using our digital platform for their transactions with an additional 600,000 new users onboarded in the quarter. Digital leadership position remains affirmed with 90% count of retail loans processed on digital channels in the quarter. On Slide 20, we analyze electronic fees and commissions -- sorry, on Slide 21, we analyze our electronic fees and commissions for the quarter as we continue to use digital innovation to enhance users' experience for our customers. Electronic fees and commissions contributed 47% to gross fees and commissions, up from 39% in Q4 2021 (sic) [ 2020 ], showing strong commitment, so using digital solutions to improve user experience. Thanks for listening to this segment. I will now hand you over to Femi Badeji to take you through the Corporate and Investment Banking business.

Thank you, Yemisi, and good afternoon, everyone. As mentioned, my name is Femi Badeji, I will take you through the Corporate & Investment Banking section of the presentation, which are Pages 23 through 25. On Slide 23, we provide the performance highlights of the business and profit after tax being up 6% year-over-year. Total assets were up 29% year-over-year to NGN 680.8 million with operating income being up 9% year-over-year to NGN 4.5 billion. There was an 8% year-over-year loan growth to NGN 526 billion, and deposits were up 46% year-over-year to NGN 234 billion. CIR deteriorated 5.5% to 83% for the period, and the NPL ratio declined marginally from 1.4% to 1.8% for the period. Moving to Slide 24. The CIB PAT performance dropped significantly quarter-over-quarter but improved 8% year-over-year. The quarter-over-quarter drop was due to a 71% reduction in noninterest income. Noninterest income of NGN 922 million dropped 71% quarter-over-quarter largely due to an 88% decline in brokerage commissions and a 52% drop in net fees and commissions for the period. Net interest income of NGN 3.6 billion increased 29% quarter-over-quarter and 12% year-over-year driven by a reduction in cost of funds as well as an improved yield on risk assets. Impairment charges dropped 26% and 10% quarter-over-quarter and year-over-year, respectively. Loans and deposits grew year-over-year and quarter-over-quarter primarily due to increased customer activity as well as gains from FX revaluations with net loans increasing year-over-year by 8% and deposits increasing year-over-year by 46% as previously mentioned. NPLs decreased 2% quarter-over-quarter but increased 27% year-over-year due to delayed repayments on certain oil and gas downstream loans. Moving to Slide 25. As we continue to implement our turnaround strategy for the CIB business, we are focused on the following key action points, which are to strategically increase loan volume growth, improve net interest margin by increasing low-cost deposits using tech-enabled solutions to support client collections and value chain finance; focus on deepen our presence in high-growth sectors that offer better margins, e.g., technology and health care; increase cross-sell opportunities and transaction banking activity to boost noninterest income; and improve balance sheet efficiency. I will now hand you over to Bimpe Odunuga to take us through the risk management review for commercial and retail banking. Thank you.

Thank you, Femi. Good afternoon, ladies and gentlemen. I will be taking you through the risk management review on Slide 27 to 29. If you turn with me to Slide 27, which summarizes the group's loan book by sector. We see consistent loan growth quarter-on-quarter over the year in line with our strategic plan. Quarter 1 ended with 7.7% growth over quarter 4 2020 loan book. And we also saw 15.8% growth year-on-year. Quarter-on-quarter growth was primarily driven by natural growth in commerce, manufacturing, government, individual, finance and insurance, oil and gas downstream. Only 9.3% of the quarter's growth was induced by movement in exchange rate, showing over 90% resulted from our deliberate effort to grow the loan book. Year-on-year growth occurred across all our focus sectors, that is retail, agriculture, manufacturing and commerce. These sector's contributed over 52% of the total growth year-on-year. Growth also occurred in real estate, oil and gas downstream, government, power and energy, and finance and insurance as we continue to seek opportunities for quality loan growth within our risk acceptance criteria. The year-on-year growth was also partly induced by 5.5% devaluation of naira. The growth in government, as we see it, is a short-channel transaction and expected to cycle hard within the year. The 2.9% drop in agriculture quarter-on-quarter is also cyclical, and growth is expected to resume later part of Q2 as this remains a focus sector for us. Drop in other sectors were due to repayment from matured obligations within the quarter. We remain cautious and continue to monitor concentration within the entire oil and gas sectors, which remains within acceptable limits. The portfolio is well-diversified, and all sectors are within plan and regulatory limits. We maintain -- we remain committed to our loan growth plan for the year and will project a 10% to 14% growth for the year. If we turn to Slide 28, we showed a marginal drop of 0.1% in NPL ratio to close at 3.2%, which was likely due to growth in our loan book. However, NPL grew slightly by 6.6% quarter-on-quarter and 5.9% year-on-year. The quarter-on-quarter growth came largely from the commerce sector. This was from few SME obligors who are not fully recovered from the COVID impact. Other sectors with growth were likely interest and exchange rate movement driven. While quarter-on-quarter drop in some sectors where repayment on the -- on nonperforming loans due to our recovery efforts. Our recovery drive will continue with expectation for improvement as economic activities pick up. The quality of our loan book remains a major focus for us. And we plan to maintain our NPL ratio within regulatory limits. Moving on to Slide 29, which reveals the trend of cost of risk year-on-year from 2017 to 2021 and quarter-on-quarter trend from 2020 Q1 to Q1 2021. Cost of risk dropped quarter-on-quarter by 0.4% largely due to improved recovery and similarly by 0.4% year-on-year for the same reason. Thank you. I now hand you over to James Ilori, CEO, FCMB Wealth Management.

Thank you, Bimpe. Good afternoon. I will be taking you through the next couple of slides on the performance of the Investment Management group. I'll start with Slide 31. The group recorded a marginal growth of NGN 400 million in assets under management on a quarter-on-quarter basis with investment return on pension funds contributing NGN 3.4 billion, whilst net flows fell by NGN 3 billion. The decrease in net flows was due to NGN 10.7 billion fall in the value of discretionary portfolios. The NGN 10.7 billion withdrawal by one of our clients was to actually finance a major project. Our Pensions business contributed 75% of the closing first quarter AUM compared with 76% in the same quarter last year and 74% at the end of 2020. The number of retirement savings accounts rose by 1.22% quarter-on-quarter to 456,450 with digital registration accounting for 50% of the increase. Looking at cost-to-income ratio, this fell by 9% year-on-year and was on the back of continuing decreases in operating expenses, such as staff, depreciation, transport and travel costs. I'll now move to the next slide on financial year 2021 projections. We expect the group's 2021 AUM to increase by 10% to close at NGN 543 billion. As an update on the AIICO Pension Managers Ltd acquisition, the main industry regulator asked that we make a few changes to the deal structure. We can report that these changes have been made, and we now expect to receive final approval for the acquisition this month. Looking at online registration for retirement savings accounts, this is expected to remain at 50% of new RSAs for the rest of this year. Attainment of this goal will be supported by improvements to user experience on our RSA platform and increased marketing via social video. Contributions to AUM from collective investment schemes and wealth management should account for around 28% of total year-end AUM compared with 26% at the end of last year. Finally, our full year PBT is projected to increase by 18% to NGN 2.4 billion. We expect our Pensions business to contribute about 62% of the projected PBT. Thank you. I'll now hand you back to Ladi Balogun to take you through general outlook for the rest of the year.

Thank you very much. Following a slightly underwhelming Q1 from a profitability perspective, we do expect that we will see stronger and more sustainable performance in the remaining quarters. Specifically, we are hopeful that the rising interest rates will have a positive impact on asset yield. There may be a slight increase in cost of funds as a result. But we believe that, net-net, this should be positive, especially as we've seen the low-cost deposit mix improve significantly during the course of the year 2020. We also, as mentioned by Bimpe, expect double-digit risk asset growth this year projected in the range of 10% to 14% and most likely at the upper end of that. We do expect that much of this will come from -- at least 50% of this growth will come from retail and much of that being digital. So that will be positive on NIM and also positive on capital utilization as retail loans only have a 75% capital charge as opposed to 100%. In terms of our deposit growth, much of that this year again will be low-cost deposits. This will be fueled by the customer acquisition that we expect will be largely in the retail space as well as the drive for greater transaction banking activities in the corporate banking space as earlier discussed. Much of this, I think, will be in the area of technology-enabled collections as well as value chain financing. We expect that our fees and commissions as well as digital lending, which will drive the risk asset growth, will largely replace much of our historically volatile earnings -- or those areas of our earnings are quite volatile such as trading income and exchange revaluation. So while some of those may still come in during the course of the year, we will not be dependent on those to a large extent to meet our performance goals for this year and to surpass 2020 performance. We do expect steady profit growth in the asset management space. There will be a modest contribution from the AIICO acquisition this year, but that will become more significant in the 2022 year, as we would have the full-year benefit and also all restructuring charges would have been taken. Cost of risk, we expect to be stable. And finally, when it comes to expense growth, this would otherwise have been flat if not even declining. However, the rising regulatory costs, specifically AMCON charges on our growing balance sheet will lead to a modest uptick in OpEx, but it would be certainly below 5% we hope closer to sort of 3% to 4% range. However, we do expect that the ongoing digital transformation will have an overall positive impact on the scalability of our business and improving, therefore, our cost-to-income ratio. That is it for today, and we would be happy to move on to answer your questions. Thank you very much.

[Operator Instructions]

Okay. Maybe I will start with reading out the questions asked by Tunde Ogunleye, and then we will attempt to answer them. The first question is that could we give specific guidance on loan growth, deposit growth, OpEx and PBT for the financial year 2021. We have given some of that. I believe loan growth guidance is in the range to -- of 10% to 14%, but we think it will be in the upper range of that. This is assuming no material devaluation or revaluation gain on our dollar loan book. Deposit growth, we do expect that there will be some modest deposit growth, but our focus is really on continuing to improve the mix and will only grow deposits to support our loan growth. So my anticipation is that we should see a similar level of deposit growth to the loan growth. In terms of OpEx growth, we've also given an indication that, that would be in the 3% to 5% range. We'll be working hard to keep it at the lower end of that. We wouldn't give PBT guidance, but you'll probably be able to sort of work it out based on assumptions around net interest margin, what your views on asset yields would be. But certainly, there will be a number of extraneous factors that will -- that we find make it difficult for us at this stage to give very specifics with PBT guidance. But we certainly are not looking at a worse performance to 2020, even though we have started the year off quite slowly. The second question was in terms of rising interest rates. How should we be looking at the cost of funding? Again, I think here, we would look at the deposit mix, which is about 79% low cost. We hope that as the year proceeds that mix will continue to improve. So it's just about 21% of the book that will be subject to rising interest rates. We haven't calculated what that would be, but of course, there will be a modest impact. Subject to what -- to how cash reserve requirement that has occurred during the course of the year, we typically have more in liquid assets and government securities that should offset the rising interest rates on the cost of funds. Speaking to the second question from Mr. Tunde Ogunleye, and just saying that we expect that the rise in yields on earning assets should more than offset the rise in our cost of funding. In terms of the OpEx line, the jump in lease expense and insurance expense, I don't have an answer. We would have to get back to you on that because the CFO and the bank's acting MD also do not have specific details on that right now. You also asked about the regulatory costs that do we -- that you want us to clarify. The regulatory cost is expected to remain constant till 9 months 2021, and -- but Mrs. Yemisi Edun had mentioned that the cost is taken over 3 quarters. And you want to know whether you heard right. This is correct because we normally pay our AMCON levy in April/May. And we tend to do our audit in September, and it would have been paid, and therefore, has to be fully expensed. So we amortize it over 9 months, which is why we tend to have a significant drop in expenses in Q4, and therefore, Q4 PBT tends to be -- and cost-income ratio tends to be much, much stronger. We all look forward to the day the AMCON levy ends, and then we wouldn't have to be dealing with that. You asked about NPL ratio in Credit Direct and what are the mitigants. Credit Direct is a traditionally cyclical business. It's largely dependent on the ability of states and federal governments to pay salaries. We certainly do have very, I would say, effective collection methods. So ultimately, while some of this translates into actual credit losses, much of this reflects just delay in salary payments. So we do expect that much of these impairments are recovered. So -- and also, I would say that we are very focused now on only lending to states that have very strong internally generated revenue and a growing internally generated revenue profile as well as federal government as opposed to those that don't. You -- another question was asked that on the increasing loan exposure to government, could you share more insights around the cyclical impact? Bimpe, do you have an answer to that?

Okay. So it's state government, and there's a 6-month loan that's going to be paid back within the year.

Okay. So the 6-month self-liquidating loan to a particular state government. So -- and we're relatively comfortable with the -- their revenue outlook for that 6-month period. And I believe -- while I don't have the full details, I believe that there's probably some sort of standing payment order.

Yes.

Yes. So there's a standing payment order against certain sort of revenues they earn statutorily. So could you explain what we're doing in the agency banking space? Certainly, we can. We've been a bit slow to start with agency banking, but we are certainly expanding that this year. And we are working on a combined strategy of our own agents as well as working with super agents that will substantially increase our footprint. Obviously, the margins are better with both agents that we recruit ourselves. We do have an objective to have at least 50,000 agents this year, but we do expect that probably about 75% of those would be super agents that we're engaging through others. But that mix will improve over time. So you can expect that, by the end of this year, we should have, I would say, at least about 10,000 of our own agents directly. Our aim is to cross-sell a broader range of products than you find in other cases, which are largely focused on cash-in and cash-out. We haven't projected the impact of any of this in 2021. We don't believe it would have adverse impact on earnings based on the fact that our investment is skewed towards partnership with super agents in year 1 as our volumes grow. But we do expect that, by 2022 this will be net positive on fees and commissions, customer acquisition, and a low-cost deposit. So it is definitely a part of our plan, but it's -- I would say we're probably not moving as fast as some of our other peers. Now that being said, we're very much focused on driving mobile generally and cashless. And we believe that ultimately that is where the future lies. Agency banking for us will only be complementary. You asked if we're developing our in-house agents. And the answer is yes, yes, and I gave you those numbers. Currently, I believe we do have about 1,500 to 2,000 agents. We had to pause on the expansion last year as we overhauled our technology stack to do that better. And in terms of the innovations that we're launching in this space, which is one of the other questions you've asked, it's really around selling products that we have not seen sold right now by some of our other competitors. I think we have a broader range of products that we do earn that could be sold through the agency network. We're also, I wouldn't say innovating, but differentiating ourselves with a technology stack that will give a very high level of transaction reliability, which has been one of the challenges with agents as well as working with our agent partners to provide them with working capital financing so that they can settle the higher volume of transactions. So we're quite optimistic that there would also be an impact on credit growth as this business steps out. So moving on to next question, Tunde Abidoye, who asked that he sees the income on cash and equivalents was negative NGN 289 million. This was in those 8 of the financial statements, and has asked, is this linked to CRR debit, and could we shed more light on this. Again, we will come back to you on that. We don't have the details of that. The third question was asked by [ Terry Cioni ], who apologized for joining late, apology accepted, and what is our ideal CASA mix ratio in the medium term? And then asks, as at Q1, what portion of our book was restructured, and how are these facilities performing today? Yes, I think, you've given an indication of what the CASA mix is currently. It's 79%. We only see that improving and for the simple reason that everything that we're doing in terms of customer acquisition as well as digital is really -- and when I say digital, I refer to both the -- both at the retail end as well as corporate transaction banking. We see immense opportunity in transaction banking over the next few years, both directly in terms of what we're doing as well as partnerships that we are forming with a number of technology companies in this regard. So everything points to much faster growth in CASA than we will see in terms of risk asset growth, which means that subject, and I say that it's really subject to the Central Bank's cash reserve requirement regime, we expect that the trend will continue to improve. In terms of the portion of the book that was restructured...

25.9%.

25.9% of the book has been restructured. How are these facilities performing today?

Okay. Okay. So based on our continuous monitoring of best loans, over 5% have actually paid down and over 40% have resumed repayment while, for the rest, they are waiting for the repayment obligations to forward you in line with agreement. So in terms of performance, generally, they are performing. Those that -- based on our monitoring, we have seen that they are still challenged in terms of cash flow, were classified, and that represents about 2% of the entire portfolio that was restructured. And provision has actually been taken on them.

Thank you. Okay. Any other -- do we move on to the -- that there are no more questions. So there are a couple of things we couldn't respond to, which I believe was something to Tunde Abidoye on the negative NGN 289 million on cash and equivalents. So we'll get back to you directly on that as well as the operating lease expenses and insurance expenses that increased by 162% and 56% year-on-year. So we'll get back to Tunde Ogunleye directly on that. So thank you very much. I believe we're now done. And we look forward to chatting with you again in Q2 -- Q3. Thank you.

That concludes the conference for today. Thank you for participating. You may all disconnect.