Good day, ladies and gentlemen, and welcome to the Fidelity Bank 2024 Full-Year 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 an operator by pressing star, then zero. Please note that this call is being recorded. I would now like to turn the conference over to Nneka Onyeali-Ikpe. Please go ahead.
Good day. My name is Nneka Onyeali-Ikpe, MD/CEO of Fidelity Bank PLC. I am pleased to welcome you to our full-year 2024 earnings call. On this call with me today are the following executives and principal officers of our bank: Kevin Ugwuoke, Executive Director, Chief Risk Officer; Ken Opara, the Executive Director, Lagos and Southwest Business; Pamela Shodipo, the Executive Director, Southwest Business, South Business; Stanley Amuchie, Executive Director, Chief Operations and Information Officer; Abolore Solebo, Executive Director, Corporate Banking; Sufiyanu Garba, Executive Director, North Business; Victor Abejegah, Chief Financial Officer; Akintoye Babalola, the Treasurer; Adetunji Mustafa, Divisional Head, Strategy, Innovation and Business Transformation; Samuel Obioha, Head Investor Relations. We have uploaded the full Investor Relations presentation on our website. In this session, I will provide a high-level overview of the macroeconomic environment and speak to the facts behind the figures.
The 2024 economic landscape in Nigeria was significantly influenced by the impact of policy changes introduced in 2023. The removal of fuel subsidies and the unification of the exchange rate led to a rise in energy costs and devaluation of the naira. Consequently, the exchange rate dropped to a low of NGN 1,681 per dollar in the official market and about NGN 1,800 per dollar in the parallel markets. The nation's annual inflation rate reached a 30-year high of 34.8% in December 2024. In response, the Central Bank of Nigeria adopted a restrictive monetary policy stance, which led to higher borrowing costs and liquidity pressures in the deposit money banks. However, the policies also resulted in higher yields on treasury assets and fixed income securities, which created attractive investment outlets for foreign portfolio investors.
Our strategic imperative in the last financial year was to optimize our balance sheet by expanding our earning base, enhancing the net interest margin, increasing non-interest revenue, reducing the cost to serve, and sustaining the cost-to-income ratio within acceptable thresholds. I will now speak specifically to each of the measures. Improvement of our net interest margin from 8.1% to 12% was due to the increase in rates on both sides of the balance sheet as a result of the implementation of the restrictive monetary regime of the Central Bank of Nigeria, which I mentioned to you earlier on in the economic review. We optimized our margins by ensuring that the increase in yield on non-earning assets was higher than the corresponding rise in average funding cost. We moderated the impact of our average funding cost by deliberately focusing on mobilization of low-cost deposits.
We are very proud to say that by full year 2024, our low-cost funds accounted for 93% of our total deposits. We also improved our non-interest revenue by driving fee-based income, increasing customer transactions, and growing our additional income account maintenance charges and the trade income. Breakdown of the fee income shows on page 15 of the investor presentation, which shows a double-digit growth in almost all our commission lines. We also kept our cost-to-income ratio within acceptable limits. From what you can see in our IR presentation, our year-on-year OpEx increased by NGN 136 billion, from NGN 194 billion in December 2023 to NGN 331 billion in the reporting period. The major drivers of the increase in OpEx were the staff cost, the regulatory cost charges, and the technology spending. The rise in staff cost was due to increased wages and salaries across all cadre.
The increase in regulatory costs of the NDIC and AMCON was driven by growth in the balance sheet, while the technology cost was significantly impacted by the devaluation of the naira. Overall, our cost-to-income ratio reduced to 42% from 50% in December 2023, as the increase in income outpaced the rise in the cost. We also optimized our balance sheet by increasing the ratio of our earning assets. Our total assets increased by NGN 2.6 trillion in the review period. 83% of this growth in total assets was invested in our earning assets. Our net loans and advances increased by 41%, 41.9% to NGN 4.44 trillion. However, the real growth was 10.5%, while the impact of the naira devaluation accounted for 31% year-on-year year-to-date growth in the loan book. Finally, I assure our esteemed stakeholders that we will sustain this growth trajectory.
We will also sustain our culture of increasing shareholders' value by paying dividend on our interim and full-year audited figures. Thank you very much for your support, and I will take questions.
Thank you very much. Ladies and gentlemen, if you would like to ask a question, you may press star and then one to join the queue. You will hear a confirmation tone that you have joined the queue. If you, however, wish to withdraw the question, you may press star and then two to remove yourself from the question queue. Once again, if you would like to ask a question, you can press star and then one on your touch-tone phone or on the keypad on your screen. The first question that we have is from Olumide Sole of Renaissance Capital Africa. Please go ahead.
Hello, good afternoon. Please confirm if you can hear me.
Yes, sir, please go ahead.
Okay. First, I would like to mention, say congratulations on your results. Impressive numbers and good overall. Not just impressive numbers, profitability metrics were also good. Congrats on that. My first question, I'm saying, can you give us an update on the integration of Union Bank UK? You know that. At the point, I think was it last year, I think 2023 or so, you acquired as the group acquired Union Bank UK. What strategic synergies are being realized currently? Also, can you give us more disclosures or let me say disclosures on your forbearance, earlier regulatory forbearance with CBN, and what provisions have been made in terms of when I say your aggregate , I'm talking about the value or what percentage of it is, what percentage is in the loan book, and also what provisions have been made to date. Thank you.
Thank you very much, Olumide. On the integration of Union Bank London, I can tell you that it's a very good success story. The integration of our U.K. subsidiary, Fidelity Bank London, the U.K., as it's called, has been a great success story. Aside from the fact that the subsidiary has turned the corner with its total assets, it has also grown its total assets by 101% from acquisition, and other performance indices are also moving north. The subsidiary has helped us to meet the banking requirements of our customers end-to-end, but I'll have Stanley speak to it.
Okay, thank you very much, Olumide. As MD just mentioned, we believe that that decision to acquire the asset in London was a very good one. We are seeing a lot of positives coming out of it. As you just mentioned, that the subsidiary has turned the corner positively as well. We've seen total assets grow by 101%, starting from if you take from the point of acquisition. Other performance indices are turning very positive. Again, as you said, we can now serve our customers, their businesses end-to-end. We have also been able to onboard new customers on the back of having this subsidiary in the U.K. For us overall, it's been a positive thing. The fact that, I mean, numbers are turning positive also shows that that was a wise decision, and we're very happy with that move. Thank you.
One question was around the forbearance exposure, and I will have the CRO speak to that.
Thank you. Thank you very much, MD, and thank you, Olumide, for that question. Now, regarding our forbearance exposure, at this point, we have just about 10% of our loan book under forbearance. These forbearance loans, as you know, they are just watchlisted loans that we're paying special attention to. Of that 10%, we've been able to cure effectively about 50% of them, and we're making significant progress on the remaining 50% to ensure that they are all treated within the timeline that has been given for them to be treated. That is really the update on that. The outlook is for us, we see the outlook as positive overall for the forbearance exposures. Thank you.
The next question we have is from Stephen Chima of Cardinalstone. Please go ahead.
Good afternoon, everyone. Thank you for the opportunity to ask questions. For my first question, I would like you to speak a little more specifically on the unique strategies that the bank incorporated to generate its very strong asset yield. By my computation, I think full year 2024's asset yield came in at almost 18%. I think that brings me to my second question. We've also seen interest income account for 2.1% of the bank's gross earnings, which shows strong core performance, but we'd like to get a sense of what strategies the bank is looking at to position itself and protect its margins in the event that there's a dovish monetary policy shift in 2025.
Also, we'd like it if you can speak briefly, or more specifically rather, to the drivers for improvement in the bank, rather, drivers for the improvement, I beg your pardon, drivers for the improvement in the bank's NPLs right in 2024, and what plans the bank has for provisioning in 2025. Lastly, I would also like you to give a little bit about, a little bit, speak a little bit about the bank's next steps to cover up its capital shortfall timelines, if you may. Thank you.
I would like to speak to the first question, which is the unique strategies that we deployed to get to 18% of a high-yield environment. Yes, we deepened our retail play to generate more low-cost deposits. We really timed our investments to get enhanced yields based on, of course, the opportunities that were presented in the market at that time. We monitor the market very well to ensure that our yields stick up. On the second question that you asked about our gross earnings and income and how we intend to defend the margins, I would yield to the treasurer to speak to it in terms of money market management.
Okay, thank you very much. My name is Akintoye, as ea introduced by the MD. The strategy is quite simple. It is important to first state that we do not see any major significant change in the interest rate environment. We see these are still being good for our books, as it were. Of course, what we have actually done to date, and which we are also planning to do, is to make sure that we maintain our stay in those high-yielding instruments, particularly for the short and the medium term, and that will also help us to obliterate any form of reinvestment risk. That is key for us. In addition, the bank is also trying to drive strongly income-based from non-interest line.
Basically, talking about the fee-based, the trade-related income, digital banking, and export businesses, we are very strong in that space, and we want to deepen it more. If you mix all these together, we see that it will also strengthen our drive, sustain our income, and also make us deliver value to increasing shareholders. Thank you.
Thank you. The next question was around the decline in our impairment charges and the moderation of our NPL ratio. If you recall, last year, our cost of risk was 2.6% as we proactively made provisions in a very volatile environment. However, in 2024, we also saw improvement in the cash flow of our customers, as well as economic activities also picked up significantly. That explains why our cost of risk dropped to 1.5% this year, but I will have the CRO speak to it a little bit more.
Okay, thank you. Thank you very much, MD . As the MD said, if you also look at the GDP numbers for 2024, you see it was an improvement at 3.4%, which was an improvement on 2.7% in 2023. Overall, the macro improved, and also the quality of our risk assets and the cash flows from our customers also improved. If you take that with the backdrop of what we did in 2023, in terms of being very proactive and conservative and having a very high cost of risk charge, that contributed to the decline you see in the impairment charge for 2024 to 1.5%. Also, if you look at the, we also improved on the quality of our monitoring of our loans in the year 2024. We improved on that. We paid attention to the creation of risk assets.
That also, we made sure quality was maintained because when the macro is challenged somewhat, they must improve on your risk origination. Your credit origination must be tighter, and that's what we did in 2024. Also keep in mind that the exchange rate significantly was devalued in 2024, which increased the value of the denominator in the loan book. That is, the loan book became higher, so that also contributed. If you put all that together, it speaks to the improvement in our NPL ratio to 3.1% from 3.5% in the previous year, and also the improvement in cost of risk from 2.6% to 1.5% in 2024. Going forward, we intend to sustain the same measures we've put in place to help to maintain good asset quality.
By way of projection, we do not expect to get worse than 5%, which is the limit CBN has put, but we believe we will still be operating around that 3, 3-something percent, all things being equal. Cost of risk, we have given we are looking at a guidance of 2% max, and we expect to be well below that. Thank you very much.
I hope we've answered all your questions.
Hey, I'm sorry. Could you speak a little bit about provisioning for 2025 and next steps for the capital raise?
On provisioning for 2025, I think I just spoke a little about that now. We don't expect that okay, on cost of risk, we expect that our guidance is 2%, like I said, but we believe we'll close well below that. Provisioning-wise, we also expect our NPL ratio to be well below 5%, which is a CBN threshold. We expect to be well below that. I'm optimistic that with the measures that we put in place in 2024, which we intend to sustain with proactively working with our customers, improving our monitoring, watching creation of our risk assets, we don't expect that our NPL ratio will be any worse than where it is now. Therefore, the provisioning levels will also not be materially different from where we are today. I think that's how I'll answer that question. Thank you.
Okay, thank you very much for the question on the capital raise. This for us is a major success story. We have successfully completed the first phase of our capital raise plan with a very successful 230% of our subscription on the combined offer. We were only able to take NGN 175 billion out of the NGN 273 billion that was raised. This leads us to the second phase, which is the private placement, which has commenced. In this phase, we need to make up the difference of NGN 194 billion. The private placement is already in place, and we hope to conclude before half year, end of H1 this year, 2024, 2025. Thank you.
The next question we have is from Gideon Oshadumi of Chapel Hill Denham. Please go ahead.
Good afternoon, everyone. Congratulations again on your strong financials. My question is going to be circled around. First of all, I would like to understand your expectations on interest rates and inflation. What is your expectation going forward into 2025? I also want you to shed more light on your capital expenditure. We saw a very significant rise in your capital expenditure in 2024. What should we expect in 2025? Are we going to see more of that, or is it going to fall in 2025? Thank you. Also, sorry, about the dividend payment, are we going to see sustained dividend payout ratio moving forward? Thank you. That is all from me.
The outlook for 2025 for us is positive, and we are expecting that the interest rates for this year will moderate. We have seen a lot of activity from the Central Bank of Nigeria, from the regulators. However, the recent developments in the global economics may affect the interest rate going forward, but I'll have my Treasurer speak more to this.
Okay, thank you, MD. Just to put more color to that, yes, if you look at the direction that the interest rate has been going, what the Central Bank was doing was more of inflation targeting. We've seen two consecutive reductions in the inflation. However, maybe because the MPC meeting is going to come in May, perhaps that's why no action has been taken. Whatever the action is being planned, the new incursion into the market, the global market, like MD mentioned, we have to make every central bank sit back and possibly review the impact first. Should the tariff go, even though it has been deferred by 90 days, factor costs will definitely shoot up. The implication for global inflation and price hike, and that's in terms of interest rate hike, is clear. Emerging markets will come under that intense pressure.
When those pressures come, clearly, everybody will have to react by going in that same direction. If we incorporate this impact of the global headwinds that we're having now, clearly, we will expect interest rates to be high or increased. For Nigeria, in our own view, we believe that we'll still have more of these elevated interest rates for a time to come because, like we all know, the interest rate, as well as the foreign exchange market rate, they are intertwined. Whatever happens on that side speaks to the other variable as well. We expected that in terms of inflation, yes, if you bear to pick the impact of the global tariff and all that, you will see inflation will continue to go down because we're already seeing it.
Should the factor costs increase and the cost of importation and all that also increase, clearly, your guess is as good as mine. We may have some very slight elevation in terms of the inflation rates coming from the high costs in those importations. I do not know if that actually answers your question. Thank you.
Okay. On the interest rate outlook and inflation outlook, do I go on to the second question, which is on capital expenditure?
Yes, you can go on to the next question, capital expenditure.
Fine. Just to say that the exceptional items here, in 2024, we had to do the capital raise. Those come with expenses. We also expect some expense around that in 2025, but that will disappear after the private placement has been done, which is where we expect to conclude before the end of H1. We will also not lose sight of the inflation in the country generally. Of course, the devaluation, which has a direct relationship with our cost of technology, acquisitions, and all of that. This will continue to, despite the fact that there are some exceptional items under 2024 and 2025 around the capital raise, we expect that this will not go away very soon because of the inflation and the devaluation impact on our technology and cost of doing business. Thank you. Okay, our last question was on dividend payout.
Yes, we'll continue to sustain our interest in dividend payout. You know our ratio is between 25% and 40%, which we will continue to maintain. I'll have the CFO speak to that because that is tough.
Okay, thank you very much. Like the MD have said, our dividend payout ratio and guidance is an integral part of our overall capital and dividend management policy. The whole aim is to ensure that as we commit to meeting the promises we make to our shareholders by rewarding them adequately, we also try as much as possible to retain sufficient capital to support our future growth aspiration. Like MD said, we have between 25%-40% of our profit after tax as a dividend ratio, and we have sustained this trajectory. Same will be done in the coming year. Thank you.
Very much. Please, if I may ask one more question. On your loan book exposure breakdown, what can you say about your exposure to oil and gas as the option, considering the downtrend we've seen in oil prices globally?
We have significant exposures and very good relationships in the oil and gas space. Everything that borders around this is of interest to us. We are keeping very close; we are watching it very closely. We have no reason to worry, to show anxiety on it yet, because our earnings are all well matched and hedged in that space. I will have the CRO speak to the portfolio, and then I will have the head of oil at Abolore speak to the outlook. CRO, please. Thank you.
Thank you very much, MD. Thank you for that question too. I think to continue from where the MD stopped, the oil and gas portfolio, I'll start by saying that the benchmark price at which we went into those assets, right now, they are well below the current market price. Current market price is in the neighborhood of $70. Our benchmark was well, well below that. In terms of margins, margin of safety or cushion, we have a very strong margin of safety. The second thing is that the assets there are all good assets. This is reserve-based lending. They are all good assets with good reserves. In terms of being able to produce and generate the ultimate cash flows, not a problem because the reserves are there. The other thing you talk about is how do you get those reserves out to market?
That has also improved significantly. Overall, our upstream exposure, in addition to being naturally hedged, as the MD said, we are not worried about the operations itself, the operating dynamics of those exposures. We are comfortable with them as they are right now. The outlook is also positive, given all of the improvements that you will also have been reading about concerning our oil and gas upstream industry. Improvement in overall production levels, improvement in earnings overall that the country is making. It is all of these assets that are generating those. The outlook is positive. That also reflects on the quality of the portfolio that we currently hold in that sector. In essence, we are comfortable where we are. The outlook is positive. That is how we are expected to continue to be, all things being equal. Thank you.
Okay, thank you so much, MD and CRO.
My name is Abolore Solebo. To speak about the outlook for the oil and gas industry and the oil price. The oil price affects majorly the E&P space. In the E&P space, there are two things we do when we're doing a transaction in the E&P space. One is that we have what we call the oil price deck, which is the amount that is the base price that we use to cut the projection going forward. For Fidelity Bank, it is currently $45. Any deal below $45 will not. For the $45, it's far below what the price is at the moment. On the second layer of protection, what we do is to now have a hedge in place.
We now hedge the strike price of $45 at the first minimum to take care of debt service into the future. With these two protective strategies, our portfolio and exposure in the E&P space is well secured and protected. We also have exposures in the midstream and the downstream space. In the midstream and oil services space, we do contract finance. Most of these contracts are fixed term and fixed term. Our customers work against the payment expected. That is also naturally hedged. The final is the downstream space. Downstream is just simply buying and selling. The good oil price affects the price at which they buy and they sell and they keep their margin. That is how we protect our oil and gas portfolio. Thank you.
Have we answered all your questions?
Oh, yes. Thank you very much.
The next question we have is from Sadiq Sefiu of SBG Securities. Please go ahead.
Thank you very much and good afternoon. I just wanted to get a sense of the outstanding cross-currency swap value for the bank at the moment. That's one. Also, we'd like to get analysis of the components of the stage two loans. As it stands, it's about 25% of total gross loans. Is there a reason why we have it at that high level? Maybe just get a sense of the components. Lastly, from the proceeds generated from the capital raise last year and this year, my assumption or my guess is that it probably hasn't really been plugged into operations for the bank. What are we likely to see? What was the outlook like coming into 2025, both the one that was used last year and this year?
Knowing fully well that you sort of favor loans and advances more, should we see that going into increment in loans and advances or increment in investment security? Just to get a sense of how that proceeds may be used in 2025. Yeah, that would be all from me. Thank you.
Thank you very much. On your first question, the answer is that we have $450 million with the Central Bank of Nigeria on the swaps to date. Your second question, if I remember, is around the loans, the stage two loans. Most of our stage two loans are from the power sector and some oil and gas loans which were restructured. I will have the CRO speak to it.
Okay. Thank you. Thank you very much for that question. As MD said, the stage two loans that we have are mostly in the oil and gas upstream sector and power sector. They were restructured. The outlook for them, which is very important to mention, the outlook for the loans we have there is positive. Particularly in the upstream sector, one particular exposure there accounts for over 60% of what we have in that upstream sector. That exposure is very, very—I mean, it's a prolific asset, and the outlook is quite positive. On the power sector loans, we've done quite a lot of things on them also. The outlook is quite positive. That's the composition of the stage two loans that we have in our books. For all of them, the outlook is positive.
We're monitoring them carefully, and it's a finite number, and we're optimistic about the outcome for all of them. Thank you.
Question was around the plans to deploy the new capital, if I remember. The use of funds.
Yes.
Okay, great. Okay, yes. Our successful capital raise, we promised our existing investors and the new investors that we will utilize the funds to, first of all, 7% of it to go into business and regional expansion, 20% to be for investment in the IT infrastructure, and then 10% to be for product distribution channels. That's the broad outlook that we guided for the use of funds. I will have Madhu speak a little bit more on where we are on this plan. Thank you.
Okay. Thank you, MD. You were very right when you said, "Where are we deploying the funds to?" Most of the plans may not come so quickly. Some of them will take time, like regional expansion and others. The funds today, we're using it in the market. I mean, you mentioned issues like playing the treasury and others. The funds we've gotten we're also using to generate income for the bank by deploying it to areas we feel will help us to continue to generate very reasonable returns for shareholders. That's what we're doing. Not necessarily creation of loans. Of course, you can see from the report which was shown that the growth in loan was just 10% with those organic growth. The other one was exchange rate.
Most of it will be more like playing the treasury because that's where we saw a lot of our activity. We're also expanding opportunities, other opportunities generally for the bank. That's what we're using and expansion. For the expansion, we are really on it. We are looking at all the opportunities right now, especially the African expansion. We believe that in the next few months ahead, we'll be seeing a lot of activities there. Mostly, we're planning to see brown fields, which will add immediately to our bottom line as soon as we do that. Thank you very much.
The next question we have is from Nikolai Dimitrov of Morgan Stanley Investment Management. Please go ahead.
Hi there. Good afternoon. A couple of questions for me. I was thinking about your guidance for 2025. I was wondering whether it factors any of the current turmoil in world markets and oil down, potential recession in the U.S., and stuff like that. If it doesn't, how do you revise it? My next question is on stage two. By the way, thank you for clarifying the composition. I saw that stage two loans declined roughly 40% in nominal terms, quarter over quarter. You must have upgraded there to stage one. If you can provide some clarity on that front, that would be great. Then capital sensitivity. I know that you're doing a great job in terms of raising capital, and there's more of that to take place.
That being said, can you give us an update on your capital sensitivity to the moves in FX, especially in light of the fact that you cannot maintain a net long dollar position? Thank you.
Yes, thank you for those questions. Yes, we have factored in the global issues that are very recent into our guidance. To that end, we expect that the trade tensions caused by the tariff is going to be high and that the factors of production will come in with high cost and eventually dwell in and trigger global rate hikes. We also expect that the Fed may respond by increasing interest rates. Hence, other emerging market economies may follow suit, especially with respect to trade, cost of funding transactions, we expect will also increase. This will lead to increased cost of importation and pushing the prices for Nigeria that's import-dependent. Definitely, Nigerian economy is not insulated from this impact. The capital flight from emerging markets and the associated negative impact of their currencies will increase our credit risk. Consequently, our trade finance cost.
This we also believe will increase our cost of importation. Of course, the price of imported goods will also go up. We do not expect much change in the size of our trade with our major partner, which is China. In all of this, we will continue to watch our customers and ensure that we have a good buffer for all of them. I am sure the situation will be clear in another two to three months. In the interim, we will continue to watch and make sure that we have a buffer for them.
Thank you.
On the question on the movement to stage two, I'll have the CRO speak to them more specifically. Thank you.
Okay. Thank you, MD. Thank you, Nikolai, for the question. On the stage two loans and the reduction that you noted is basically from two factors. The first one is that we had one slightly significant stage two loan that we decided that this should now move to stage three. You can see that reflects in the increase in our stage three loans from NGN 112 billion in 2023 to NGN 141 billion. That loan was a factor in that increase. That's one. The other thing responsible for the reduction was a migration back to stage one for some of the stage two loans that we had. Net-net, that's what led to that improvement or that reduction in the quantity of stage two loans that we saw quarter on quarter. With regards to capital sensitivity, yeah, we are mindful of that.
From our own analysis, we believe that a 10% Naira devaluation will result in a 20 basis points decline in our capital adequacy ratio. That is something where we keep an eye on it. At this point in time, that is what it is looking like now. Thank you.
Okay. Thank you very much. Lower than I expected, but thank you.
Okay.
The next question we have is from Ben Makela of Fundwave Canada. Please go ahead.
Hi, good afternoon. I withdrew that question. It's exactly the question that was asked earlier regarding the global economic situation and the policy shifts that we are seeing, especially coming from the U.S.. I believe that has been adequately addressed. Thank you.
Thank you. The next question that we have is from Onome Oruwari of Green wich Merchant Bank . Please go ahead.
Good afternoon. Please confirm you can hear me.
Yes, please go ahead, sir.
Okay. I have two questions. All right, ma'am. The first is your U.K. unit, there was a 6x increase in OpEx. I would like to know what drove that. Two is broadly for 2024. I see that corporate and investment banking grew faster than retail in terms of profits. I am wondering, is this a trend we will see going forward, or is it a one-off thing due to one-off factors?
Okay. Let me answer the one on the OpEx of the U.K. subsidiary. After acquisition, after changing control, there are a lot of things we're doing to get back that subsidiary to sustainable profitability. Part of it is also onboarding new staff members who I believe will help to achieve our aim in the U.K. The cost is coming from there, because we needed the kind of staff with the kind of skill that will be able to drive business in the U.K. You will see an increase in personnel costs or staff costs. We're also changing all the IT systems, and we're trying to upgrade how they've done business in the past. The impact of all this, cost of IT, cost of personnel costs, and others, are the things that you will see that are increasing the OpEx.
Of course, in doing this, we probably will need the services of consultants in one way or the other to assist in getting this done and the changing control itself. That is what has happened. I think that should explain that increase in OpEx.
Okay. What of the revenue split? CIB going faster than retail?
Okay. Thank you very much for that brilliant question. The corporate and investment space, I think they benefited most from the yields in the markets. The treasuries were able to play a lot more because of the low-cost funds that we already spoke to that we are washed with, which is 93% of our deposits. That's one. On the corporate side, the increase, the devaluation, of course, increased the loan book, and that's also the earning assets increased. Those two combinations is what we see as the reason why it's looking like corporate and investment did better in terms of income than retail.
All right. Thank you.
Ladies and gentlemen, just a final reminder, if you would like to ask a question, you may press star and then one. We will pause a moment to see if we have any further questions. We have a question from Tobi Ehinmosan of FBN Quest Merchant Bank. Please go ahead.
Yeah, good afternoon, everyone. Congratulations on your numbers. I have a couple of questions, right? With the recent introduction of President Trump's reciprocal tariffs and growing global trade tensions, which could potentially have knock-on effects on capital flows and exchange rates, particularly for emerging markets like Nigeria, what is your thoughts towards the Naira's outlook in 2025, and what impacts the U.S. Fed on FX trading income and other non-interest revenue, especially if we see it in the market volatility? I would also ask questions on the asset quality ratios. From your financials, we observed that asset quality ratios improved during the quarter. Can you give us an indication on how the Aiteo asset is doing, and what plans do you have for this asset going forward with respect to provisioning? Thank you.
Okay. Your question on the reciprocal tariffs, we expect that we'll see some level of volatility around the currency. More so, the high USD rates will negatively impact capital inflows to Nigeria, like other emerging frontier markets. The foreign reserves would likely be under pressure. However, we do see rate stability as the global market stabilizes and settles. Yeah. Other question is on asset policy. The Aiteo OML 29 asset is our largest producing such asset onshore in Niger Delta, and even by the figures of the reserve. I'll have Abolore speak to this. This particular asset, we do not have any analysis around this because it's a prolific asset. We've done quite a bit on it to structure and put it on the path of a good path. I'll have Abolore speak to it. Feedback. Thank you.
Okay. Thank you once again, MD. Okay. For Aiteo, like MD said, the single largest prolific and producing assets onshore. Before it was sold by Shell, it picked about 120,000 barrels a day. When the Niger Delta hostilities heightened, Shell divested to Aiteo, and Aiteo picked at about 12,000 barrels and were bound to hit the previous levels of 120,000 barrels. However, the pipeline which was used to evacuate goods from the asset and other assets was tampered with, and Aiteo had to abandon it and currently have built a new evacuation route. They are back producing at about 50,000 barrels a day and ramping up the previous levels of 85, then almost 120,000 barrels a day. That will make them one of the, excluding the IOCs, the largest producer onshore Nigeria.
The asset has about 150 million barrels, which at today's price is going to value about $9 billion. The lenders are just focusing now on restructuring the facility to ensure that it can benefit from the new cash flows. To date, from the resumption of production, they've lifted about 17 cargoes, which is in the region of about $1 billion. That is the situation of things with Aiteo. I'm very comfortable that we'll turn the corner with its performance. Thank you.
Okay. Thank you very much. Do you have more questions?
Thank you, ma'am. At this time, we have no further questions on the call. I would like to hand back over to you for any closing remarks.
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