Good day, ladies and gentlemen, and welcome to the Fidelity Bank H1 2022 earnings call. All participants will be in listen-only mode. There will be an opportunity to ask questions later during the conference. If you should need assistance during the call, please signal for an operator by pressing star and then zero. Please note that this call is being recorded. I'd now like to turn the conference over to Nneka Onyeali-Ikpe. Please go ahead. Good day, everybody. My name is Nneka Onyeali-Ikpe, MD/CEO of Fidelity Bank Plc. It is my pleasure to welcome you to our H1 2022 earnings call. On the call with me today are the following executives and principal officers of our bank. Kevin Ugwuoke, Executive Director/Chief Risk Officer. I have on this call Ken Opara, the ED in charge of our Lagos and Southwest business. I have Stanley Amuchie, the Executive Director/Chief Operations and Information Officer. Victor Abejegah, the Chief Financial Officer. Lanre Sonubi, our Chief Digital Officer. Abolore Solebo, the Head of our Corporate Banking Business. Akintoye Babalola, the Treasurer of the Bank. Adetunji Mustafa, the Divisional Head in Charge of Technology, Innovation, and Business Transformation. Samuel Obioha, who Head our Investor Relations desk. We have uploaded the IR presentation on our website, so I will be speaking mainly with the facts behind the figures. I believe you would address them. On the macro front, the domestic economy is facing the same headwinds that have plagued it over the years. High inflation, low level of capital importation, FX scarcity, and a depleted external reserve. Although on a positive note, the GDP has been trending upwards. According to the data published by the NBS, our Gross Domestic Product grew by 3.54% in Q2 2022, making it the seventh consecutive quarter-on-quarter growth after the Q1 2020 recession. Our objective this year at the bank is to optimize our balance sheet by expanding our earnings base, improving the NIM, increasing our non-interest revenue, reducing the cost to serve, and keeping our CRR within acceptable levels. I will speak specifically to each of these measures. We improved our NIM by achieving an optimal risk asset pricing, while at the same time reduced our interest expense by increasing the volume of our low-cost funds. Total deposits increased by 13% from NGN 2 trillion in December 2020 to NGN 2.9 trillion within the reporting period. A breakdown of the deposit numbers show that we increased current account deposits by NGN 343 billion, savings by NGN 51 billion, and reduced tenor funds by NGN 129 billion. Consequently, low cost funds in H1 2022 accounted for 83% of total deposits, up from 74%, 74.5% in 2021 full year. Quarter-on-quarter, our interest expense reduced from NGN 36 billion in quarter four, 2021 to NGN 32 billion in quarter one, 2022, and NGN 28 billion in quarter two, 2022. Our cost of funds reduced to 4% from 4.2% in December 2021. We achieved an optimal pricing of our earning assets, which led to an increase in yields on earning assets from 10.1% December 2021 to 11.5% in the review period. Overall, we were able to improve our NIM by almost 200 basis points. Our net interest margin closed at 6.4% in the review period, compared to 4.7% in December 2021. We also improved our non-interest revenue by driving fee-based income and increasing the level of customer transactions. Although year on year our net fee income reduced by 9.6%, which is NGN 1.4 billion, the dip was caused by a NGN 10 billion reduction in FX revaluation income. In H1 2021, we recognized a revaluation income of NGN 9.8 billion, which did not reoccur this year. An analysis of our fee income in slide 16 specifically of the IR presentation shows significant growth in virtually all lines. Digital income, for example, increased by 37%, account maintenance charges increased by 25%, and trade income increased by 70%. We also kept our CRR within acceptable limits. Year-on-year, our OpEx increased by NGN 19.7 billion from +NGN 2 billion in H1 2021 to NGN 62 billion within the reporting period. The major driver of this increase was the AMCON cost. Last year, we amortized our AMCON cost over one year because of the late passage of the AMCON Act. The AMCON Act was eventually passed this year, and in line with IFRIC 21, we recognized our full AMCON cost of NGN 18.3 billion as soon as we received the notice. The movement in AMCON cost accounted for about 40% of our total expense variance. We closed the period with a CIR of 69.7. However, our CIR would be reduced to 59.4 when we amortize our AMCON cost over one year. We optimized the balance sheet by increasing the ratio of earning assets compared to the non-earning assets. Our total assets increased by NGN 403 billion within the review period. 82% or NGN 329 billion of the growth in the balance sheet was invested in earning assets. Our loan balance grew by NGN 254 billion. However, 32% of the loan growth was funded by intervention funds. We took advantage of the various intervention windows available in the Central Bank to fund our risk asset growth. These intervention funds allow us and qualified customers under the scheme to access loans at a very concessional rate. Finally, I want to assure our esteemed stakeholders that we will sustain this trajectory. In the coming months, we will continue to innovate and disrupt using technology. We'll also sustain our culture of increasing shareholder value through the yearly payment of dividends on their investments with the bank. This year, we commend the payment of interim dividends to mitigate the impact of inflation on our esteemed shareholders. We thank you for your support. We will now take questions. Thank you. Thank you very much. Ladies and gentlemen, if you would like to ask a question, please press star and then one on your touch tone phone or on the keypad on your screen. If you decide to withdraw your question, please press star and then two to remove yourself from the list. Again, if you would like to ask a question, please press star and then one. We will pause to see if there are questions. The first question comes from Oluwaseun from FBN, from FBNQuest. Please proceed with your question. All right. Good afternoon. Thanks for hosting this call. Please confirm you can hear me. Yes, we can. I just have a couple of questions. I'll go through them briefly. The first will be that we can see from your results that overall NPL ratio dropped quarter-on-quarter. If we look at the breakdown by sector, looking at your transport and consumer portfolio, we'll notice that NPL ratio for that class increased. I would appreciate if you could give us some insight into what is happening in that space. We would like to know if that has anything to do with, you know, the elevated interest environment. Also this trend was also noticed for finance and insurance sector. I want to know, is this due to probably a specific obligor, or is this something you are seeing? Are you seeing a gloomy outlook, you know, industry-wide now? The second question will be, in what sectors, specific sectors, are you looking to increase your exposure? The next is as regards the CBN's intervention facility. We know CBN increased rates on this facility from 5% to about 9%. I would appreciate if you could give us in percentage terms the percentage of your loan book, you know, that goes to intervention facilities. I would also appreciate if you can give us in percentage terms how you see this impacting your margins. My last question would be, I would appreciate detailed insights, you know, as to how you see the increased interest rate environment affecting your trading book. You know, in terms of, what you are seeing in terms of mark-to-market, losses or gains, whichever it is you're experiencing. That will be all from me. Thank you. Thank you very much for those questions. I think I'll probably start from the last one and work up to the first one. Your last question is, you want to also know the top. Now our loan book is funded with intervention funds from different sources. And you want to know what percentages we have on the loan book. Okay, fine. Currently 24% of our loan book is funded with intervention funds from different sources. However, 18% is funded with the CBN intervention funds. The upward re-review of the rate from 5% to 9% is positive for us because our margins will increase from 3% to about 5%. In absolute terms, we expect about NGN 6 billion additional income per annum due to the policy change by the Central Bank. That will be the answer to that question. You also asked what can we see as the overall NPL ratio had dropped from Q1 Q2 year-on-year and quarter on quarter. Having looked at our transport and consumer portfolio and the NPL ratio that have increased. My answer to this would be that on a quarter-on-quarter basis, the NPL of our transport sector dropped by 1.5%, but grew by less than 5%, which we have considered relatively marginal. For the consumer loan book, the NPL increase is the failure of the third-party system used in collections. I will have the CRO speak to this. Thank you very much for that question. Basically, we had a failure in a third-party application that we use to collect repayments. Now we've engaged that third party to see that this is resolved, and we expect that this will be fully resolved and we'll see things normalize in subsequent quarters. Thank you. Just to add a little bit more to that, we are strengthening this collection, and we've also activated the GSI instruction, which allows us to seek for funds in any bank account operated by defaulting customers. We believe, just like the CRO said, that all this will resolve. These are our salary customers, so it will be resolved after their salaries come in within the year. Thank you. Okay. Hello? Can you hear me? These sectors we expect growth. From what we can see from our perspective, we're expecting a lot of growth in manufacturing, pharmaceuticals, medical supplies, food processing, e-commerce, and oil and gas, especially the downstream. This, of course, everybody know this is supported by the recent increase in crude oil prices, which has traded to over around $100 per barrel. We're also very focused on the infrastructure space because the federal government itself is focused on infrastructure renewal. We have positioned ourselves in this space, and we have major transactions going on in this infrastructure projects. We have the construction of the 378 standard gauge railway line between Kano and Maradi, valued at over $2 billion. We also have the construction of Ajaokuta-Kaduna-Kano gas pipeline valued at over $2.4 billion. You asked a question about the finance sector, so finance and insurance. I just want to allay your concern that that has to do with a specific public, or just one public actually, where we had a facility going to stage three. That just to address that concern that you expressed. Thank you. Oluwaseun, I'd just like to check if that addresses all of your questions and if you have any follow-up questions. Yes, I have one. I think one question is yet to be answered. The question on how the interest rate environment is affecting your trading book. I would also appreciate, as regards to the last, the answer to the question that was given now, can you give us some more information about finance and insurance? I mean, what size are we looking at here? Any further information will help. Thank you. On finance and insurance, this is a very small part of our loan book. Aggregate exposure there is less than a total of about NGN 1 billion in that sector. We just have one borrower with more than 60% of that exposure that has had a challenge. It's a very negligible part of the loan book in total. Nothing of concern as far as we are concerned. As far as the portfolio is concerned, there's nothing we're worried about from that sector. It's a loan we've taken as loss, and also we're taking provision on it. Of course, we'll continue to pursue recovery on that particular exposure. Thank you. Question is on the interest environment and how that affects our trading book. Fidelity has 7% of its total assets in earning assets, and 83% of our customer deposits are in low-cost deposits. A high interest rate environment is net positive for us. For instance, in the current interest rate environment, our NIM jumped from 5.3% in H1 2021 to 6.1% in H1 2022. This is due to increased yields on our investments in securities, which increased from 6% - 10.1%. We believe that the yields will continue to tick up, and we have strategically positioned our trades at the short end of the yield curve to ensure that we optimize returns. We have done a whole lot in terms of energizing our staff to focus on low-cost deposits. You can see that from the growth that we have and the significant movement in our low-cost deposits to a percentage of our total deposits. We think it's very positive. The Treasurer may want to add something to this. Yeah. Clearly. Thanks, MD. I think you're spot on. If you look at where the market is going- Before now, everybody had expected or envisaged increase in the yield environment, I think from HQ. It's not anything that caught the market unaware. If you look at the global headwinds from the macroeconomic uncertainties, it's just very normal for traders to appropriately plan their books and ensure that they stay at the short end of the curve, so that as the market is moving, you're also taking advantage of the high yield environment. What happened in 2020, 2021, I think, we're not likely to see that majorly in the market, or at least from our own perspective. That fear by mission definition is not gonna happen as we had it then, because this is quite planned, quite envisaged, and we have appropriately structured our trading to take this into consideration. Thank you. All right. Thank you so much. Thank you. The next question comes from Samuel Oshinuga from CardinalStone Partners. Please proceed with your question, Samuel. Thank you. Good evening. Can you confirm that you can hear me, please? Yes, we can. Thank you very much. First of all, congratulations on your good results. I have a few questions, and I will start from your loan books. Forgive me, I'm Samuel Oshinuga, CardinalStone Securities. Our analysis on your loan books shows that 94% of your stage two loans are domiciled within the oil and gas and power sectors. How much of those specifically, you know, are in intervention facilities, and what specific developments in those sectors do you think are contributing, in your estimation, would you say are contributing to contributed to this proportion of your stage two loans? You know, so just very slightly on the power sector, in the power sector, could you give, you know, any corporate updates on your takeover of the collateralized shareholding of the DisCos that happened earlier? You know, if there are any updates on that, what impact are you foreseeing and what changes are you looking forward to? You know, second leg of my questions, I would like to speak to the drop in capital adequacy. You did attribute it largely to balance sheet optimization through asset reallocation. You know, just to ask for more color on what that is specifically and how long would this strategy be in play? Is this something just for short term or something that we should expect over the next couple of quarters as well? You know, with the normalization of the savings deposit rates to a minimum of 30% of MPR, what are your expectations on the impact of this directive on your funding cost? How much of a shift can we expect in your funding strategy? You know, what's your outlook for your net interest margin following this recent CBN move? Lastly, you just disclosed the pending takeover of Union Bank UK, and in the same communique, you stated that this was just to expand service touchpoints beyond the Nigerian shores. Firstly, could you provide, you know, insights on, like specific insights, what level of impact are you looking at from that you're looking to derive from this corporate, you know, action in terms of geographical diversification? Secondly, does this acquisition signal the beginning of the bespoke strategy to diversify exposure, and should we expect pan-African movements? Those three main questions. Let me take the first one about our stage two. 94% of our loans in the oil and gas, and they were funded by intervention facilities. No, they were not. None of our oil and gas and power loans were funded using intervention funds. I hope that's the answer to that question. The second question is on the power sector. To give you an update basically for what is going on in that space. We think it's a good story. I would say that the takeover was timely, and this was to ensure that the loans don't deteriorate any further, and that we're able to refresh the cash flows, especially with the recent implementation of the market reflective tariffs and the gradual commencement of the contract-based markets. We saw that the operators were not being very transparent, so it was expedient that we stepped in, and we have the full backing of the government, the BPE and the bank. Because electricity generation is a very critical part of the economy, and the government were definite that they didn't want to allow this to continue to be a challenge. We have the full backing of the federal government. As we are aware, the syndicate and the banks and the federal government appointed new boards in the affected DisCos, and the new team have a mandate to make sure they improve collections and stabilize the business operations of these companies so that the assets we took back on sale. That's the end target. The significant banks are working with the regulators, like I said, namely the Central Bank, NERC and BPE, to optimize the operations of these companies. First of all, increase their revenue and cash flows and make them attractive for sales. On the impact on our books, we have already made provision of about 10%-15% of these loans. We consider the level of provision sufficient because we don't anticipate that we will have any business increase it. If anything, that those two partners are on the recovery path. I will have Hillary, who is our Head of Power, speak a little bit more to this. Thank you, MD. Like MD has pointed out, the takeovers were timely so that we can prevent a deterioration of the loans. The power sector is actually looking up in the last 1-2 months. You will have all noticed an increase in power generated. Now, the contract-based market is also kicking off. What that means is that the generation companies will have to generate a certain percentage of power, failing which they will be made to pay penalties. Same thing goes for the transmission side of the business, and also the same thing goes for the distribution side of the business. Overall, the outlook is very good for the power sector. Then now we're getting close, as close as possible, to the cash flows that we've always wanted to be. Thank you. Now to the second question. The third question is on the drop of capital and liquidity, and, if that was balance sheet optimization or asset, reallocation. I think that's what I got the question to be. The answer would be no. The drop in our capital liquidity ratio was not due to balance sheet optimization. Rather, the drop in our market risk was due to strategic positioning of our trading books. Due to the rising yields in the market, we have intentionally positioned our trading book at the short end of the yield curve to ensure that we optimize returns and improve our market risk position. I will also have the CRO speak a little bit more to this. Thank you. Thank you very much, MD. We continue to pursue a strategy of optimizing the use of our capital. You will notice that we achieved a 15% growth in the loan book between December and June. Now, that, of course, requires taking on additional capital to support that growth. We've also, to mitigate that impact, we saw the market risk impact moderated due to balance sheet optimization. If you look at our net position at 19.8%, we are well above the regulatory minimum of 15%. We remain strongly capitalized, and we intend to continue to pursue that strategy of remaining strongly capitalized going into the future. Thank you. Your next question will be on Union Bank, on why we acquired Union Bank. We have several reasons, continuing reasons why we acquired Union Bank. Firstly, Fidelity has a short to medium term aspiration, as you would have, as we have mentioned in our previous calls, of our intention to expand beyond the shores of Nigeria. If you remember, we've always had an international license for over 30 years. It is an opportunity that had to be taken. The acquisition offers a compelling synergy, which we hope to build on and create a scalable service franchise that will support our wider ecosystem. As you're well aware, Fidelity is very big on trade customers in the SME space and also in Diaspora Banking. Definitely this will affect us positively. It will be a big synergy. Moreover, we've always done a lot of business with Union Bank all this while. The acquisition definitely will, like, it will also improve our capacity for scale and offer bundled services to our various customers across the continent. Like I said, we're very strong in the SME space, and this will be another synergy. There is also potential for stronger customer loyalty and stickiness also because now we don't have to in-house it through another bank and all that. We're able to transact end-to-end for our customers and also for bundled products. As you're aware of, the Union Bank London has been in existence since 1983. It has a very strong brand and very sound legacy. It also has a robust range of financial services for both individual and corporate clients, including, but not limited to trade finance, personal banking, business banking, treasury services, commercial lending, and a very big and robust portfolio. We think that we're going to assist our trade portfolio and Union Bank couldn't have had a better acquisition target. When the opportunity came, we made sure that we closed it. Yes, that would be my answer. I'll have my COIO, Stanley, who was on this, who executed this from end-to-end to speak more to it. Stanley Okay. Thank you very much and, MD, I think you've gone through all the issues, but basically this for us is a very welcome development in the history of the bank. As MD said, we're about the only bank in Nigeria today with foreign or international license that has not gone offshore. We find this as a very good opportunity, and we timed it properly to be able to go out there. We've got a target we felt we could use and explore to be able to keep our customers. Apart from using it to keep our current customers, we believe we'll be able to also get more customers who need banking outside of London and other parts of the world. We'll be able to to handle their trade and all those kind of transactions through our subsidiary, that's if which will become Fidelity Bank in the U.K. We feel that Union Bank fulfills this promise for us, and we're excited as a bank to get this bank to get into this. We believe that we're going to improve on what Union Bank has done over the years. We'll need to add our own vibe to it, you know, be able to push the transactions strongly, especially in the trade area. This therefore offers a very good opportunity for us. You also mentioned the issue of Africa. Of course, that means that if we then find very good opportunities in Africa, especially with the African trade coming on board, that also opens up a lot of opportunities for us to be able to link up all those kind of businesses, have our Union Bank UK, which will become Fidelity Bank U.K., be at the center of this transaction. Therefore, for us it's a very positive one, and we'll see a lot happening from there. Maybe at this point I'll just take your next question that talks about NIMs, if that helps. You had asked about our outlook, what we see as outlook for NIMs following recent CBN pronouncement, especially as regards increasing rate of most of the loans that were under intervention from 5%- 9%. For us, yes, I mean, it's a good time for us. What has happened is that we had earlier on started off this process of ensuring that our liability generation comes from the low-cost end of the market. We've seen our low-cost funds increase from 74.5% of our total deposits to about 83.1% as at half year of 2022. There has been an intentional effort to start shifting the mix of our deposit liabilities to be able to prepare for this day. We're already working on this day and now that it has come. What has also happened is that most of our intervention loans which were ending at 5% are now going to end at 9%. We're keeping an eye on the spread, and if the spread remains good, the outlook remains very positive for our NIMs. We've seen that demonstrated on the growth we have witnessed from 4.7%- 3.4%. There's some intentional work that has gone into it, and we'll continue to drive our earnings in that direction going forward. For us, it's positive even in the environment that we see, and we'll continue to push and make sure we get more low-cost deposits while also pricing our assets, earning assets properly. That would be our answer to that. Thank you very much. The impact of the new state policy on savings. Yes, we have a deliberate strategy to increase our activity around the low-cost deposits, which is the current account balances. This will really moderate the extra payment that we need to make on the savings accounts due to the shift in the policy, because it is going to come in, we have to pay a lot more on the savings deposit across the bank. We have a strategy of the bank. We intensify efforts on the low-cost deposits that are just current account balances. On top of our strategy that I speak to Adetunji. Okay. Thank you very much, MD. The question was impact on savings account, impact of the recent increase, in the savings rates on the funding costs, one, and then on our NIM. I believe MD and Stanley have already answered the second part of the question, and so I will just speak to the first part. Impact of savings accounts on the funding costs. Now, when MD was doing the introductory speech of the MD, she mentioned that the bank is focusing on some things. One, increasing NIM, and then two, driving low cost fund. Now, the savings account on the NIM. The savings account rate, yes, was increased to about 4%, from 0.14%, due to the increase in the MPR rates. What we've done as a bank is that, you know, we've increased transactions on all the customer platforms, so we've been able to reduce our rates because as you know, if you do more than four transactions on your savings account, you are not entitled for interest rates. What we've done, we've increased transactions in all the platforms, and we are driving customer transaction, and that has reduced our savings rates to about 2.5%. Even in August at the start of this initiative. Going forward, we'll continue to do that. We'll continue to drive customer turnover, and then we've introduced different loyalty schemes for customers that will drive the turnover. That will push down the savings rates. Thank you. Samuel, does that address all of your questions? Do you have any follow-up questions? Yes. Thank you very much. Thank you very much for that. It does address most of my concerns. Just some follow-up questions, and this may be for your tax rates. Your tax rates guidance for full year 2022 stands at 15%-20%. Just to get a bit of insight on that, if that projection includes consideration on the expiration of the tax exemption period for government securities. You know, on your OpEx, we know that regulatory costs have been really directly passed through to operating efficiency. Do you see any respite soon in that direction? Thank you very much for those questions. Of course, we are taking into consideration the new regulatory shifts on the tax rates, and I'll have the CFO speak to that. Okay. Thank you so much. Such questions are actually expected. You know, the Finance Act 2021 came up and brought up some amendments in some of the tax rates, and some of them on the educational tax that went from 2%- 2.5% of assessing profits. Then we also saw the imposition of 0.25% of PBT. That has actually been impacted in our 2021 financials. I'm sure what you're asking for is the waiver of the taxable income on treasury bills and other fixed income securities. If you recall, our earlier guidance was between 10%-15%, but we have to bring that impact to change our guidance from 15%-20%. The current tax effective tax rate of 7.1 you are seeing will be fully impacted by the time we get to year end. We expect about close to a double of what we have seen in H1 2022 of 7.1, which will be in line with our guidance of between 15%-20%. That will be factored in fully in the full year accounts. Thank you very much. The next question comes from Muyiwa Oni from Standard Bank. Please proceed with your question, Muyiwa. Thank you. Good afternoon, ladies and gentlemen, and thank you for the presentation. Time to take our questions, and also congratulations on your results. I have a few follow-up questions. First is on the power exposure on power sector. I wanted to get a sense of timelines for when you think the assets will be sold. So what you are thinking in your mind of timelines for assets to be sold. And then if you also think it's possible for the bank, so you to sell your own stake or your position independently of the syndicate. And second question is on Basel III implementation, timing for when you think the full implementation will come into play. I understand that there's currently parallel run going on. And then the third is on the expansion on the African continent. I know you highlighted the expansion on the back of your acquisition or movement into the U.K. I want to understand if you had a timeline for expansion into the continent and countries that you see compelling opportunities as well. Those are my questions. Thank you very much, Muyiwa. On the question that you asked about the power sector, I would imagine that on the immediate, stabilize the management is what we need to do. What is the timelines for sale will depend on what the new management unveils. We will stabilize the place first of all. Then, I mean, it has to be attractive for anybody who wants to buy. We'll make sure that we put a proper corporate governance, make sure that the policies are working well. Give and take, I would personally say like maybe like a year. The power, the assets are available for sale from this moment. Okay. I would imagine that what makes sense to any buyer is to see something that is properly organized. The most important thing is that we have put very solid management there right now, and that they are already at work trying to stabilize things and ensure that there's corporate governance in place to get a proper reading of the things. I'll have a strong man in the power sector, his name is Hillary. Thank you, MD. The timelines for asset sale in line with the government pronouncement is six to 12 months, just like the MD has said. Again, we would need to stabilize the place. There's going to be a diagnostic. By an international consulting group. They're working in conjunction with the current management of the lease so that we'll stabilize the assets and also make them very attractive for potential core investors. Timeline, six to 12 months, in the first instance, and then of course, we'll take it from there. Thank you. Okay, fine. The other question was our timelines for expansion into African countries. Our timeline is like yesterday, so it's opportunistic. We are reviewing all the countries and we're looking at what. It's big data on all the countries. We're very much on it. The African Free Trade Agreement has even made expansion into African countries more attractive. It's a to-do for us. We believe that within the next year we would have opportunistically been able to close on one or two, depending on what the market what we meet in the marketplace. We have to dimension it very well before we make the move. That's why we'll take our time deliberately and get a very big asset stack. Thank you. The third question is on Basel III, and I will have my CRO speak to it. But preliminarily, I can tell you that we are very much on course, that we've met all the parameters and all the numbers. We're way above the regulatory numbers and that we don't have any issues at all, even if it started today. But the CRO will speak to it. Thank you. Thank you very much, MD. Indeed we are at this point waiting for regulators to come back to us with a timeline. You'll recall that the whole process started last month of 2021. It was supposed to be for an initial period of six months, with the possibility of extending for another three months. We are more or less at the tail end of the three months extension timeline. Basically our expectation is that any moment from now, the regulators should come back to say, "Okay, this is it." Of course, a lot depends on what they are seeing, in terms of the reports that every bank is sending in. At the outset, when Basel III came up, an independent consultant did a survey of the markets, and they felt that of all the banks, there was probably just one or two that might fail the new requirements. That's about nine months ago, so I'm sure that by now CBN has the details and can see how it will affect the banking sector and everything. We expect that they'll come up with something in a very short time from now. We are very strongly positioned as far as all the ratios are concerned, both from a CET1 perspective. As far as. If you remember, the minimum requirement is 11.25%. We are at 14.61%. On the overall high itself, the minimum is 15%. We are at 19.8%. On the leverage ratio requirement, the minimum is 4%. We are at 5.58%. Of course, you know about our NPL issue, which is 2.7% as at this time. We are ready anytime at all, including if they say we should go today. Thank you. Thanks for that. Just wanted to check on the first question I asked, the second part of the question, if it was possible for the bank to sell independently of the syndicate, or you'd have to sell as a whole? That's for the power sales. I'll quickly speak to that. For all the assets where we have syndications, we are very much aligned with the other lenders. For the ones that are bilateral, we don't need the consent of any other lender to sell. For the ones that are syndicated, all the lenders are well aligned, and there shouldn't be a problem to make that sale. Thank you. Thank you. Thank you very much. The next question comes from Ashwinder Bakhshi from Barings. Please proceed with your question, Ashwinder. Hi there. I hope you can hear me. Can you just give a little bit color and your thoughts on the sort of the macro environment in Nigeria, especially the pressure on currency, and we keep hearing about FX shortages. Generally, you know, how you're navigating that and potentially any impact of further depreciation on capital and asset quality. That's the first question. Second question, just to sort of double-check, the October 2022 bond, the $400 million odd, in the plan to sort of, you know, refi it, you know, what is the sort of plans there? Thank you. Thank you very much. What we see is that 2022 is a pre-election year, and that by the end of September 2022, campaigning starts in full swing. From experience, government at all levels will become more responsive to the yearning of the masses as we inch towards the election date, and more infrastructure will be built and commissioned as a campaign strategy. There'll be a lot of activity. Expect a lot of activity in terms of business. However, there's also the risk of the government drifting into politicking and a level of negligence of the economy at the expense of the economy. However, our outlook for the Nigerian economy is still very positive because, as you can see, the GDP growth for Q2 2020 came in at 3.5%, making it the 7th consecutive quarter-on-quarter growth since Q4 2020. I'm sure you will also remember that the IMF recently revised its growth forecast for Nigeria in 2020 to 3.4% from its earlier projection of 2.7%, citing the crude oil prices and improved operating environment. As you well know, the crude oil prices have continued to be stable at over $100 per barrel in spot market, and local production is averaging at 1.4 barrels per day according to the latest industrial figures. We see the macro as stable and the government is making a lot of efforts towards stabilizing the South South region. It recently signed some contracts to take care of the security issues around there, like oil theft and all of that. That's been the very major thrust, if you've been reading the news in Nigeria, in the last one month. We believe that all of that will take the production levels back to about 2 million, which is where it was when these same contractors, security contractors, were managing that space. We are very convinced and we are very positive that things will improve for the better. You also asked questions around the interest rate situation and the assets and quality of our loan books. No, incidentally it's the reverse. What we're seeing is very strong core numbers from customers' activity, and that will filter into the percentages on our growth in our non-interest income. Yeah. I think that, I'll have Adetunji speak to this first. In terms of the numbers that we've seen a strong growth in customer business and activity. It's difficult to say that, we're expecting pressure in our assets and business value. You can also see from our NPL ratios that the asset quality is actually improving. We think everything is positive. But I'll have Adetunji speak to the strategy. Thank you, MD. If you look at the specifics, if you look at the economic indices, you will discover that we've been through this circle before. It's not news to the banking industry. The FX scarcity has been there. The government has made several efforts. They have the race to $200 billion in non-oil exports. They have the Naira 4 Dollar Scheme. Different interventions. CBN has introduced different interventions to try and stabilize the currency. Do we think there will be a bit of Naira devaluation later on? Yes, we think there might be a devaluation. How does that affect our books? We are long on the dollar. Any time there's a devaluation of the Naira, we actually make more money. The CBN has also started a restrictive economic policy. I think they started that from the last two MPC meetings, I mean. They are focusing on controlling inflation and, you know. We are positive about the economy. Yes, there are headwinds, but the outlook is still positive. Thank you. Just to speak to this specifically, from our numbers, it is a 10% devaluation in Naira would translate to about NGN 10 billion devaluation income for us. You also asked about the impact of this on our CRR. The impact is only going to be 20-30 basis points due to the credit and market risk computation. All in all, we are quite comfortable in that space. There's nothing to worry about. You also asked another question on our maturing Eurobonds. We are all set to make the payment in October. We announced this at our last earnings call. We confirmed that we have always built sufficient sinking funds for the payment on the sixteenth of October, definite. Thank you. Thank you. Thank you. The next question comes from Chibuike Ilonze from Davik Ventures Nigeria. Please proceed with your question, Chibuike. I wanted to ask quickly on the Union Bank UK acquisition. Are you going to, you know, and then is there, again, subsequently sell off that acquisition. Just wanting to know what your focus is on the U.K. business. Thank you. Thank you very much. Our intention in U.K. business is very robust. We are going to play on all of those wholesale, retail, mortgages, trade. It's very strong. There's very strong attraction to us, for us. As you well know, a very significant portion of our trade business passes through our U.K. banks, Nigerian banks. All we need to do is to aggregate that and pass it through Union Bank UK. Of course, we will do what we know how to do best, which is market very strongly. We believe that we are going to. It's a good outing for us. We intend to play in all the areas that are. We have a very robust license. Union Bank UK has a very robust license and able to do both commercial, take deposit. As a matter of fact, they have the facilities that a lot of banks also don't have. It's a good opportunity for us. I'll have Stanley speak to that a little bit more. Thank you. Okay. Thank you, MD. You're right, we are very open to play on all sides. I think specifically we are going to concentrate a lot on the wholesale side. The wholesale side is from the trade. We believe that most of the transactions that happen out of Nigeria and other African countries, especially on trade, we can direct a lot of that through our UK subsidiary. Aside that, aside Nigeria particularly, as MD said, part of what we are doing currently with other correspondent banks, we can channel a portion of it, not all, but at least reasonable portion. What that means is that it increases their flows and the fees that were paying to some of these correspondent banks goes to the group more like. That's some kind of retention there. Apart from trade, we also have seen opportunities in the mortgage area. We have some Nigerians or other Africans who want to have a property in the U.K. for their family and the ones they want to buy and sell, buy and rent or that kind of opportunity. It's also out there for us to tap into. We are looking at all those options, and we believe that we're quite focused on what we want to do with the subsidiary we have purchased. I mean, we're not distracted in any way. The scenarios we have built are very clear in our minds about the opportunities that exist in that space. We're just going to jump into as well. As I said, if you move 30%-40% of what we are doing with other subsidiaries today back to Union Bank, that creates a lot of opportunities to improve performance for that subsidiary. We are quite on the path of focus on that, and we believe we will make reasonable impact from that subsidiary being there. Thank you very much. Just to add that, what we have seen so far is that Union Bank London has huge customer base. This is old money, if we have to use the local parlance. These are people who are very comfortable and did a lot of business many years ago. We don't need to market new relationships. All we need to do is to start with activation. If we actively reactivate the customer base, we'll be very busy for one year. I'm telling you from what I've seen so far. It's a very good purchase and we're very happy to take it to the next level. We just need to put some energy around the marketing drive there. Thank you. Chibuike, are those all your questions? Yes. Thank you. Thanks. Thank you very much, sir. The next question comes from Eze Ben Prince Ikemefuna from Inside Business. Please proceed with your question, Eze. Okay. Good afternoon. Please confirm that you can hear what I'm saying, sir. Yes, we can. Okay. Please, I have a couple of questions. One, is about what is the total liabilities and total assets of Union Bank UK that Fidelity Bank is acquiring? Two, was the intention of acquiring Union Bank UK started in any of the Fidelity's financial statement? Was it stated in any of the financial statements? And please, if it is, kindly refer us to it. Thirdly, does the Securities and Exchange Commission, as well as the Financial Reporting Council of Nigeria, has any role to play in the move by Fidelity Bank to acquire UB, Union Bank UK? Please, if yes, what part have both regulated agencies played? Yeah. Well, let me start from the last question. We have the approval of all the regulators on this purchase, except the PRA, which is the regulator in London. The process is that they would have to go through a change of control, and that is ongoing at the moment, which is to say we have commenced the process of sending all our documents to them, our strategy and the plans we have. The change of control takes anywhere between four to five months. We believe that by the end of the year, all that would have been completed, barring any unforeseen. We're definitely not in breach of any regulatory approvals on this. We've done what we're supposed to do. We have a no objection from Central Bank, and we have notified the SEC about the purchase. That would be the answer to that first one. We will publish the details when we complete the acquisition. We'll publish the details when we complete the acquisition. You know that we're still going through regulatory change of control. It would be out of place to divulge information on Union Bank and its holdings at this point in time. Once we complete the change of control, it will be in the public domain. Thank you. May I just confirm, do you have any further questions? The first one wasn't actually answered. What is the total liability and total assets of Union Bank UK that Fidelity Bank is acquiring? That was the first question, and it wasn't answered. Certainly, I answered that earlier on. I said to you, if you remember, that we will publish the details for you after the full handover. At this point in time, the documents have gone to the regulators in London. We've sent in all our documents to regulate our assets. We're going through the process of sending these documents to the regulators, and then this would not be an appropriate time to divulge information on Union Bank. You can be rest assured that we did our due diligence. Thank you. Okay. All right. Thank you. Thank you very much. At this time, there are no further questions in the queue. If there are no further questions, Nneka, I would like to hand over to you for closing remarks before we conclude. Thank you very much. Okay. Thank you very much for the questions and for signing into this call. I want to assure you that regardless of the headway in the domestic economy, we will deliver on the guidance we have promised at the beginning of the year. Our H1 numbers have come in very strong. I believe that H2 will be just as strong, if not stronger. Thank you. Thank you very much. Ladies and gentlemen, that does conclude today's conference. Thank you very much for joining us. You may now disconnect your line.