Fidelity Bank Plc (FIDELITYBK) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the Fidelity Bank 2024 Full Year Earnings Call. [Operator Instructions] Please note that this call is being recorded. I would now like to turn the conference over to Nneka Onyeali-Ikpe. Please go ahead.

Good day. My name Nneka Onyeali-Ikpe, MD, CEO of Fidelity Bank Plc. I am pleased to welcome you to our full year 2024 earnings call. On this call with me today are the following executives and Principal Officer of our bank: Kevin Ugwuoke, Executive Director, Chief Risk Officer; Ken Opara, the Executive Director of Lagos and South West business; Pamela Shodipo, the Executive Director of South business; Stanley Amuchie, Executive Director, Chief Operations and Information Officer; Abolore Solebo, Executive Director, Corporate Banking; Sufiyanu Garba, Executive Director, North business; Victor Abejegah, Chief Financial Officer; Akintoye Babalola, the Treasurer; Adetunji Mustafa, Divisional Head, Strategy, Innovation and Business Transformation; Samuel Obioha, Head Investor Relations. We have uploaded the full Investor Relations presentation on our website. In this session, I will provide a high-level overview of the macroeconomic environment and speak to the facts behind the figures. The 2024 economic landscape in Nigeria was significantly influenced by the impact of policy changes introduced in 2023. The removal of fuel subsidy and the unification of the exchange rate led to a rise in energy costs and devaluation of the naira. Consequently, the exchange rate dropped to a low of NGN 1,681 per dollar in the official market and about NGN 1,800 per dollar in the parallel market. The nation's annual inflation rate reached a 30-year high of 34.8% in December 2024. In response, the Central Bank of Nigeria adopted a restrictive monetary policy stance, which led to higher borrowing costs and liquidity pressures in the deposit money banks. However, the policies also resulted in higher yields on treasury assets and fixed income securities, which created attractive investment outlets for foreign portfolio investors. Our strategic imperative in the last financial year was to optimize our balance sheet by expanding our NIM base, enhancing the net interest margin, increasing noninterest revenue, reducing the cost to serve and sustaining the cost-to-income ratio within acceptable thresholds. I will now speak specifically to each of the measures. Improvement of our net interest margin from 8.1% to 12% was due to the increase in rates on both sides of the balance sheet as a result of the implementation of the restrictive monetary regime of the Central Bank, which I mentioned to you earlier on in the economic review. We optimized our margins by ensuring that the increase in yield on non-earning assets was higher than the corresponding rise in average funding cost. We moderated the impact of our average funding cost by deliberately focusing on mobilization of low-cost deposits. And we are very proud to say that by full year 2024, our low-cost funds accounted for 93% of our total deposits. We also improved our non-interest revenue by driving fee-based income, increasing customer transactions and growing our digital income, account maintenance charges and trade income. Breakdown of the fee income shows on Page 15 of the investor presentation, which showed a double-digit growth in almost all our commission lines. We also kept our cost-to-income ratio within acceptable limits. From what you can see in our IR presentation, our year-on-year OpEx increased by NGN 136 billion from NGN 194 billion in December 2023 to NGN 331 billion in the reporting period. The major drivers of the increase in OpEx were the staff costs, the regulatory cost charges and the technology spending. The rise in staff cost was due to increased wages and salaries across all [indiscernible]. The increase in regulatory cost of the NDIC and AMCON was driven by growth in the balance sheet, while the technology costs was significantly impacted by the devaluation of the naira. Overall, our cost-to-income ratio reduced to 42% from 50% in December 2023 as the increase in income outpaced the rise in the cost. We also optimized our balance sheet by increasing the ratio of our earning assets. Our total assets increased by NGN 2.6 trillion in the review period. 83% of this growth in total assets was invested in our earning assets. Our net loans and advances increased by 41.9% to NGN 44.4 trillion. However, the real growth was 10.5%, while the impact of the naira devaluation accounted for 31% year-on-year -- year-to-date growth in the loan book. Finally, I assure our esteemed stakeholders that we will sustain this growth trajectory. We will also sustain our culture of increasing shareholders' value by paying dividend on our interim and full year audited figures. Thank you very much for your support, and I'll take questions.

[Operator Instructions] The first question that we have is from Olumide Sole of Renaissance Capital Africa.

Okay. First, I'd like to mention -- say congratulations on your results, impressive numbers. And good overall impressive number, profitability metrics were also good. So congrats on that. So my first question, can you give us like an update on the integration of Union Bank U.K. You know that the point -- I think it was in last year, I think 2023 or so you acquired -- the group acquired Union Bank U.K. So what strategic synergies are being realized currently? And also, can you give us more disclosures or [indiscernible] disclosures on your forbearance regulation for CBN and what provisions have been made in terms of when -- I'm talking about value or what percentage of -- what percentage is in loan book and also what provisions have been made to date?

Thank you very much, Olumide. On the integration of Union Bank London, I can tell you that this is a very good success story. The integration of our U.K. subsidiary, Fid Bank London, the U.K. as it called, has been a great success story. Aside from the fact that the subsidiary has turned the corner with the total assets, it has also grown the total asset by 101% from acquisition and other performance indices are also moving up. The subsidiary has helped us to meet the banking requirements of our customers end to end, but I'll have Stanley speak to it.

Okay. Thank you very much, Olumide. As my MD just mentioned, we believe that, that decision to acquire the asset in London was a very good one, and we are seeing a lot of positives coming out of it. As she just mentioned that the subsidiary has turned the corner positively as well. We've seen total assets grew by 101% starting from if you take on the point of acquisition. Other performance indices are turning very positive. Again, as she said, we can now serve our customers, their businesses end to end. We have also been able to onboard new customers on the back of having this subsidiary in the U.K. So for us, overall, it's been a positive thing. And the fact that, I mean, numbers are turning positive also shows that, that was a wise decision, and we're very happy with that.

One question was around the forbearance exposure, and I will have the CRO speak to that.

Thank you. Thank you very much, MD, and thank you, Olumide for that question. Now regarding our forbearance exposure, at this point, we have just about 10% of our loan book on the forbearance. These forbearance loans, as you know, they are just watch listed loans that we're paying special attention to. Of that 10%, we've been able to cure effectively about 50% of them, and we're making significant process on the -- progress on the outstanding 50% to ensure that they are all treated within the time line that has been given for them to be treated. So that's really the update on that. The outlook is for us, we see the outlook as positive overall for the forbearance exposures.

The next question we have is from Stephen Chima of Cardinal Stone.

For my first question, I would like you to speak a little more specifically on the unique strategies that the bank incorporated to generate its very strong asset yield. By my competition, I think full year 2024 asset yield came in at almost 18%. And I think that brings me to my second question. We've also seen interest income account for circa 91% of the bank's gross earnings, which shows strong core performance, but I would like to get a sense of what strategies the bank is looking at to position itself and protect its margins in the event that there's a dovish monetary policy shift in 2025. Also, we would like to -- would like it if you can speak briefly or more specifically rather to the drivers for impairment in the bank -- drivers for the improvements in the bank's NPLs, right, in 2024? And what plans the bank has for provisioning in 2025? And lastly, I would also like you to give a little bit about -- a little bit -- speak a little bit about the bank's next steps to cover [indiscernible] time lines, if you may.

I would like to speak to the first question, which is the unique strategies that we deploy to get to 18% of the high-yield environment. Yes, we deepened our retail fee to generate more low-cost deposits, fully trained our investments to get enhanced yield based on, of course, the opportunities that was presented in the market at that time. And we monitor the market very well to ensure that we -- our yields pick up. On the second question that you asked about our gross earnings and income and how we intend to defend the margins, I would yield to the Treasurer to speak to it in terms of money market management.

Okay. Thank you very much. My name is Akintoye, earlier introduced by the MD. So the strategy is quite simple. It's important to state that the -- we do not see any major significant change in the interest rate environment. So we see this as still being good for our books as it was. And of course, what we have actually done to date and which we are also planning to do is to make sure that we maintain our stake in those high-yielding instruments, particularly for the short and the medium term, and that will also help us to arbitrate any form of investment risk. That is key to us. And in addition, the bank is also trying to drive strongly income fees from non-interest line, basically talking about the fee base, the trade-related income, digital banking and export businesses were very strong in that space, and we want to deepen it more. If you mix all this together, we see that it will also strengthen our drive, sustain our income and also make us to deliver value to our increasing shareholders.

Thank you. The next question was around the decline in our impairment charges and the moderation of our NPL ratio. If you recall, last year, our cost of risk was 2.6% as we proactively made provisions in a very volatile environment. And -- however, in 2024, we also saw improvement in the cash flow of our customers as well as economic activities also picked up significantly. That explains why our cost of risk was dropped to 1.5% this year, but I'll have the CRO speak to it a little bit more.

Okay. Thank you very much, MD. So as MD said, we -- if you also look at the -- if you look at the GDP numbers for the -- for 2024, you see it was an improvement at 3.4%, which was an improvement on 2.7% in 2023. So overall, the macro improved and also the quality of our risk assets and the cash flows from our customers also improved. And if you take that with the backdrop of what we did in 2023 in terms of being very proactive and conservative in having a very high cost of risk charge, that contributed to the decline you see in the impairment charge for 2024 to 1.5%. Now also, if you look at the -- we also improved on the quality of our monitoring of our loans in the year 2024. We improved on that. We paid attention to the creation of risk assets that also -- we made sure quality was maintained because when the macro is challenged somewhat, they must improve on your risk origination. Your credit origination must be tighter, and that's what we did in 2024. Then also keep in mind also that the exchange rates significantly was devalued in 2024, which increased the value of the denominator in the loan book that the loan book became higher. So that also contributed. So all of that -- put all that together, it speaks to the improvement in our NPL ratio to 3.1% from 3.5% in the previous year and also the improvement in cost of risk from 2.6% to 1.5% in 2024. Going forward, we intend to sustain the same measures we put in place to help to maintain good asset quality. So by way of projection, we don't expect to get worse than 5%, which is the limit CBN has put, but we believe we'll still be operating around that 3%, 3-something percent, all things being equal. And cost of risk, we've given -- we're looking at a guidance of 2% max, and we expect to be well below that. Thank you very much.

I hope we have answered all your questions.

I'm sorry, could you speak a little bit about provisioning for 2025 and next steps for capital raise?

On provisioning for 2025, I think I just spoke a little about that now. We don't expect that -- okay, on cost of risk, we expect that -- our guidance is 2%, like I said, but we believe we'll close well below that. Provisioning-wise, we also expect our NPL ratio to be well below 5%, which is a CBN threshold. We expect to be well below that -- are optimistic that with the measures that we put in place in 2024 and which we intend to sustain with proactively working with our customers, improving monitoring, watching the creation of our risk assets. We don't expect that our NPL ratio will be any worse than where it is now. And therefore, the provisioning levels will also not be materially different from where we are today. I think that's what the answer to -- that's how I'll answer that question.

Okay. Thank you very much for the question on the capital raise. This for us is a major success story. We have successfully completed the first phase of our capital raise plan with a very successful 230% of our subscription on the combined offer. We are only able to take NGN 175 billion out of the NGN 273 billion that was raised. This leads us to the second phase, which is the private placement, which has commenced. In this phase, we need to make up the difference of NGN 194 billion. The private placement is already in flight, and we hope to conclude before half year -- end of H1 this year, 2024 -- 2025.

The next question we have is from Gideon Oshadumi of Chapel Hill Denham.

Congratulations again on your strong financials. My question is going to be circled around -- First of all, I would like to understand your expectations on interest rates and inflation. Like what is the -- what is your expectation going forward into 2025? And also, I want you to shed more light on your capital expenditure. We saw a very significant rise in your capital expenditure in 2024. What should we expect in 2025? Is that -- are we going to see more of that or it's going to fall in 2025? Also sorry -- about your dividend payment, are we going to see sustained dividend payout ratio moving forward?

The outlook for 2025 for us is positive. And we are expecting that the interest rates for this year will moderate. We have seen a lot of activity from Central Bank from the regulators. And however, the recent developments in the global economics affect the interest rate going forward. But I'll have my treasurer speak more to this.

Okay. Thank you, MD. So just to put more color to that, yes, if you look at the direction that the interest rate has been going, what the Central Bank was doing was more of inflation targeting. We've seen 2 consecutive reduction in the inflation however, maybe because the MPC meeting is going to come in May. Perhaps that's why no action has been taken. But what about the actions is being planned, the new incaution into the market, the global market, like MD mentioned, we have to meet every central bank to sit back and possibly review the impact first because should the tariff go, even though it has been deferred by 90 days, factor cost will definitely shoot up the implication for global inflation and price hike and that's in terms of interest rate hike is clear. So imagine markets will come under intense pressure. When those pressures come, clearly, everybody will have to react by going that same direction. If we incorporate this impact of the global headwinds that we're having now, clearly, we will expect interest rates to be high or increase. But for Nigeria, in our own view, we believe that we still have more of the elevated interest rates for a time to come because like we all know, the interest rates as well as the foreign exchange market rate, they are intertwined. And whatever happens on that side, speaks to the other variable as well. So we expect that in terms of inflation, yes, if you bear the impact of the global tariff and all that, you will see inflation will continue to go down because we're already seeing it. But should the factor cost increase and the cost of importation and all that also increase. Clearly, your guess is as good as mine. We may have some very slight elevation in terms of the inflation rates coming from the high cost in import. I don't know if that actually answers your question. Thank you.

On the interest rate outlook inflation outlook. Do I go on to the second question, which is on capital expenditure?

Yes, you can go on to the next question after capital expenditure.

Fine. Just to say that the exceptional items here, in 2024, we had to do the capital raise. This comes with expenses. And then we also expect some expense around that in 2025, but that will disappear after the private placement has been done, which is we expect to conclude before end of H1. But we will also not lose sight of the inflation in the country generally and of course, the devaluation, which has a direct relationship with our cost of technology, acquisitions and all of that. So this will continue to -- despite the fact that there are some exceptional items on the 2024 and 2025 around the capital raise, we expect that this will not very soon because of the inflation and the devaluation impact on our technology and cost of doing business. Thank you. Okay. Last question was on dividend. Dividend payout. Yes, we'll continue to sustain our interest in dividend payout. As you know, our ratio is between 25% and 40%, which we will continue to maintain. But I'll have the Treasurer, the CFO speak to that. So that's his.

Okay. Thank you very much. Like the MD has said, our dividend payout ratio and guidance is an integral part of our overall capital and dividend management policy. And the whole aim is to ensure that as we commit to meeting the promises we made by shareholders by rewarding them adequately, we also, as much as possible to retain sufficient capital to support our future growth aspiration. Like the MD said, we have between 25% to 40% of profit after tax as a dividend ratio and we will sustain this trajectory. Same will be done in the coming year.

If I may ask one more question. On your loan book exposure breakdown, what can you say about your exposure to oil and gas as the upstream considering the downtrend we've seen in oil prices globally?

We have significant exposures and very good relationships in the oil and gas space. And everything that borders around this is of interest to us and we're keeping very close watch -- we're watching it very closely. We have no reason to worry, to show anxiety on it yet because our earnings are all well matched and hedged in that space. So -- but I'll have the CRO speak to the portfolio, and then I'll have the Head of Oil Abolore speak to the outlook. CRO, please. Thank you.

Thank you very much, MD, and thank you for that question, too. I think to continue from where the MD stopped, the oil and gas -- our oil and gas portfolio, I'll start by saying that the benchmark price at which we went into those assets, they -- right now, they are well below the current market price. Current market price is in the neighborhood of $70. Our benchmark was well, well below that. So in terms of margins, margin of safety or cushion, we have a very strong margin of safety. The second thing is that the assets there are all good assets. As you know this is reserve-based lending. So they are all good assets with good reserves. And so in terms of being able to produce and generate the ultimate cash flows, not a problem because the reserves are there. Now the other thing you talk about is how do you get those reserves out to market. That has also improved significantly. So overall, our upstream exposure in addition to being naturally hedged, as the MD said, we are not worried about the operations itself, the operating dynamics of those exposures. We are comfortable with them as they are right now. And the outlook is also positive given all of the improvements that you can also -- you also have been reading about concerning our oil and gas upstream industry. Improvement in overall production levels, improvement in earnings overall that the country is making, it's all of these assets that are generating those and the outlook is positive, and that also reflects on the quality of the portfolio that we currently hold in that sector. So in essence, we are comfortable where we are. The outlook is positive, and that's how we expect it to continue to be, all things being equal. Thank you.

Okay. Thank you so much, MD. I'm CRO, my name is Abolore Solebo. So to speak about the outlook for the oil and gas industry and the oil price. So the oil price affects majorly the E&P space. And in the E&P space, there are 2 things we do when we're doing a transaction in the E&P space. One is that we have what we call the oil price deck, which is the amount that is in the base price that we use to cut the projection going forward. For Fidelity Bank, it is currently $45. So any deal below $45 would not. So for the $45 is far below what the price is at the moment. Then on the second layer of protection, what we do is to now the hedge in place. So we're now hedged the strike price of $45 at the first minimum, take care of debt service into the future. So with these 2 protective strategies, our portfolio and exposure in the E&P space is well secured and protected. We also have exposures in the midstream and the downstream space. In the midstream and oil [indiscernible] space, we do contract finance. And most of these contracts fixed term and fixed sum. So our customers work against the payment expected. So that is also naturally hedged. The final is the downstream space. Downstream is just simply buying and selling. So the crude oil price affects the price at which they buy and they sell and they keep their margin. So that is how we protect our oil and gas portfolio.

The next question we have is from Sodiq Safiriyu of SBG Securities.

I just wanted to get a sense of the outstanding cross-currency swap value for the bank at the moment, that's one. Also would like to get an analysis of the components of the Stage 2 loans as it stands, it's about 25% of total gross loans. Is there a reason why we have it at a high level? Maybe just get a sense of the components. And lastly, from the proceeds generated from the capital raise last year and this year, my assumption, my guess is that it probably hasn't really been flowed into operations for the bank. What are we likely to see -- what was the outlook like coming into 2025, both the one that was used last year and this year? Meaning fully well that you sort of see both loans and advances more, should we see that going to increment in loans and advances or increments in investment securities? Just to get a sense of how that proceeds may be used in 2025.

Thank you very much. On your first question, the answer is that we have $450 million with the Central Bank on the swaps to date. And your second question, if I remember, is around the loan -- Stage 2 loans. Most of our Stage 2 loans are from the power sector and some oil and gas loans, which have been -- which were restructured. I will have the CRO speak to it.

Okay. Thank you very much for that question. As MD said, the 2 loans that we have are mostly in the oil and gas upstream sector and power sector. And they were restructured and the outlook for them, which is very important to mention, the outlook for the loans we have there is positive. Particularly in the upstream sector, one particular exposure there accounts for over 60% of what we have in the upstream sector. And that exposure is very, very -- I mean, it's a prolific asset and the outlook is quite positive. On the power sector loans, we've done quite a lot of things on them also and also the outlook is quite positive. So that's the composition of the Stage 2 loans that we have in our books. And for all of them, the outlook is positive. We're monitoring them carefully, and we -- it's a finite number, and we're optimistic about the outcome for all of them.

One question was around the plans to deploy the new capital, if I remember. The use of funds?

Yes.

Okay. Great. Our successful capital raise, we promised our existing investors and the new investors that we will utilize the funds to, first of all, 7% of it to go into business and regional expansion, 20% to be for investments in the IT infrastructure and then 10% to be for product distribution channel. That's the broad outlook that we guided for the use of funds. But I'll have Stanley speak a little bit more on where we are on this plan.

Okay. Thank you, MD. So you are very right when you said where are we deploying the funds to. Most of the plants [indiscernible] not so quickly. So that will take time like a regional expansion and all that. So the funds today, we're using it in the market. I mean you mentioned issues like playing with treasury and all that. So the funds on bottom [indiscernible] to generate income for the bank by deploying it to areas we feel will help us to continue to generate very reasonable returns for shareholders. So that's what we are doing and not necessarily creation of loans. Of course, you can see from the report have shown that the growth in loan was just 10%, which was organic growth. The other one was exchange rate. So most of it will be more like treasury because that's where we saw a lot of activity. So we also -- yes, so -- we are also expanding opportunities, other opportunities generally for the bank that we're using and the expansion. But for the expansion, we are really on it. We are looking at all the opportunities right now, especially the African expansion. And we believe that in the next few months ahead, we'll be seeing a lot of activities there. And mostly, we are planning to see brownfields, which will add immediately to our bottom line as we do that. Thank you very much.

The next question we have is from Nikolai Dimitrov of Morgan Stanley Investment Management.

A couple of questions from me. I was thinking about your guidance for 2025. And I was wondering whether it factors any of the current turmoil in world markets and oil down, potential recession in the U.S. and stuff like that. And if it doesn't, how do you revise it? My next question is on Stage 2. And by the way, thank you for clarifying the composition. I saw that Stage 2 loans declined roughly 40% in nominal terms quarter-over-quarter. So you must have upgraded there to Stage 1. If you can provide some clarity on that front, that would be great. And then capital sensitivity. I know that you're doing a great job in terms of raising capital and there's more of that to take place. That being said, can you give us an update on your capital sensitivity to the moves in FX, especially in light of the fact that you cannot maintain a net long dollar position?

Yes. Thank you for those questions. Yes, we have factored in the global issues that are very recent into our guidance. And to that end, we expect that the trade tensions caused by the tariff is still to be high and the factor of production will come in with high cost and eventually and trigger global rate hike. And we also expect that the Fed may respond by increasing interest rates. Hence, all the emerging market economies may follow suit, especially with respect to trade, cost of funding transactions, we expect will also increase, and this will lead to increased cost of import and pushing the prices for Nigeria that speed. So definitely, Nigerian economy is not insulated from this impact. The capital flight from emerging markets and the associated negative impact of the currencies will increase our credit risk and consequently, our cost of -- our trade finance costs. This we also believe will increase our cost of importation and of course, the price of imported goods will also go up. We don't expect much change in the size of our trade with our major partner, which is China. But in all of this, we will continue to watch our customers and ensure that we have a good buffer for all. I'm sure the situation will be clear in another 2 to 3 months. And in the interim, we'll continue to watch and make sure that we have a buffer for them. On the question on the movement to Stage 2, I'll have the CRO speak to them more specifically. Thank you.

Thank you, MD. And thank you, Nikolai, for the question. On the Stage 2 loans and the reduction that you noted is basically from 2 factors. The first one is that we had one slightly significant Stage 2 loan that we decided that this should now move to Stage 3. And you can see that reflect in the increase in our Stage 3 loans from NGN 112 billion in 2023 to NGN 141 billion. That loan was a factor in that increase. So that's one. Then the other thing responsible for the reduction was a migration back to Stage 1 for some of the Stage 2 loans that we had. So net-net, that's what led to that improvement or that reduction in the quantity of Stage 2 loans that we saw quarter-on-quarter. Then with regards to capital sensitivity, yes, we are mindful of that. And from our own analysis, we believe that a 10% naira devaluation will result in a 20 basis points decline in our capital adequacy ratio. So that's something we keep an eye on it. And at this point in time, that's what it's looking like now.

The next question we have is from Ben [indiscernible] Canada.

Sorry I withdraw that question. It's exactly the question that was asked earlier regarding the global economic situation and the policy shifts that we are seeing, especially coming from the U.S. And I believe that has been adequately addressed.

The next question that we have is from [indiscernible].

Okay. So I have 2 questions. All right. The first is your U.K. unit, there was a 6x increase in OpEx. So I'd like to know what drove that. Then two is broadly for 2024, I see that corporate and investment banking grew faster than retail in terms of profit. So I'm wondering, is this a trend we see going forward? Or is it a one-off thing due to one-off factors?

Okay. So let me answer the one on the OpEx of the U.K. subsidiary. After acquisition, after change in control, there are a lot of things we are doing to get that subsidiary to sustainable profitability. Part of it is also onboarding new staff members who I believe will help to achieve our aim in U.K. So the cost coming from there because we needed the kind of staff with the kind of skill that we will be able to drive business in the U.K. So you see an increase in personnel costs or staff costs. We're also changing the IT systems, and we are trying to upgrade how they've done business in the past. So the impact of all the cost of IT, cost of personnel costs and all that are the things that you're seeing that are increasing the OpEx. Of course, in doing this, we probably need the services of consultants in one way or the other to assist in getting this done and the change in control. So that's what has happened. I think that should explain that increase in OpEx.

Okay. What are the revenue split, CIB growing faster than retail?

Okay. Thank you very much for that brilliant question. The corporate and investment space, I think they benefited most from the yields in the market, okay? The treasury was able to play a lot more because of the low-cost funds that we already spoke to that we are wash, which is 93% of our deposits. That's one. Then on the corporate side, the increase -- the devaluation of cost, increased the loan book and that also the earning assets increase. So those 2 combinations is what we see as the reason why it's looking like corporate and investment is better in terms of income than retail.

[Operator Instructions] We have a question from Toby [indiscernible] of FBNQuest Merchant Bank.

Congratulations on your numbers. So I have a couple of questions here, right. So with the recent introduction of President Trump's tariffs and going global trade tensions, which could potentially have knock-on effect on capital flows and exchange rates, particularly for emerging market like Nigeria. So what is your thoughts towards the outlook in 2025? And what impact do you expect on FX trading income and other noninterest revenue, especially if we see market volatility. I'd also ask questions on the asset quality ratios. Yes. So from your financials, you have observed that asset quality ratios improved during the quarter. So can you give us an indication on how the IT asset is doing? And what plans do you have for this asset going forward with respect to provision?

Okay. Your question on the reciprocal tariff, we expect that we see some level of volatility around the currency and most of the high USD rates will negatively impact capital inflows to Nigeria like other emerging frontier markets. So the foreign reserves should also be -- would likely be under pressure. However, we do see rate stability as the global market stabilizes and settles. Your other question is on asset quality. And the ITO OML 29 asset is our largest producing assets also in Niger Delta and even by the figures of the result. I'll have Abolore speak to this. This particular asset, we do not have any insight around this because the prolific asset. And we don't quite a bit on it to structure and put it on the path of -- well part. So I have Abolore speak to it [indiscernible].

Okay. Thank you once again, MD. Okay. So for ITO, like MD said, it's the largest -- single largest prolific and producing assets onshore. Before it was sold by Shell, it takes about 120,000 barrels a day. Then when the Niger Delta [indiscernible] Shell divested to ITO and ITO picked at about 5,000 barrels and we were bound to hit the previous of 120,000 barrels. However, the pipeline which consists [indiscernible] from the assets and other assets was tempered and ITO had to abandon it and currently built a new evacuation route. They are back producing at about 50,000 barrels a day and previous of 85,000 120,000 barrels a day. So that will make them one of the -- excluding the IOCs, the largest producer onshore Nigeria. The asset add about 150 million barrels, which at today's price is about $9 billion. So the lenders are just focusing now on restructuring the facility to ensure that they can benefit from the new cash flows. So from the resumption of production, they about 17 cargoes, which is in the region of about $1 billion. So that's the additional things that I do. I'm very comfortable with that we turn the corner with its performance. Thank you.

Okay. Thank you very much. Do you have more questions?

Thank you, ma'am. At this time, we have no further questions on the call. And I would like to hand back over to you for any closing remarks.

We want to thank everybody for attending this call. Over the years, Fidelity has built a resilient and sustainable balance sheet by including different economic cycles in our scenario planning. We will continue to prioritize strong corporate governance, effective risk management, capital preservation, talent retention and enhancement of shareholders' value through the payment of interim and final dividend. I can assure you that we will drive -- we will deliver on the guidance in our IR presentation. I also assure you by the next time we speak, we'll be a NGN 500 billion bank. Thank you.

Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You may now disconnect your lines.