FCMB Group Plc (FCMB) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Half Year 2021 Results Webcast and Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded on Tuesday, the 3rd of August 2021. And I would now like to hand the conference over to your speaker for today, Ladi Balogun, Group Chief Executive of FCMB Group Plc. Please go ahead.

Thank you. Good afternoon, ladies and gentlemen, and welcome to our half year investors and analyst presentation. I will be joined during the course of the presentation by a number of my colleagues, including Mr. Kayode Adewuyi, who will be taking us through the results overview. He is the CFO of FCMB Group, the holding company. We also have here Mrs. Yemisi Edun, who is the newly appointed Managing Director and Chief Executive Officer of FCMB Limited the bank, and she will be talking us through the performance of the commercial and retail banking business. We have Femi Badeji also with us here today. Femi is the Executive Director in charge of Corporate Investment Banking for the holding company, FCMB Group Plc. He will be walking us through the performance review of corporate investment banking. And we have Toyin Olaiya, Mrs. Toyin Olaiya, also recently appointed as an Executive Director, and she will be walking us through the risk management review. And we also have with us today Mr. James Ilori, who is the CEO of FCMB Asset Management Limited. Then he will be talking us through the investment management review. As usual, in the room today, we have our Head of Investor Relations, Ori Rewane. We have our Head of Digital and IT, Emeka Eboegbune. We also have joining us in the room today just listening in, our new Chief Operating Officer, who is subject to Central Bank approval, Mr. Gbolahan Joshua. So I will move straight to Slide 3, where I thought it would be helpful just to highlight these changes or the new appointments, 2 of which have been approved by the Central Bank and one of which is being approved by the Board with subject to regulatory approval. We have Yemisi Edun who has now moved to being the Managing Director of the Bank; and Mrs. Toyin Olaiya, who already was serving as Chief Risk Officer that has been elevated to an Executive Director with oversight responsibility for both risk as well as compliance. Gbolahan Joshua is stepping in as Chief Operating Officer for the group, replacing Mr. Peter Obaseki that retired earlier in the year. I will move on to Slide 4, where I'll go through at a high level, the results highlights. While we did see some improvement in our performance overall quarter-on-quarter, we are trailing our half year 2020 performance, at least in terms of profit. This is largely caused by 2 factors, which is the increased regulatory costs on our business, AMCON levy having stepped up significantly. That being said, what this means is that by Q4, when we stopped accruing our AMCON levy because we accrue over 9 months of the year when we do our audit, our 9-month audit, we will see that there is a significant uplift or a more significant uplift in the Q4 performance of the bank as a result of this and of the group as a whole. But the AMCON levy has been one of the major drivers of relative underperformance year-on-year, and we also saw some compression in our net interest margins. We feel about to recover in the second half of the year. But that compression is really caused by the rise in interest rates, which was not immediately followed by a repricing of our assets. That have been a gradual repricing that we've been able to do, but we will feel the impact of improving yield more in the second half of the financial year. So we saw that while our personal assets grew to NGN 2.24 trillion, up 14% from this time last year, our profits before tax actually dipped by 19.5% to NGN 8.9 billion. If we look at our other earning matrices, we saw that gross earnings did drop by 4% and ROE also dropped by 280 basis points to 6.6% for the half year. In terms of balance sheet's footing, we saw fairly robust growth in deposits, up 21% year-on-year and also in loans that are up 15% year-on-year. As a result of that and because of the fairly stable asset quality that we're experiencing, NPL ratios improved slightly to 3.3%. AUM rose steadily to about NGN 500 billion, which is a 10% rise. I think it's important to also note that this does not include the impact of the AIICO acquisition. And that will be reflected in the full year numbers. In fact, you'll be seeing it by Q3, I believe, when we will be consolidating the numbers of AIICO to the group, although we would not have completed the merger. As you will hear more later, it is now a subsidiary of FCMB's pension. Our customer base has grown steadily by about 13% to 8.7 million. Most of our customers are now being acquired digitally. And so we saw a total of 7.2 million digital customers. By digital customers, we mean those that actually transact on either mobile or internet, and it's predominantly mobile. And this figure grew by 35% from this time last year to 7.2 million. If we move on to Slide 5, there's a quick overview or snapshot of the performance of the group companies that are organized by business focus. So Commercial and Retail Banking, we've seen fairly strong growth in loans, 33%. Much of that loan growth coming from the retail and the SME space. More details will be shared about that later when Yemisi gives her presentation. However, we saw the operating income did dip slightly by 3% largely because of regulatory charges and a little bit because of compression in margins, although that business is able to grow its loan book in the retail and SME space to compensate largely for that. The operating expenses grew by 9%, and that largely was a result of the items already discussed on the regulatory side and 1 or 2 other areas. Impairments dropped by 81% to just NGN 750 million for the period. And profit for tax for commercial and retail banking stood at NGN 10 billion, all of that was still 15% down. Our Corporate Investment Banking business remains challenged. A lot of the challenges, however, are coming from the fact that much of the regulatory costs that are linked to balance sheet and particularly loans hitting this business harder than any other. So we -- obviously, much of our cash reserve charges on the balance sheet are allocated through corporate banking and also AMCON levy as well based on the size of the balance sheet of that business. That being said, we did see a 5% very modest increase in loans. Operating income dropped by 1%. But because of these charges, OpEx climbed more than in other business areas by 18%. This led to a 27% drop in profit, although we did see a 16% drop also in impairment charges. In terms of Investment Management, we're seeing that business continue to grow steadily. As have been mentioned earlier, we saw a 10% improvement in AUM, slightly better improvement in operating income at 12% growth and an even better improvement in PBT at 21% growth. I think it's also important just to talk about 1 of our -- or our most important focus area right now. If we look at the performance of the group, a lot has been hinged on using innovation, particularly technology, to drive and scale the business and thereby improve performance. Some of the key results that are worth highlighting is that we have seen commissions from mobile banking rise 57% quarter-on-quarter and 98% year-on-year. We have -- that's transaction volumes, I should say. Revenue has actually increased by 29% quarter-on-quarter and 101% year-on-year, respectively. These are trends that are reflective of stability of our digital platforms as well as the growing number of customers that we have transacting on these platforms. In terms of lending, we've seen very significant growth in digital loans coming from both Personal Banking and SME segment. We have also been able to make -- maintain impairment rates at very low levels. So we saw 29% growth in digital loans quarter-on-quarter and 172% year-on-year. We expect that we will be able to sustain these sort of growth rates over the next 12 months and seeing a see-through into the overall profitability of the group and, of course, the bank as this continues to grow. We actually think this is an area where, as a bank, we are relatively well positioned with the challenge that we're seeing from fintech for a number of reasons. Not least of all because, obviously, we do have the distribution and the customer base that continues to grow. We have potentially access to more data, and we do have the capital to spend. So this is an area that, not just the capital to lend, but also the liability, so you're not funding your loan with just with equity. So we will continue to lay emphasis on digital lending as a way to drive growth in the retail business and supporting that with the last area of this customer acquisition. We now have about 7.2 million digital customers, up 35% from last year, as mentioned. We're really driving this with digital marketing as well as continually simplifying our onboarding process. We are targeting to acquire about another 400,000 customers in the second half of this financial year. Moving on to Slide 7, just to give some insight into the plans around the acquisition and merger of AIICO Pensions with FCMB Pensions. Just to quickly talk through the deal rationale once again. AIICO's strength is positioned more towards the private sector and particularly in the southern part of the country. While FCMB Pensions' strength due to the acquisition we had made of legacy pension is stronger in the public sector and the north. We feel that the growth that we're going to see in this space is going to increasingly come from the private sector. So it helps us establish a stronger foothold in that space. Equally importantly is the fact that the mix of funds between retirement savings accounts and funds from schemes that were approved prior to the Pension Act is at almost 100% in the case of AIICO. I believe, in the case of FCMB Pensions was around 80%, 70%, 72%. So again, this combination helps to improve that overall mix and therefore, makes AUM growth much more sustainable and predictable. There are also synergies, and I think this is the key rationale for us in the deal. We see that we should be able to realize NGN 1 billion, at least, of synergies in both revenue and cost, which we expect will come through next year. So on a consolidated basis, we -- well, if we look at post synergy, this business should be generating about NGN 1.2 billion of profit for us, which we will see next year. Certainly, this gives us increased scale and efficiency and also improves our market position to the sixth largest PFA and positioning us well for future consolidation in the industry. What was acquired was 60%. This was based on the fact that this was the percentage that the regulatory approved. It gives us sufficient ownership to be able to proceed with a merger of the 2 entities. We would have over 82% of the -- FCMB Group will earn over a 2% of the combined -- the combined pensions business post-merger. And we are -- we do have plans to increase our stake over the next couple of years. In terms of the value that we paid, it was NGN 6.78 billion, means giving NGN 11.3 billion implied equity value. It gives us a NGN 146.93 billion AUM as of June 2020. And the half year management accounts was a profit of just NGN 119 million. As I mentioned, we expect that with the realization of synergies, this figure would increase substantially and begin to make the acquisition multiples look more reasonable at the time. That is it in terms of my initial remarks. I will now hand you over to Mr. Kayode Adewuyi, who will talk us through the -- in more detail the results as a whole.

Thank you very much. Good afternoon, ladies and gentlemen. Speaking from Slides 9 and 10, which provides a summary of the performance highlights for the quarter. Overall second quarter 2021 performance improved quarter-on-quarter but dipped on a year-on-year basis. We had a return on equity of 6.6% for the first half of the year compared to 9.4% last year. Our loan-to-deposit ratio at the end of June was 70%, slightly better than what we had at the end of March, that was 67.8% or slightly lower than what you had at the same period last year. Cost-to-income ratio deteriorated year-on-year, as we had mentioned before, largely because of increased regulatory cost and inflationary purchase. Our non-interest income to operating income ratio improved slightly from 27.8% to 29.4%. And our strategy is to continue to increase this ratio. Our cost of risk also improved from 1.96% in 2020 to 1.1 in 2021. Capital adequacy ratio and liquidity ratios are above the regulatory needs of 15% and 30% respectively. Those are helping [indiscernible]. Then Slide 10 provides a summary of the statement of comprehensive income. We reported the profit before tax of NGN 7.6 billion at the end of the first half of the year, which we got -- for the quarter, profits increased 11% quarter-on-quarter, but as you can see, the dip on the year-on-year basis due to decrease in our net interest income and the 9% increase in -- experienced in operating expenses. Our impairment charges increased 24% quarter-on-quarter, but dropped 48% year-on-year, largely because of improved loan recovery efforts. We'll provide more details on this on the group's management review. I'll now hand it back to Mrs. Yemisi Edun to take us through the commercial and retail banking segment.

Thank you, Kayode. Good day, everyone. I'll be speaking from Slides 12 to 21 as a review of the commercial and retail banking business. On Slide 12. This shows a dashboard of our key performance metrics. Revenue and PBT grew quarter-on-quarter, however, dipped slightly year-on-year due to increased cost of funding and CBN discretionary debits. Deposits grew to NGN 1.12 trillion. Gross loans grew to NGN 417 billion. Return on average equity increased by 7.9% quarter-on-quarter to close at 6.6%. Cost to income ratio also reduced by 6% quarter-on-quarter as we continue to implement our cost optimization plans for the business. Moving on to Slide 13, which contains an analysis of the commercial and retail banking performance for the period. PBT grew 21.6% quarter-on-quarter due to increase in both net interest income and non-interest income. Net interest income increased 7.1% quarter-on-quarter. However, declined 5.9% year-on-year from higher cost of funds and regulatory in these discretionary CRR debits, as mentioned earlier. Non-interest income increased 12.3 -- 25.3% quarter-on-quarter and 5.4% year-on-year from increase in fees and commissions, in line with strategic priority to improve the transition of our products and services. Operating expenses increased 5.5% quarter-on-quarter and 9% year-on-year, largely due to increased regulatory costs, double-digit inflationary environment and currency devaluation. Risk assets grew 7.7% quarter-on-quarter and 33% year-on-year, while deposits also increased 2.3% quarter-on-quarter and 20% year-on-year respectively. Moving on to Slide 14, which shows the performance of the segments. Personal Banking contributed 52%, in line with our strategy of using innovation and technology to grow the segment. This accounted for 19% quarter-on-quarter growth. This segment has a strong deposit base with a stable liability mix, which continues to position the business for sustainable growth and profitability. We are continuing to see the growing acceptance of our retail products, designed with a "Customer First" approach and digital agility. We will continue to use product innovation and technology to grow transactional volumes, improved cost efficiencies and customer experience. The SME segment contributed 33% to net revenue from growth in net interest income. Growth is supported by the automation of the SME lending platform and partnerships with DFIs to provide long-term affordable funding to SMEs across different sectors of the economy. As we have mentioned, our partnership with the likes of IFC, Oikocredit and most recently, African Development Bank to provide both COVID-19 funded support for women-owned businesses and other MSMEs in the country. We continue to engage more DFIs for such partnerships to aid the development of the risk sector in the country under the focus areas of the bank. Treasury and financial markets contributed 5% to net revenue. FCMB U.K. Limited contributed 4% and institutional banking contributed 4%, and commercial banking contributed 2% interest to net revenue respectively. Moving on to Slide 15. We see deposit trend analysis for the period. Total deposits rose 2.3% quarter-on-quarter and 20% year-on-year, as mentioned earlier, from CASA deposits, in line with our digital agility plan for CASA goods. Low-cost deposits now account for 76% of our total deposits. It remained flat quarter-on-quarter but grew 14% year-on-year. Retail deposits comprising mainly personal and SME deposits now constitutes of 88% of total deposits, and this grew 7% quarter-on-quarter and 20% year-on-year. On Slide 16, which looks at the cost analysis and reduction plan for the year. Operating expenses increased 5.5% quarter-on-quarter and 9% year-on-year. The quarter-on-quarter was due -- increase was due to increased operating costs generally coupled with double-digit inflationary environment and currency devaluation, while year-on-year increase was due to regulatory costs and resumption of business operations post lockdown. Regulatory costs, majorly the NDIC and AMCON levies grew 24% year-on-year and accounted for 18% of OpEx, while technology costs grew at 36% year-on-year and accounted for 8% of OpEx, respectively, in the period. We have commenced the implementation of some business transformation initiatives to drive efficiencies and reduce costs to sales. We shall provide updates on these initiatives as we go forward as we continue to build an agile and more resilient business. On Slide 17, there's a snapshot of digital-led priorities for retail and SME segments to improve customer experience across digital lending payments, remittances, customer acquisition and CASA groups. Firstly, we'll continue to leverage data analytics to improve the lending business across SME and personal segments. Secondly, we will sustain the growth in fees and commissions income as a significant source of revenue for the business. And thirdly, we will develop existing and new technology competencies to increase customer acquisition, CASA and digital adoption. Moving on to digital performance, which as we have then, it's on Slide 18 to 21. On Slide 18, we have continued to see a steady increase in adoption of digital channels for transactions from adoption rates -- with adoption rates now at 60%. Also on Slide 18, we see that 90% of our total customer acquisition have been onboarded on digital channels as at H1 2021. Slide 19 is on the digital payments revenue analysis. In the period, half year 2021, digital payment's revenue was NGN 6.7 billion, which is 11% of gross revenue and 51% of gross fees and commissions, respectively. Mobile, cards and alternate channels payments are driving the strong retail digital revenues and will grow as we advance our digital transformation plan for the segment. Also, we see a lot of market opportunities emerging from our Merchant Solutions business and web payments as we continue to replicate the retail success to other parts of the banking business, notably SME, commercial and corporate customers. On Slide 20, we see the trend of digital loans growth across SME and personal banking segments, in line with our digital transformation and priorities. 29% quarter-on-quarter and 172% year-on-year growth were recorded in digital loans in both personal and SME segments. Growth in SME is from the automation of the SME lending platform. Growth in personal banking is from the deployment of self-service channels and innovative retail loan products. Digital lending income is also on a positive trend, in line with our revenue plan for the year. Moving on to Slide 21. Slide 21 looks at the trend of fees and commissions revenue for the period under review. That was a 35% quarter-on-quarter and 78.5% year-on-year increase in electronic fees and commissions, supported by improved transactional volumes on our digital channels. Electronic fees and commissions contributed 51% to gross fees and commissions, and this was up from 47% in Q1 2021. Thank you for listening. I will now hand you over to Femi Badeji, who will present the performance of the Corporate and Investment Banking business.

Thank you, Yemisi, and good afternoon, everyone. My name is Femi Badeji, and I will take you through Slides 23 through 25, the CIB section of the presentation. Total assets grew 37% year-over-year for this business to NGN 738 billion, whilst operating income declined year-over-year modestly by 1% to NGN 8.4 billion. The CIB loans grew year-over-year by 5% to NGN 554 billion, while deposits grew 24% year-over-year to NGN 223 billion. Profit before tax for the period was a loss of NGN 2.4 billion, while CIR increased to 89%, largely due to an increase in regulatory-related expenses tied to asset growth as well as technology-related costs. Moving to Slide 24, please. As we intensify the turnaround effort for the business, the road map to recovery is based on the following pillars: one, a focus on deepening of our presence in high growth sectors that we have seen to offer better margins in e.g. health care and technology; 2, increased cross-sell opportunities and transaction banking activity to boost non-interest income. This is especially mindful for clients that we have deep experience with, where cross-sell offers additional income and transaction banking improves the value chain capture; 3, improve our net interest margin by increasing low-cost deposits using tech enabled solutions to support the client collections and value chain finance; and 4, to strategically increase loan volume growth where opportunities exist, especially around intervention funding. Moving to Slide 25, please. CIB's profit after tax decreased 51% quarter-over-quarter and 26% year-over-year. The quarter-over-quarter drop was mainly due to a 21% drop in net interest income, whilst the year-over-year drop was due to an 18% increase in operating expenses. As we mentioned on the last slide, this was mainly due to regulatory-related costs due to asset growth and investments in technology to make the cost of collections more efficient and other initiatives that are being perceived within the business. Net interest income dropped 21% quarter-over-quarter and 1% year-over-year. This quarter-over-quarter decline was largely due to the inability to immediately pass on rate increases to all clients as we went into an increased interest rate environment. And as we continue during the course of the year, we hope to be able to pass on or to reprice those loans more in line with what market realities are. Non-interest income increased 18% quarter-over-quarter due to a 22% increase in net fees and commissions, despite a 35% drop in brokerage commissions. Impairment charges dropped 10% quarter-over-quarter and 16% year-over-year, whilst NPLs increased modestly by 2% and 6% quarter-over-quarter and year-over-year. Of particular importance to the business, the LDR trended downwards from 294% to 249% year-over-year as our tech solutions led to collection strategies -- our tech solutions led collections strategies begin to translate to increased deposit growth and lower costs of funding. I will now hand you over to Toyin Olaiya to take us through the risk management review section of the presentation. Thank you.

Thank you, Femi. Good afternoon, everyone. I'll be taking you through the risk management reviews on Slides 27 to 30. Moving on to Slide 27. This slide summarizes the group's loan book by sector, currency and segments. Growth has been consistent year-to-date in line with plan. We ended the half year with 11.8% growth in the financial year 2020. Quarter-on-quarter growth was 3.8%, and we also saw 15.4% growth year-on-year. Quarter-on-quarter growth was primarily driven by attributing in individual commerce and manufacturing sectors. 8.2% of growth in the quarter was induced by 0.7% movement in exchange rate, showing about 92% natural loan growth. Year-on-year growth occurred across our focused sectors, namely agriculture, retail, manufacturing and commerce, contributing about 58% of the year-on-year growth achieved. On the loan book by currency, concentration in the foreign currency loan book continues to improve with a drop by 2.2% quarter-on-quarter in share of the portfolio in favor of the local currency loan book. 16% of this foreign currency loan book is from a U.K. subsidiary and consists mainly of trade lines in favor of credible counterparties. On segment distribution, corporate banking accounts was 57% of the loan book, while personal and SME segment continues to grow according to our strategy and accounts for 30 corporate sales, thereby improving portfolio diversification. We will continue to prioritize growth in our focus sectors in line with plan. Moving on to Slide 28. This shows our loan book performance across sectors: currency and business. We achieved 0.1% growth in NPL ratio that closed at 3.3% in Q2. Nonperforming loans grew by 6.3% quarter-on-quarter and 8.2% year-on-year. The quarter-on-quarter growth came largely from the bank's individual loan book and was due to delayed salaries, which would largely reverse in subsequent months when salaries are paid. On NPL distribution by currency, 96% of nonperforming loans currently come from the local…

Okay. Due to the loss of communication with Toyin Olaiya, the Chief Risk Officer, we will move to James Ilori, the head of -- who will be talking us through the investment and…

Apologies for that.

Okay. Okay. Sorry, go ahead, please.

On NPL distribution by currency, 96% of nonperforming loans currently come from the local currency portfolio. On distribution by segment, personal and SME segments accounts for 68% of the NPL book with corporate and commercial accounting for 31%. The quality of our loan book remains a major focus for us, and we plan to maintain asset quality within tolerance limits. Moving on to Slide 29. This speaks to our cost of risk trend quarter-on-quarter and net impairment charge over the period. Cost of risk dropped quarter-on-quarter by 0.3%, largely due to improved recovery. Cost of risk similarly dropped by 0.7% year-on-year for similar reasons. I now move on to Slide 30, which shows how we have built impairment buffers over the period, and also speaks relative stability in our NPL ratio. NPL has been relatively stable year-to-date as we continue to grow volumes within our risk acceptor criteria. Impairment coverage has also been consistently above 100%, largely due to proactive impairments in line with IFRS 9 model. Thank you. I now hand you over to James Ilori, who'll take you through the investment management review.

Thank you very much, Toyin. Good afternoon, everyone. I'll be covering Slide 31 to 33 on the performance of the Investment Management group. I'll start with the Slide 32. Looking at assets under management, that increased by NGN 45 billion year-on-year and grew to NGN 500 billion. The investment return was the major contributor to AUM growth in the first half of this year. Our pensions business accounted for 77% of the second quarter AUM. That compares with 75% that was recorded in the first half of this year. The number of retirement savings accounts increased by 1.1% quarter-on-quarter with registrations by our digital platform accounting for 57% of the increase compared with 49% in the first quarter. We expect to grow RSA by over 11,000 in the second half of this year. We were net recipients of funds from the transfer window, recording a net inflow of more than NGN 360 million in the second quarter. On the AIICO Pension Managers Limited acquisition, this has already been addressed. But I would just like to mention that AIICO Pension Managers Limited became a direct subsidiary of our pensions business on the 5th of July of this year. I'll now move to Slide 33, which looks at projections for the end of this year. We expect to grow the group's full year AUM by 37% to close at NGN 677 billion. The AUM target includes the expected year-end AUM for AIICO. Contribution to AUM from collective investment schemes and wealth management should represent about 21% of the total year-end AUM. That's down from the 26% that we recorded last year. And the decrease in percentage share reflects the impact of consolidation of AIICO's AUM under our pensions business. Full year PBT is projected to grow by 17% to NGN 2.37 billion, with our pensions business accounting for 63% of the total. The estimated NGN 1 billion annual PBT impact from the AIICO acquisition will start to reflect from next year. And we intend to keep the market abreast of developments as we continue with the integration of the 2 businesses. Lastly, we plan to increase collaborations with external parties and will make equity investments where they align with our inorganic growth strategy. Thank you. I'll now hand you back to Ladi Balogun, who will talk about the general outlook for second half of the year.

Thank you, James. The themes for this year really, and for the rest of the year, really center around growing our digital and our asset management business, while we continue to transform and refocus our corporate investment banking business. We expect that we would make appreciable progress, particularly with customer acquisition in the remaining part of the year, which will have its impact on low-cost deposits. We expect that we will continue to drive digital lending in the SME and personal banking space. All these will lead to a restoration of net interest margins following the dip that we saw in H1 this year relative to last year. Similarly, as a result of the digital strategy, we do expect to see robust growth in electronic banking fees and commissions. And we also expect that the growth -- continued growth in low-cost deposits and the inflow of various on-lending facilities from DFIs like the African Development Bank that we just recently closed the $50 million. All these will support growth in loans and earning assets in the second half of the year. We do expect that we will continue seeing AUM growth, and James already given you the estimates in terms of earnings growth in that business, which we expect will be marginally above what we did in H1. OpEx will be flat generally and potentially could actually come down because we expect that in the fourth quarter of this year, we will not have the impact of AMCON Levy. We expect that cost of risk will also remain fairly stable. So when we look at all these factors, there's reason to expect and believe that the second half should certainly outperform the first. This brings me to the end of the presentation, and we'll be glad to answer your questions.

[Operator Instructions] There are currently no questions coming from the phone lines.

Okay. We -- hold on, please. One second. Yes, we do have one question that's been sent to us so far from the Emele Onu, who has asked from Bloomberg. The impairment charges dropped by 48% year-on-year in the first half due to improved loan recovery. How much loans were recovered in the past 12 months? Do we see loan recovery and lower impairment charges in the second half of this year? If so, why? What percentage of loans were restructured last year and how are they performing currently in terms of interest and principal repayments? So that's quite a few questions. I'll sort of break them down and maybe ask different colleagues to answer them. So the first area is how much loans are recovered in the last 12 months? I don't know whether Yemisi Edun…

Around NGN 4 billion.

So I think it's about NGN 4 billion in terms of recoveries in the last 12 months. Do we see further loan recovery and lower impairment charges in the second half of the year? And if so, why? Yemisi, yes.

We see further loan recoveries. As we see some of the loan customers come back into -- to pay it on their loans as we resume business. So we expect for the loan recoveries.

Now what percentage of the loans are restructured last year? And how are they performing in terms of interest and principal repayments? Toyin, could you please provide insight to that?

Yes. Okay. So 40% of the loan book was restructured last year. So that particular portfolio enjoyed the COVID forbearance. So but that is down to 25% now. So we witnessed pay downs in the retail and SME segment. So that brought down the percentage of restructure from 40% to 25%. Now about 5% of that particular book moved to NPL and a few other named, mainly syndicator facility. We've requested for the restructuring tenor extend loan, but from their midterm interest payment, while awaiting closure of restructure.