U.S. Markets open in 9 hrs 26 mins

Edited Transcript of FBNH.LA earnings conference call or presentation 26-Apr-19 2:00pm GMT

Q4 2018 & Q1 2019 FBN Holdings PLC Earnings Call

May 1, 2019 (Thomson StreetEvents) -- Edited Transcript of FBN Holdings PLC earnings conference call or presentation Friday, April 26, 2019 at 2:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Chuma Ezirim

FBN Holdings Plc - Group Executive of E-Business and Retail Products of First Bank

* Ini Ebong

First Bank of Nigeria Limited - Group Executive, Treasury & Financial Institutions

* Kayode Akinkugbe

FBN Holdings Plc - MD of FBN Merchant Bank Limited

* Patrick Iyamabo

First Bank of Nigeria Limited - CFO

* Urum Kalu Eke

FBN Holdings Plc - Group MD & Director

================================================================================

Conference Call Participants

================================================================================

* Oluwatoyosi Oni

Renaissance Capital, Research Division - Research Analyst

* Ronak Gadhia

EFG Hermes Holding S.A.E., Research Division - Research Analyst

* Tolu Alamutu

Exotix Partners LLP, Research Division - Director & Corporate Credit Analyst of Financials

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good morning and good afternoon, ladies and gentlemen, and welcome to the FBN Holdings Full Year 2018 and First Quarter 2019 Financial Results Conference Call. This call is being recorded. (Operator Instructions)

I would now like to hand the call over to Mr. UK Eke, Group Managing Director of FBN Holdings. Please go ahead, sir.

--------------------------------------------------------------------------------

Urum Kalu Eke, FBN Holdings Plc - Group MD & Director [2]

--------------------------------------------------------------------------------

Thank you very much. Good morning, and good afternoon, ladies and gentlemen. Thanks for joining us on this investor and analyst presentation for the FBN Holdings Full Year 2018 and First Quarter 2019 Results.

My name is UK Eke, the Group Managing Director. On this call with me are my colleagues. From the commercial bank, the Managing Director, Dr. Sola Adeduntan; and we have Ini Ebong, the Treasurer. The CFO of the commercial bank is also here, Patrick Iyamabo. The CRO of the commercial bank, Segu Alebiosu, is here. And I have my colleagues from the merchant bank, Kayode Akinkugbe, the Managing Director. And finally, I have the CFO of FBN Holdings Plc, Wale Ariyibi.

We already have posted this presentation to our website, and I hope you found time to look through the presentation. I'd like to start on Slide 6, where we provide the context on the macro that prevailed during the year under review. Though we have strength into 2016 when we took charge as management, I think the growth consensus, an agreement that 2018 was challenging overall with inflationary pressure, primarily in first half of 2018, then go it reverted in the second half 2018.

On the oil production, we were steady at 1.7 million barrels a day. And also aided by a very stable oil price that's in above the budget wage mark price of $60, we're able to accrete significantly to our quarterly results, which hit about $48 billion in second quarter of last year. Now the combined effect of this is our Central Bank of Nigeria was able to maintain collectively stable FX regime on both the NAFEX market and also the Central Bank window.

Moving on to Slide 7. We have indicated some of the regulatory developments during 2018. We have discussed extensively some of these point in the previous calls, so I'll just restrict myself to 1 or 2 developments that impacted us or will be still impactful going forward.

By the fourth quarter, our fourth quarter of 2018, Central Bank issued guidelines for licensing of payment service banks. We believe this will change significantly the competitive environment in the medium to long term. But as a group, we are fully ready and prepared, and we do think that we'll continue to defend our market share in that space, sales on the platforms we have built over time.

Now because we also play in insurance space, I'd like to call out the NAICOM's prescription for tier-based minimum solvency capital framework. Even though this was suspended by the fourth quarter of 2018, I can confirm that we are also ready to fully comply with the capital requirements.

Now for 2019, Central Bank signaled the change in direction, and I'm speaking to the MPR, which was reduced by 50 bps or 13.5%, and I think this will increase our line with fiscal policy expectations of economic growth.

Now I'll move to Slide 9. And from here, I'll also highlight some of the commitments that we'd make to the market in the context of our 3-year strategic planning program, which we published 2017 and ending in 2019. The year under review, 2018, represents therefore the penultimate year of our 3-year SPP, and we anchored the plan on 3 major pillars. One was around revenue generation, particularly in a diversified way, taking into the account the broad offering of the group. The second was around asset quality, where we made the commitment to completely overhaul the risk architecture and deliver very sound loan book or portfolio. The third was around costs and capital efficiency, where we've made a commitment to rein-in costs and review our capital profiles. Right on that slide, you will see the enablers we identified and have also leveraged to deliver on these commitments, the people, processes, innovation, synergy and technology. I will delve into more detail in subsequent slides.

Now on Slide 10, we begin to see the credit risk governance in the commercial bank now operating best-in-class standards. And we are proud to report that the vintage NPL, i.e. loans we have booked in the last 2 years certainly reporting less than 1% NPL. And the overall cost of risk is now roundabout 2.5%. Again to emphasize, we have completely overhauled our entire risk management architecture. We have achieved a coverage ratio of about 89%, and the cost is risk is now about 2.5%. I am happy to report that we have fully resolved and fully provisioned and indeed written off our largest and most difficult NPLs, particularly Ontario and Atlantic Energy. For us, this is a major landmark which markets should be aware of. I would do think it was the inputs, the beginning of great things that will happen not just in the terms of loan book growth but also revenue generation.

Slide 11 speaks to our revenue generation. We have recorded very good subset in our quest to drive noninterest revenues to our digital offerings and also increased income from nonbanking subsidiaries. We are currently the undisputed leader in digital solutions and agency banking, and it is happening in Africa's largest retail market. We do believe that this represents for us a strong bragging right and we are going to leverage some of these assets to improve profitability. Specifically, I'd like to confirm that our digital channel customer base currently exceeds 10 million, again underpinning our strength in that space. We are the only banking manager today that's fully operational in every state, in every local government across the country and operating with the over 20,000 agents. This is on the Firstmonie agent offering, and the target for us by end of 2019 is to exceed 30,000 agents.

Now the FirstBank Digital Lab was established in 2018, and this is basically to harness opportunities that exist in the fintech space. We are looking at collaboration and partnership with the fintechs. And I'd like to confirm also that we have successfully have crossover for 85% of all customer-generated transactions into operating platforms. So they no longer have to transact through bricks and mortar. Again, these are extraordinary achievements in a very challenging and competitive environment.

Moving onto Slide 12, around operational efficiency. We continue to do be very well in liability generation, and we are proud that we have an excellent funding platform, which obviously results in low cost and diversified and stable funding base. The growth [we are so happy today shows] for 2018 full year, deposits grew 10.9%. But more importantly, low-cost deposits continue to grow and currently represents about 86% of total deposits as at end of March 2019. And again, we are proud to say that our savings bucket, the savings deposit base is about NGN 1.2 trillion, which makes us clearly the biggest in that space in Nigeria

Now asset quality and capital, I'd like combine that Slide 13, where we have discussed what we have done in terms of restructuring the balance sheet without diluting current shareholders. And so we have demonstrated very clearly best-in-class capital management capability. We made a promise to the market 3 years ago, and even though it was challenging, we are going to accrete capital through retention of profits, particular the commercial bank, and therefore we have kept that promise. And to your right, you will see the capital ratios, and by year-end, we closed at 17.3%. And for Q1, we're at 16.5%. Again, these are strong capital forecasts sufficient for the group that we intend to achieve for current year even as we expect to ramp up profitability and accrete further. So we would like to reassure that we will continue to sustain our best-in-class operations. We will continue to accrete organically without a cost to the market, and we will remain focused on building a fortressed balance sheet capable of pivoting our future when risk assets enabled growth resumes.

I will then go to Slide 15. Here, we want to show that even though we have covered sufficient grounds and delivered on the promises we made to a large extent, there are still a few areas we need to improve on. Specifically I'd like to take you to Slide 16 and the first point to call out there is the costs. Here, we saw a spike net on year, but we are committed absolutely to a reining in costs even as we significantly invest for the future. The point we make is that we will not shy away from investing in sustainable growth even though they may result in onetime cost increases. We believe this assures the future for us. And so if you look at the presentation, operating expenses grew by 9.7% year-on-year, clearly below inflation. But if you normalize for nonrecurring costs, OpEx growth in first quarter of 2019 was 12.1%, translating to an effective cost to income ratio, again for 2019 first quarter of 60.6%. (inaudible) that given the sheer size and scale of our platforms, it's very difficult to fall within a range that we'll have expected all within just 1 year. But a combination of revenue growth amounts to a clear and sustainable cost containment measure, our steps will result in a more normalized cost-to-income ratio, and I will give you the guidelines when we get to that slide.

Now onto Slide 17. The second area of focus for us, which is priority, is the NPL. Clearly, NPL ratio of 25.9% exceeded the guidance we gave for 2018 full year. But then we have a path, as we will show you further down the presentation or during the Q&A, a path that will result in a single-digit NPL by 2019. This is a commitment we are giving, and we will stand by that. And that implies, we make a commitment that we'll continue to improve on the coverage ratio, which currently is indeed above 100% under IFRS 9 rules. And so for us, 2019 remains a critical watershed for us at FBN Holdings, in line with the commitment we have made. We are not shifting the goal posts. We are committed to delivering on all the numbers we gave. So we reiterate our commitment to address on all the structural issues, the balance sheet repair, aggressively growing the revenue base and deposit diversifying (inaudible) and also we undertake to fast track initiatives around human capital transformation even though this may result in onetime costs. The key thing to take away from this slide is that we are not going to carry forward negative issues into 2020. Some of those issues we end in 2019, in line with commitments we've made.

Slide 19 gives the effects or the results of all the initiatives I have highlighted. And so we are happy to report that profit before tax for 2018 was NGN 65.3 billion, up nearly 20% year-on-year. And profit after tax was also up 31% year-on-year to NGN 59.7 billion.

Earnings per share inched up by 43% to NGN 1.65. Noninterest income increased by 15.8% year-on-year, closing at NGN 132 billion.

Under electronics banking revenue contribution to the noninterest revenue was also up 22% to 25.8%. Our credit impairment was down 42% year-on-year, which on that cost, our strong focus on resolving all the negative issues highlighted previously. We are including the capital absorbing capacity with NPL coverage at 78%, again, I emphasize with Atlantic Energy now fully provisioned.

For 2019 first quarter, profit before tax was NGN 19.3 billion, up 2.6%. And profit after tax was up also by 6.9% to NGN 15.8 billion. Now noninterest income was up 21.8%, closing at NGN 30.2 billion. Electronic banking portion of that is about 33.3%. Again, sustaining the reduction in impairment charges, we are seeing a 45.3% year-on-year decline in impairment charge, reporting our commitments and drive to improving the asset quality. Now if you normalize for associated costs as submitted previously, operating expenses grew by 12.2% -- or 12.1%.

In summary, ours has been a recovery story achieved through a very difficult period, and so we are delighted that we have turned the corner, and we have taken out all the impediments to growth. And therefore, we are optimistic that we will deliver the commitments we'll make. What are those commitments? I'll take you to Slide 27, where we have submitted the guidance for 2019 financial year.

We believe that we can deliver ROE of between 12% to 14%. The ROA, 1% to 1.5%. Our cost-to-income ratio will be within the bank of 58% to 62%. Cost of risk, 3.5% to 4%. Of course, you'll understand why, because we are adopting or we have adopted the IFRS 9 on expected loss basis. Cost of funds, we'll continue to maintain a very [different] cost of funds between 3% and 4%. And then our NIM will be between the bank of 9% -- 7% to 8%, I'm sorry. And then deposit growth, we'll sustain growth in that area above 10%. Net loans, I think we are wrong about this. The market was completely wrong. We thought that was a record growth, but our current industry will adapt flattish or a reduction, a negative. But we do believe that this year, we are going to achieve around about 5% growth in the loan book. And NPL for (inaudible) we would be able to deliver to up 10% NPL ratio, and this will be achieved through a combination of restructure, recovery, write-off and loan growth.

I would like to end my presentation here and open it up for question and answers. Thank you very much.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) We will now take our first question from Tolu Alamutu of Tellimer.

--------------------------------------------------------------------------------

Tolu Alamutu, Exotix Partners LLP, Research Division - Director & Corporate Credit Analyst of Financials [2]

--------------------------------------------------------------------------------

I have a few questions on asset quality, capital, liquidity and costs. So first on asset quality. Thank you for the guidance on Atlantic Energy. Can you just confirm that it was -- their loan was fully provisioned and not fully written-off?

And in previous calls, you'd mentioned that it was possible that you might write off all or part of that loan by the end of this year if there was no resolution to the ongoing court cases and so on. Can you give us an update on that, please?

And also related to asset quality, can you please tell us how Ontario was resolved? Were the assets sold?

And just for my benefit on Itau, can you confirm that it's no longer classified as a nonperforming loan?

Then on capital, again, thank you for being very clear on the need for no fresh capital, but does that include Tier 2 as well as Tier 1? And does FBN intend to call the Tier 2 $450 million bond, which is callable later this year? And could you maybe give us your Tier 1 and total capital ratios at the end of March without the transitional arrangements from the CBN?

And then on liquidity, is there any plan to return to the dollar-Eurobond market?

And finally on costs, any detail that you can give on the increases in non-regulatory costs in the quarter would be really appreciated, especially the operating and other losses and professional fees, were those all related to digital banking and IT? Or were there other drivers behind those costs?

--------------------------------------------------------------------------------

Urum Kalu Eke, FBN Holdings Plc - Group MD & Director [3]

--------------------------------------------------------------------------------

Thank you. Can we take another set of questions please?

--------------------------------------------------------------------------------

Operator [4]

--------------------------------------------------------------------------------

We will now take our next question from Toyosi Oni of Renaissance Capital.

--------------------------------------------------------------------------------

Oluwatoyosi Oni, Renaissance Capital, Research Division - Research Analyst [5]

--------------------------------------------------------------------------------

My first question is also on asset quality. Please can you provide a detailed explanation on what's going on with asset quality of the bank? The expectation was that with the resolution of these high-performing associated marketing banks, especially when we consider how much was actually lost.

And further to that, is there a risk that the bank will not deliver on the 2019 promise of a clean book? Can you please explain this path that has been identified for us so that we have a better understanding of whether that's [going as the asset best] quality?

My second question is from the (inaudible) of [Banco Anima] to create a significant [pull] in driving profit for your competitor. Will we see a -- will we likely see similar earnings from FBN going forward?

And my final question is regarding an update on senior management and any changes that are to come and the continuity plans for the bank going forward.

--------------------------------------------------------------------------------

Urum Kalu Eke, FBN Holdings Plc - Group MD & Director [6]

--------------------------------------------------------------------------------

Sorry, the last question, can you repeat it, please?

--------------------------------------------------------------------------------

Oluwatoyosi Oni, Renaissance Capital, Research Division - Research Analyst [7]

--------------------------------------------------------------------------------

So the last question was an update on anything your management changes to come. And what the continuity plan for the bank is for (inaudible)?

--------------------------------------------------------------------------------

Unidentified Company Representative, [8]

--------------------------------------------------------------------------------

She asked this question around (inaudible).

--------------------------------------------------------------------------------

Urum Kalu Eke, FBN Holdings Plc - Group MD & Director [9]

--------------------------------------------------------------------------------

All right. We're going to respond to the questions on asset quality.

--------------------------------------------------------------------------------

Unidentified Company Representative, [10]

--------------------------------------------------------------------------------

Thanks for the questions. On Atlantic Energy, we confirm that we have solid positions with no reaching us. We'll continue to engage the government after the resolution of the issues. As confirmed the last time, the Board of FBN Holdings and the bank will take appropriate decision at the right time, but we will remain committed with resolution of (inaudible).

On Ontario asset, Ontario was resolved through a combination of asset realization and [haircuts in order to cut], which is the usability or the standing and exit. So we have the assets, they are currently being realized. In the last 1.5 years, we had a difficult macroeconomic environment. (inaudible) realization timely. However, that is on cost. We confirm that [Itau] is not in NPL. And indeed, Itau (inaudible) 100,000 barrels had been. And so a company that is positioning that. In an economy that's big as big as this, I'm looking on oil price above 60 in the last 12 months, I mean you have to shape the quantum of cost-through that passes through to Itau . Again, on asset quality, as mentioned by (inaudible), we see the evolution of NPLs and the movement from 22.8% in 2017 to 25.9% on 2019, and it's also because we adopted a more aggressive IFRS 9 outlook and fieldwork. We are perhaps one of the superbank that (inaudible) leader in the (inaudible) If I'm not wrong, I think it's only city bank that's joining us in doing that in the market. And so that (inaudible) target as the plan to be conservative and aggressive in resolving the asset quality issue, and we went ahead with (inaudible), and so that's led to that. So we have some accounts that we need (inaudible) May or June. But because we don't need the IFRS 9, it doesn't need to (inaudible).

Now going through the year, many of the installed (inaudible) because we have had -- I mean we have clear line of sight into that (inaudible) and had the customer (inaudible) and able to process the (inaudible). We note the fact that there's no risk to the single-digit NPL we have committed to.

Okay, switching to liquidity to ensure what we have out there. I mean actually we (inaudible) liquidity for bank has improved in the course of the last 2 years, and that was evident by our call-on repayments of earlier bond last year. Now given the range of financing options available to the bank, the fact that the bank still retains significant market access, we'll continue to explore all options available to the bank as it relates to the instrument in question. As you know, given the revision of an old style [7 noncore] file format, the capital benefit anyway has dropped off or will drop off in the course of this year. So risk of capital is negligible of that. So at this stage, we're looking at the comparable options available to the bank. And in the course of the next couple of months, well before the call dates, we will take the necessary steps with regards to what we need to do for long-term financing. So that will be that.

--------------------------------------------------------------------------------

Patrick Iyamabo, First Bank of Nigeria Limited - CFO [11]

--------------------------------------------------------------------------------

Okay. This is Patrick. So a couple of questions I'll respond to. The first has to do with Tier 1, and we raised our commitment to this high credit (inaudible) to raise Tier 1 capital. I've explained earlier and as you have seen from my results, looking at the bank at the current CAR level, we are comfortable. It may on top of that the guidance we've given for loan growth, the effective capital that will be consumed is less than 0.5%. So again, coming up for a serious need for 2019, we do not see any capital pressure.

Certainly, as you have witnessed from our financial, the level of provision will lessen every quarter, or every (inaudible) suggested for the whole year would accrete to about 200 basis points of cash. That will be strictly dedicated to managing impairment charge. On top of that, there's an additional 200 basis points that will accrete to the tangible earnings. Again that's the capital profile. So our viewpoint, frankly, is from the business need for this year, our current capital level from which we are accreting earnings, plus the impairment charges within our group easily reflects the organic habitat and capacity of the balance sheet. We are very comfortable with our capital position. This is the same (inaudible) for the last 3 years. We committed to it, and we are going to continue that this year.

The second question around what our CAR level will be without the accommodation is still north of 10%. So again, we are also very confident. The amortization, of course there we're talking about 30 billion each year, like I just explained. Our earnings capacity, what we accrete into earnings will easily take care of that. Our business is nonetheless, we are in a very comfortable place.

The last question has to do with our OpEx and the group (inaudible) year-on-year, and perhaps some insights into what is driving those costs. So there are couple of things that have driven our OpEx growth, but I think most of that have been touched on in the earlier discussion by the group managing director. This cost is really around the industry. Between the expected cost increase, talking about our plan deposits and growth for this year plus the change in income rules. When we look at things on a year-on-year basis, we can easily understand how our OpEx will grow, and it's in between 2.5 billion up to 3 billion. If you lay on top of that the share and active inflation and you assume, for example, a 10% inflation impact, you can annualize that and then can translate that to [possible] level, you recognize how we can easily act to ensure additional 5 billion increase in OpEx.

Now something with cost is, that we've said throughout, is that we are making strategic investments. Yes, there is structure in the business. Yes, we are growing the business, but we are also

(technical difficulty)

As a result, we're making investments in IT to ensure we consult and cost and control that and do that same as last year. But as we've done the last couple of years, we have tried to keep it under control.

Finally, I don't want to dwell on the last 2. There are certain -- some of our restructuring efforts and also, we (inaudible) we recognized certain onetime restructuring costs in this quarter. So these are really the comments to think about increase our OpEx. We understand (inaudible) strong, but all the growth is -- points towards positioning the institution for a much better placement in the future. Thank you.

--------------------------------------------------------------------------------

Urum Kalu Eke, FBN Holdings Plc - Group MD & Director [12]

--------------------------------------------------------------------------------

To answer the last question on senior management, all that we say that the leadership of our institution will remain essentially impact periodically depending on opportunity to reach and enhance the team. We will go to the market, and we will hire good people. Because we will be able to attract the (inaudible) we will try to signal with the fact that we have the capacity to attract good people. Like I said, we are always ready. We have the capacity to attract good people. So while the leadership team is taking us this far, remaining intact, our group continuously enrich and enhance on the basis.

--------------------------------------------------------------------------------

Operator [13]

--------------------------------------------------------------------------------

Our next question is comes from Ronak Gadhia of EFG Hermes.

--------------------------------------------------------------------------------

Ronak Gadhia, EFG Hermes Holding S.A.E., Research Division - Research Analyst [14]

--------------------------------------------------------------------------------

My first question -- well, most of my questions are really just a follow-up of the previous callers. Firstly, on [Itau]. Like you said, the loan remains performing. But from what we read in the press, it seems like there's some uncertainty about the underlying license for that asset. So could you just confirm if license had been renewed? So that's my first question.

My second question is on to do with your NPLs. I mean I get your point that the increasing NPLs was driven by IFRS 9. But based on the conversations we were having throughout last year from -- starting from the first quarter, management was consistent that IFRS 9 was fully implemented from the first quarter. So could you just highlight why there was a surprising increase in the fourth quarter related to IFRS 9, especially since once I take into consideration the amount of loans that you wrote off, it seems like the underlying NPL ratio was as high as 30%, if not slightly higher, which is much, much higher than what management guidance was throughout the year. So just trying to understand where the surprise came from in the fourth quarter.

And lastly, on your NPL ratio guidance for this year, 10%. Again, this is just going back to last year. There was a big surprise. It was big negative. So how confident should we be that this NPL ratio will be achieved this year?

Sorry, just one final one. On your CAR ratio, Patrick, you mentioned that on a fully adjusted IFRS 9 basis, we should knock off the capital efficiency ratio by 10%. CAR ratio on the presentation was 16.5%. So if we knock off 10%, should we say that the CAR ratio at the bank level is now almost as high as 15%? If you could just confirm what the actual number is, that would be helpful.

--------------------------------------------------------------------------------

Unidentified Company Representative, [15]

--------------------------------------------------------------------------------

Thank you, Ronak. On '19, we are aware that all the active payments have been made by [Itau]. And so we are working the license renewal. We don't see any stress to (inaudible) because the conditions for renewal of license has been met.

--------------------------------------------------------------------------------

Ronak Gadhia, EFG Hermes Holding S.A.E., Research Division - Research Analyst [16]

--------------------------------------------------------------------------------

Isn't there some core challenge to the license being renewed from environmental case?

--------------------------------------------------------------------------------

Unidentified Company Representative, [17]

--------------------------------------------------------------------------------

No, because the environmental case is caused by sabotage from the environment, not by the company. So remember, this is obviously known alone by [Itau] and so the other -- or the other oil region. And so (inaudible) because this goes to share export terminal. So Itau exports through shared export terminal. So share also use (inaudible). So the inventory is affected in Itau . So when you have that, the only cost is still compliance environmental engines, but because of the environment itself and the variability of export terminal.

Now on the single-digit NPL. We'll be confident and be confident that the single-digit NPL will be achieved in 2019. We have clear sight to how we are going to do that. And if you look at the fact that coverage ratio was 82% in Q1, so it will decide -- it's in there to realize assets and technological share cost. It is just plausible that we're going to have single-digit NPL working through that. Now on what happened between Q3 and year-end and were consistent with our commitment that IFRS 9 were not full of surprises. However, the model that we're using in there in estimated variables were different for models. In Q4, when [we released] template -- when model came onboard, and we ran our numbers, we saw that movement and timing were more important and [consistent]. So we've decided to go address it and see them in. Knowing fully well that they're timing issues, they're not capacity issues, as a timing issues we can already view it by time. And so over time, we believe that, and what will appear at year-end, within few quarters of this following year, you can get yourself back cheap -- free. It's a better and conservative approach that the packet is achieved and assuming that it will launch, and then it will be. So it will, for us, we felt it was better, it was more transparent or conservative, decisive for us to (inaudible). And then I'll come back to (inaudible).

--------------------------------------------------------------------------------

Ronak Gadhia, EFG Hermes Holding S.A.E., Research Division - Research Analyst [18]

--------------------------------------------------------------------------------

Okay. But if you could just elaborate some of the major differences between the model you are using and some of the other banks that (inaudible) because you say it's only 2 banks in Nigeria that are using the stringent model?

--------------------------------------------------------------------------------

Urum Kalu Eke, FBN Holdings Plc - Group MD & Director [19]

--------------------------------------------------------------------------------

Sorry, Ronak, we can only speak to our model, as you know, but we cannot recollect on the robustness of other models being used by other banks. The reference that should be (inaudible) for this composition as we have adopted best-in-class, and even though it's short numbers that we are in "adverse" to our own preferred position, we are good to adopt it regardless. And that is also because we wanted to fully resolve all the regulatory issues so they will not bother us (inaudible) post 2019. I believe that is a very prudent way to look at it. Okay. Patrick will take the question on CAR.

--------------------------------------------------------------------------------

Patrick Iyamabo, First Bank of Nigeria Limited - CFO [20]

--------------------------------------------------------------------------------

Yes. So Ronak, you asked the question on CAR. I guess you're trying to understand exactly the full impact on our CAR. So what I said earlier on was that our CAR was about 16 -- roughly about 16.5%. From the full impact, it came north of 10%. So in other words, without the transition adjustment, we are still north of 10%. Now to -- yes. And then, just to add to that, I (inaudible) you have noticed if you take a look at our financials, we did have about NGN 32 billion knocked out of retained earnings into (inaudible) risk reserve. Indeed, with that NGN 32 billion -- I mean, relative, doing that is sort of inconsistent with [CCO] but that's the case with us. If you relieve that, that in itself is [several hundred bps] of capital just sitting there. So like I said earlier, we are pretty confident in our capital position.

--------------------------------------------------------------------------------

Ronak Gadhia, EFG Hermes Holding S.A.E., Research Division - Research Analyst [21]

--------------------------------------------------------------------------------

I mean my view is, I mean obviously, you've got 4 years to regularize this -- you've got the moratorium from the CBN. But obviously, that's a ratio that the management will have to keep an eye on and in the medium term, I mean -- and in the short term, you're not seeing any significant pickup in loan growth within the economy due to various reasons, but if there are to pick up, it seems like FirstBank could further continue to lose market share because you're still in the mode of repairing your balance sheet, whereas everybody else could start gaining market share because they're capital ratios are much stronger. Is that something that you're concerned about?

--------------------------------------------------------------------------------

Urum Kalu Eke, FBN Holdings Plc - Group MD & Director [22]

--------------------------------------------------------------------------------

No. And I'd say why. So you've got 3 years. And if you look at our figures, that's about NGN 30 billion each year. NGN 30 billion each year in capital that are generating 36 months. So from an earnings perspective after picking up 200 bps worth of CAR through impairment charge, I can still take care of that in 6 months. Now if you look at 2019 specifically, my risk weighted asset group projections are really limited. So in summary, the capital position is solid. We have the ability to grow the business the way we want to, and we're quite confident where we are. Think about it. By next year, when our internal charge would drop, that 200 bps of CAR, thinking about it is NGN 60 billion with almost the cost -- we're [building] the cost out of what we've seen. So we're quite comfortable.

--------------------------------------------------------------------------------

Ronak Gadhia, EFG Hermes Holding S.A.E., Research Division - Research Analyst [23]

--------------------------------------------------------------------------------

Okay. And sorry, just one quick follow-on, maybe this is for Ini. If I look at your investment securities yield, the blended average yield last year was, by my estimate, is around 8.3%. And then later in the first quarter was about 9.3%, which is significantly lower than what [other specialty] yields are right now, which is anywhere between 12% to let's say as high as 15%. So why is the effective yield for you so much low?

--------------------------------------------------------------------------------

Ini Ebong, First Bank of Nigeria Limited - Group Executive, Treasury & Financial Institutions [24]

--------------------------------------------------------------------------------

Well, I guess it's a function of portfolio mix that we have at this point in time. Again, we have to build (inaudible) flexibility into our investment securities, okay. Because of the need to be relatively nimble as we deal with a number of issues working through the balance sheet. But again, it's more environmental and as we get direct clarity around the (inaudible) policy direction of the central bank, and we move away more from balance sheet repair moves, so we're more invested in it when one were better positioned to take advantage of market opportunities.

--------------------------------------------------------------------------------

Operator [25]

--------------------------------------------------------------------------------

We will now take our next question from [Michael Oyeleye] of Stanbic IBTC Pension.

--------------------------------------------------------------------------------

Unidentified Analyst, [26]

--------------------------------------------------------------------------------

My questions are, first of all, online mobile, if you could give us an update on where that is and what level of position on the economy it's taking? My second question is on what are the potential risks that you see (inaudible) your single-digit NPL guidance for 2019? And then my third question is if you could or if it's possible you could give us a breakdown or a rundown of what was the write-off, that was beginning 2018? And my fourth question is what level of CAR, when you take in on full impact, what level of CAR would you see was sustaining a comfortable level of dividend payments on the commercial bank?

--------------------------------------------------------------------------------

Unidentified Company Representative, [27]

--------------------------------------------------------------------------------

Yes, I thought that was resolved in 2018. The (inaudible) banks, the 2 clear cut (inaudible) banks, and so restructuring was completed. I don't see any heightened risk to achievement of single digit NPL. Because with what then Atlantic Energy, and we'll consolidate that in 2018 and fully provided for it. And once I sent the review out, review order material NPL that can actually take us out of costs. On the (inaudible) region of assets, I will say that you're coming to us (inaudible) go by NIM because we also need to protect the customers. But if we on the balanced revenues, we might be able to discuss.

--------------------------------------------------------------------------------

Urum Kalu Eke, FBN Holdings Plc - Group MD & Director [28]

--------------------------------------------------------------------------------

Okay. And then I think you asked a question around CAR, what's the (inaudible) of the sustainable CAR, is that correct?

--------------------------------------------------------------------------------

Unidentified Analyst, [29]

--------------------------------------------------------------------------------

Yes. So on full impact driver (inaudible) for the commercial bank.

--------------------------------------------------------------------------------

Urum Kalu Eke, FBN Holdings Plc - Group MD & Director [30]

--------------------------------------------------------------------------------

Okay. We're going to have 16.5%. The (inaudible) group would suggest (inaudible) instead of the risk-weighted assets, consume of 2.5. So pretty comfortable. Then on top of that, the (inaudible) plans we make this year, easily anywhere something from 5% and 18%. How much CAR do you really need to drive the business? Quite frankly, (inaudible). We are confident with anything north of 17%. As we've consistently explained to the investment community, we've made the decision around dividend payments as necessary to ensure that the commercial bank has all the capital to use, to drive business and to ensure a robust balance sheet. And we still maintain that. So in summary, how to grow the business? Frankly, we're comfortable with anything more than 17%. For this year, we could easily accrete more than that by the end of the year.

--------------------------------------------------------------------------------

Operator [31]

--------------------------------------------------------------------------------

We will now take our next question from [Caitlin Berne].

--------------------------------------------------------------------------------

Unidentified Analyst, [32]

--------------------------------------------------------------------------------

I just want to follow up why your constant risk guidance of 3.5% to 4% is still so high given how many -- how much provision you've already taken and since your NPL and your legacy book are so low, I would think 3.5% to 4% seems quite high and net accretion is -- the asset management business in Q1, things has gone backwards. Maybe you can just give us some color on what's happening in that division? And then on your increased agency and digital banking, can you give us some insights into how that's going to sort of drive cost reduction going forward in the sort of -- on a 3 to 5-year basis? And will you be able to sort of reduce branch sizes, will you be able to reduce number of branches and -- or is it more than a drive than noninterest revenue side?

--------------------------------------------------------------------------------

Unidentified Company Representative, [33]

--------------------------------------------------------------------------------

Thanks. The cost of risk guided should be between 3.5% to 4%. Just give you 2 things: One, clean up. No intention that (inaudible) but this must be 0. So [they're weak enough], at 82% coverage. We want to move close to 100%, so that when we are in a better position to deal and still have (inaudible) of what we have. And in thinking of that, is that there will be impairment charges to P&L for the year. That also that a unique moment in the year or else we will do the impairment. Two, is that we will grow loans, and looking at our model, there are few investment-grade names in the industry. So if you have some investment-grade names and made (inaudible) of the model risk assets, and the impairment charge might be also be modest for model also, which means that we meet -- also meet provision for that in doing your cost of goods for the year, if you're done.

--------------------------------------------------------------------------------

Operator [34]

--------------------------------------------------------------------------------

We will now take our next question from (inaudible).

--------------------------------------------------------------------------------

Unidentified Participant, [35]

--------------------------------------------------------------------------------

I have 3 questions. First, just trying to understand, so I know you highlighted clean-up as a key driver for where your cost of risk is right now, but what I'm trying to understand, if there are varied pressures you see and then where you expect cost of risk to settle in the median term. So once it's gone pass cleanup model, how should we be modeling your impairment ratios? Secondly, on your e-banking contribution, once it's been going steadily and want to understand where you expect that figure to settle, so e-bank as a contribution to your noninterest revenues. And then try to understand the kind of risks you see to the income line. So beyond potential competition from (inaudible) and these banks, do you see regulatory risks such as potential downward moderation of fee by the central bank as that -- that as a risk so more like with [COTs] as well just to see how we should be considering risk to that income line? And then thirdly, on your credit growth figure, want to understand levels of that 5%. So where do you expect loan data, loan growth to come from. But secondly as well, where -- so just looking at the Nigerian economy, where -- one, how do you expect -- or what kind of levers do you expect just to lift loan growth going forward? And what kind of credit group levels do you expect as a business going forward? Those are my questions.

--------------------------------------------------------------------------------

Unidentified Company Representative, [36]

--------------------------------------------------------------------------------

Okay. For the cost of risk, we guided earlier that post 2019 that we will see that cost of risk will be below 2%. And it is clear where we'll be in 2018, we moved substantially from [system floor] does not guarantee the 3.5% is only that 50% adoption and what we plan for 2019. Because when (inaudible) the beginning of the year, this financing of the year and that is why we are saying 3.5% to 4%, because we just want to ensure, so we won't leave anything behind. Or at least we don't leave anything that could actually push higher risk to us post-2019. On the loan growth, here we set out 5%. I believe that the manufacturing sector, the export, non-oil export, I commented this (inaudible) sale, general commerce and consumer loans are areas or sectors of growth. And that really mean that if minimum wage has been put forward is actualized, that the economy will flourish, and though we have set aggregate demand, that will also allow (inaudible) be able to invest. We all have all kind of -- we have implications for the entire economy and because processing power will be enhanced, and the (inaudible) slew of funds will (inaudible).

--------------------------------------------------------------------------------

Urum Kalu Eke, FBN Holdings Plc - Group MD & Director [37]

--------------------------------------------------------------------------------

I'd like to introduce my colleague, Chuma Ezirim, who will be Group Executive. He just (inaudible) products to respond for the question on e-banking and what our expectations are, particularly the threat of PSE and possibly Central Bank regulation charges or costs. Chuma?

--------------------------------------------------------------------------------

Chuma Ezirim, FBN Holdings Plc - Group Executive of E-Business and Retail Products of First Bank [38]

--------------------------------------------------------------------------------

Thank you and good afternoon. Last year, we grew our retail banking revenue by about 30%. This year, we are targeting a minimum of 50%. The growth will come largely from what we are doing around agents, agency banking. There we have about 35 agents in our network. We've got to do that by minimum of 50% signature will reach about 30,000 before the end of the year. If we achieve that, okay, we will see minimum in about 500% growth in revenue.

Secondly, we are also going to be very aggressive in growing our customer accounts, okay. So we also see that inside of that would lead to growth in revenue.

Thirdly, we have been approached by several (inaudible) for collaboration and we've also approached some (inaudible) or partnership. (inaudible) our open banking strategy which will help us make a new bridge (inaudible) assets, which should grow revenue.

Thirdly, on user channels. (inaudible) mobile app. We are enhancing the office agreement by (inaudible) and will additional strategies. So we believe that I mean, by the time we are certainly (inaudible) we should see a growth in the revenue (inaudible) progress.

On the (inaudible) services banks, we are part of the delegation that enters (inaudible) which should depend on (inaudible) if it is a different way (inaudible) in Libya, okay, it might be (inaudible) much trouble. But having said that, we see opportunities for strategic partnerships. They're only being approached I mean, [negative approach] and some of the companies that have applied for license, okay. (inaudible) based on what is key (inaudible) our strategic position (inaudible). We -- I also agree with you that the added pressure on the 2 sector on the different channels. But in fewer other positive and with pressure that we have suffered on the digital asset bank channels. It's certainly our larger network. But it will take hold of our larger issue wallet in a big developed (inaudible) structure, made to manage the increase in the number of qualified ventures issued. So we also see that as a revenue opportunity, okay.

And then fourthly, we also see maybe some figure on the defaults, okay, because they are allowed in the meanwhile to issue wallets, okay, (inaudible) investment assets in our deposits.

--------------------------------------------------------------------------------

Operator [39]

--------------------------------------------------------------------------------

Our next question comes from [Segun Akinlale] of [Arum Securities].

--------------------------------------------------------------------------------

Unidentified Analyst, [40]

--------------------------------------------------------------------------------

So I just have 3 questions. And as regards NPL, I know it's being flogged, but I just want to get some clarity. So you mentioned that you're looking at NPL growth into 10% by the end of the year, which by my own calculation means that you're looking at your NPL setting up about NGN 207 billion by the end of the year, from current levels. So if I'm -- my calculation is right, I mean, you're looking at right in about NGN 316 billion of your NPL. So my question relate at least to this, how much -- because I'm seeing your Atlantic and Asia exposure, based on my own calculation is about NGN 160 billion. But the calculation I'm seeing for where you're likely to wipe off your loans is about NGN 316 billion. Can you guide to which product part of your loans that will be part of these loans that you're looking at right enough before the end of the year that will take your NPL to 10%?

And also, last one, number two, you mentioned that you're looking at growing loans this year. I'm wondering, the loans you're planning to grow (inaudible) this write off from your gross loans or are with the loan you are planning to grow, where would they come from? So I'm not clear how you're planning to grow loans when you're looking at writing off as much as NGN 300 billion from your loan book. So can you just give me clarity (inaudible) on how you plan to make this up off of this?

--------------------------------------------------------------------------------

Unidentified Company Representative, [41]

--------------------------------------------------------------------------------

So let me start with your write-offs. The write off does not assess loan growth. The provision is there in other liabilities. It's actually adjusted for it. So (inaudible) you can actually add the provision to cover that. Because it's debt, so you can set it off. So there's an asset write off of 80 or whatever, or out of (inaudible) there's no asset new creation. So have that top of your mind, just I guess so net loans is what now becomes the driver and not gross loan.

Our own -- how we would get to 1% -- or sorry 10% NPL, which will be a combination of loan recovery, loan restructuring, loan growth and loan write-off. We appreciate that in resolving the assets, that will (inaudible) addition of the assets which you have (inaudible) for us. Now you restrict it in (inaudible) the evolution of that. So we're taking that into consideration. We're not -- a number of assets that I -- I mean that would believe that would result -- would bring 2019.

Apart from being there's no order NPL that's more than 1.5% of loan book. So if you need (inaudible) for those who take the bullet on each of those ones if we decide to, there's only (inaudible) we like these assets because they are not that too big for us to serve. So in doing that, we have clear sights on what we would do to get where we are. We appreciate the loan growth this year and we know that Q1 is done for the economy.

But for remaining 3 quarters of the year, there are opportunities for loan growth. And today, because of IFRS 9, all loans don't have the same (inaudible). So if I decide to go for an investment-grade name, and I have a figure of (inaudible) even if I did NGN 100 billion there, you don't have the emerging part of my capital or on my risk-weighted assets, materially, because is very luckily before, where all loans have the same rate of 100%. So we have clear sights on how we would do that.

--------------------------------------------------------------------------------

Unidentified Analyst, [42]

--------------------------------------------------------------------------------

If I could (inaudible) -- so you mentioned diluting cost of 3.5% to 4%, and I'm wondering how much are you looking at growing the profitability that you think -- having the costs and cost of lease of about 3% to 5% will not affect your capital increase, your retained earnings or your overall earnings at the end of the year, does not impact your capitalization ratio for that. I'm just trying to gauge, so how much are you looking at growing your operating profit that it would be offset by any additional provisioning.

--------------------------------------------------------------------------------

Unidentified Company Representative, [43]

--------------------------------------------------------------------------------

Okay. [Segun], loan growth is not synonymous with profitability. I mean, you'll see...

--------------------------------------------------------------------------------

Unidentified Analyst, [44]

--------------------------------------------------------------------------------

No, no, I'm saying, you say you're looking at doing additional cost provisioning and because of this you are able get to however, between 3.5% or 4%, and at the same time you say you're looking at capital risk ratio coming down. So I'm now wondering, how much profitability are you looking at making that having a 4% cost of this would still give you enough to retain for the year that would now support your capital liquidity ratio? Or are you saying that your quick weighted asset is going to decline faster than the decline you are going to see in your risk-weighted asset?

--------------------------------------------------------------------------------

Unidentified Company Representative, [45]

--------------------------------------------------------------------------------

Okay. Okay.

--------------------------------------------------------------------------------

Patrick Iyamabo, First Bank of Nigeria Limited - CFO [46]

--------------------------------------------------------------------------------

This is Patrick. (inaudible) right, actually provided guidance. I think from the guidance there, you will be able to -- most of your questions are actually answered in there. So in there, we've got it around ROE, ROA, and this -- the ROE and ROA, which reflects the cost of risk assumptions that we've made.

--------------------------------------------------------------------------------

Unidentified Analyst, [47]

--------------------------------------------------------------------------------

Okay. So -- okay, all right. Sorry, and during the presentation, you mentioned something about amortization of IFRS 9. You mentioned (inaudible) taking between NGN 30 billion annually. Is that correct? Can you please (inaudible) please?

--------------------------------------------------------------------------------

Patrick Iyamabo, First Bank of Nigeria Limited - CFO [48]

--------------------------------------------------------------------------------

Okay. Couple of things. So yes, it was to go through the full cycle. NGN 30 billion annually over the next few years. (inaudible) you're (inaudible) up NGN 32 billion (inaudible) as the risk weighted growth. If that was relieved our CAR would not even get to [10.5], now it will be 17.5. And just to put the CAR in perspective, every percent is translated to about (inaudible) assets. So that (inaudible). The other thing I said was in spite of the impairment charge we plan to take, the accretion to earnings will translate into 2% CAR every 6 months. And what that means is -- and 2% CAR every 6 months is north of NGN 60 billion. So again, we believe, this year, if I wanted to take care of that middle of the year, so we're going to take care of that middle of the year. I also mentioned that effective next year, when we expect our cost of risk to normalize, all these impairment charge actually adds back to the capital infringement. So one of the reasons was, take a looking out next year (inaudible) we do that. So between the (inaudible) I hope that helps.

--------------------------------------------------------------------------------

Unidentified Analyst, [49]

--------------------------------------------------------------------------------

And also I guess just for the last time, I just want to get your comments as with regards to both ICO and on target, what's the current value exposure, please?

--------------------------------------------------------------------------------

Unidentified Company Representative, [50]

--------------------------------------------------------------------------------

For ICO, because we also need to protect the customer and the customer information, so (inaudible) keep that. On (inaudible) written down, on our books, now we are realizing assets.

--------------------------------------------------------------------------------

Unidentified Analyst, [51]

--------------------------------------------------------------------------------

So can you give me the value of that, please?

--------------------------------------------------------------------------------

Unidentified Company Representative, [52]

--------------------------------------------------------------------------------

Also, (inaudible) skipped that because through the guided on the exposure to Ontario before, we guided on what we're expecting as recovery, and so the assets are there and they have been there, recovered. But when this product name -- looking at the fact that (inaudible) and therefore doesn't pose any threat to us.

--------------------------------------------------------------------------------

Operator [53]

--------------------------------------------------------------------------------

(Operator Instructions) We will now take our next question from [Caitlin Berne] of Prudential Investment Managers.

--------------------------------------------------------------------------------

Unidentified Analyst, [54]

--------------------------------------------------------------------------------

I just wanted to follow up on the question I asked earlier, on how the agency and digital is going to affect your costs going forward? So yes, how is this going to help drive your cost to income lower? And the second question I had asked was about the reason for the asset management division going backwards in Q1.

--------------------------------------------------------------------------------

Urum Kalu Eke, FBN Holdings Plc - Group MD & Director [55]

--------------------------------------------------------------------------------

Sorry, the reason for -- the second question?

--------------------------------------------------------------------------------

Unidentified Analyst, [56]

--------------------------------------------------------------------------------

Well, the reason for the asset management division, the AMD division going backwards in profit terms in Q1.

--------------------------------------------------------------------------------

Urum Kalu Eke, FBN Holdings Plc - Group MD & Director [57]

--------------------------------------------------------------------------------

Okay. Thank you. Okay. So the question around digital and our agency, there are 2 bits to it. So there's the revenue bit and then the cost, I think I should focus on the cost bit. The (inaudible) benefit of our (inaudible) to digital and agency, is about growing (inaudible) from there. So (inaudible) revenue stream. Now in terms of what it means for costs, the earnings from digital or agency is very profitable. And so if you look at the rates we make versus the costs that we charge, we are looking at a cost income ratio of less than 40%. So indeed, the efficiency benefit from our push into digital and agency is significant. Layer that on top of the revenue potential, layer that on top of the (inaudible) and the fact is not (inaudible) for most part and the financial upside is significant.

--------------------------------------------------------------------------------

Kayode Akinkugbe, FBN Holdings Plc - MD of FBN Merchant Bank Limited [58]

--------------------------------------------------------------------------------

Okay. This is Kayode Akinkugbe speaking on the (inaudible) business. The primary reason for the drop in [TBT] between Q1 2018 and 2019 relates to further depreciation on some of our technology investments. About 3 years ago, we made major investments in overhauling our technology, and we rolled out the applications over period over the last 2 or 3 years. So since 2018 and a little bit into 2019, we will start seeing a peak of the depreciation coming through. So that's the primary reason.

--------------------------------------------------------------------------------

Operator [59]

--------------------------------------------------------------------------------

We will now take our next question from Tolu Alamutu of Tellimer.

--------------------------------------------------------------------------------

Tolu Alamutu, Exotix Partners LLP, Research Division - Director & Corporate Credit Analyst of Financials [60]

--------------------------------------------------------------------------------

I just have a follow-up question, please. Could you give us the figures for stage 1, 2 and 3 learns as of the end of March, if possible?

--------------------------------------------------------------------------------

Unidentified Company Representative, [61]

--------------------------------------------------------------------------------

The figure is our year-end and not of March, I think.

--------------------------------------------------------------------------------

Operator [62]

--------------------------------------------------------------------------------

We will now take our next question from [Segun Akinlale] of [Arum Securities].

--------------------------------------------------------------------------------

Unidentified Analyst, [63]

--------------------------------------------------------------------------------

I just want to size something on this -- and under your operating expenses, core operational and order losses, about NGN 5 million from NGN 9.6 million last year. I just want to make (inaudible), one of that is in Q1, what is the line really about? What we should we expect for it doing to the rest of the world?

--------------------------------------------------------------------------------

Urum Kalu Eke, FBN Holdings Plc - Group MD & Director [64]

--------------------------------------------------------------------------------

The bulk of what you have there, half related onetime charges are also I think transformational initiatives that are ongoing. The program itself hasn't yet ended. So what that means, however is, while we might still incur some cost risk debt, these would be onetime charges relating to 2019. We also believe -- one of our -- I believe you've seen (inaudible) there reflects, I mean the most likely or worst case scenario.

--------------------------------------------------------------------------------

Unidentified Analyst, [65]

--------------------------------------------------------------------------------

Okay. So you mean we can't have it go (inaudible) anymore, this is the worst case scenario?

--------------------------------------------------------------------------------

Urum Kalu Eke, FBN Holdings Plc - Group MD & Director [66]

--------------------------------------------------------------------------------

So what's happening there is what has been incurred as at Q1. And in those onetime charges (inaudible). But these are onetime charges as relate (inaudible).

--------------------------------------------------------------------------------

Unidentified Analyst, [67]

--------------------------------------------------------------------------------

(inaudible) more be curious on what this program is about. So (inaudible) you estimate how much is likely to come from it?

--------------------------------------------------------------------------------

Urum Kalu Eke, FBN Holdings Plc - Group MD & Director [68]

--------------------------------------------------------------------------------

I think I can touch on part of this, which is -- we are going through a HR transformation exercise. And as part of that process, we've given staff the opportunity to leave on voluntary basis, and we paid them off in doing that. That cost is partly what it is you're seeing there.

--------------------------------------------------------------------------------

Unidentified Analyst, [69]

--------------------------------------------------------------------------------

Okay. So if I'm going to take this light, what's the number of staff that you think are going to benefited from this program? And how are you looking out for that asset mix?

--------------------------------------------------------------------------------

Urum Kalu Eke, FBN Holdings Plc - Group MD & Director [70]

--------------------------------------------------------------------------------

There's a possibility, but that will still increase. But like I said, these are onetime charges. Adjusted cost (inaudible) HR component, but there are other things that can come in that overall, if you annualize what has been in Q1 cannot get worse when you extrapolate for the end -- to the end of the year. In terms of specifics around number of people, unfortunately, I can't share that, if you don't mind.

--------------------------------------------------------------------------------

Operator [71]

--------------------------------------------------------------------------------

There are no questions at this time. I would like to hand the call back to Mr. UK Eke for any closing remarks. Please go ahead, sir.

--------------------------------------------------------------------------------

Urum Kalu Eke, FBN Holdings Plc - Group MD & Director [72]

--------------------------------------------------------------------------------

Okay. Let me thank you all for your (inaudible) interest in FBN Holdings Plc. We have shown very clearly by the numbers that we remain very resilient. We've also shown that we've got the courage to confront the negative issues that we have highlighted 3 years ago. We have shown the results of that courage and determination to excel. We have also shown how we result all of them with good dedication of our commitment to keep the promises we have made today.

We have said in our (inaudible) and we have the capacity to deliver. What is more important that I like to emphasize that there is a whole lot more happening in the group that you'll begin to see through P&L in the course of 2019. Now we have fully resolved the legacy issues, particularly around NPL.

Again, I'd like to thank you, and we promise that for the next call, for Q2 results, you'll begin to see better results from FBNH Plc. Thank you very much.

--------------------------------------------------------------------------------

Operator [73]

--------------------------------------------------------------------------------

This concludes the FBN Holdings financial results call. Thank you for your participation. You may now disconnect.