Access Holdings Plc (Nigeria) – FY 2022 results conference call transcript

By Published On: May 8th, 2023Categories: Transcripts

FY 2022 RESULTS PRESENTATION
20 April 2023

Operator

Good day, ladies and gentlemen, and welcome to the Access Holdings Plc full year 2022 results call. All participants will be in listen only mode. For the participants on the webcast, you may type your questions in the webcast question box. For the participants that have dialled in, there will be an opportunity to ask questions later during the conference. If you should need assistance during the call, please signal for an operator by pressing * and then 0. Please note that this call is being recorded. I would now like to turn the conference over to Mr Herbert Wigwe. Please go ahead, sir.

Herbert Wigwe

Thank you very much, Chris, and good afternoon distinguished ladies and gentlemen. You are all welcome to our investor call at Access Corporation, where we will be announcing our full year 2022 results. Whilst we don’t usually have quarterly calls, I guess in the course of this presentation, we shall have our Q1 results also posted for those of you who want to see and to ask questions. We prepared a detailed presentation of the group’s performance over the last year highlighting the programme, the growth and the strength of our business, as well as the challenges experienced during the year.

In 2022, we generated a record revenue, just a bit shy of ₦1.4 trillion. We finished the year with over 58 million individual customers across an extensive network of subsidiaries and business segments. We also introduced Access Corporation to the world. And with that, we formally launched our pensions and payments businesses. In addition to our financial performance, I’m excited to discuss with you today some of the developments across our group.

On the call with me today are Mr Roosevelt Ogbonna, who is the CEO for the banking group, Dr Greg Jobome, Executive Director at a group level for risk management, Mr Seyi Kumapayi, Executive Director of African subsidiaries, Miss Bolaji Agbede, Executive Director of Access Corporation, Mr Lanre Bamisebi, who is the Executive Director in charge of IT and digitisation, Ms Morounke Olufemi, group CFO, Access Corporation, Ms Kemi Okusanya, who is the CEO for Hydrogen, our payments business, Mr Hilary Daudu, CEO of Oxygen, which is our digital lending business, and Mr Dave Uduanu, who is the CEO of our pension business. We also have other executives across the banking group and business verticals to support us.

I will go briefly over the presentation, after which will allow enough time for questions and answers. Now, first speaking to the macroeconomic and regulatory updates, I would like to speak on the global environment where we have an ongoing impact of the Russia Ukraine war, which affects global supply chains and oil prices. We saw central banks struggle across the world to hike interest rates to combat inflationary pressures. In Nigeria there were four interest rates hikes at the monetary policy rate in 2022 alone. In addition to this, we saw a heightened Dollar against the Naira and the world’s major currencies, and increased risk of recession across key markets.

Highlights of the Nigerian domestic economy in 2022. Within Nigeria, we were not immune to the impact of the Russia Ukraine crisis, as earlier mentioned. We experienced high inflation rates with significant increases in food and energy prices. Nigeria had a GDP growth rate of 3.1% in 2022, and the price of crude has stabilised at about $80 a barrel. Now, oil production ended the year very strongly on the back of intervention by the government to tackle oil theft. And so far in the first quarter of 2023, we have the healthy increase in the oil production revenues and figures reaching 1.6 million barrels per day at the end of Q1. We also expect to see some positive impacts from the Dangote refinery within the 2023 financial year.

There was a 9% depreciation in the Naira’s official rate, mostly due to the FX liquidity and shortage of Dollar supply to the market, and in the first quarter of this year, we witnessed the sovereign downgrade in Nigeria by key rating agencies, specifically Moody’s and Standard & Poor’s. This clearly had financial implications which resulted in impairments of approximately ₦4.3 billion in the 2022 financial year numbers.

Slide eight and nine speak to the regulatory landscape of Nigeria and the rest of the continent. On the regulatory side for Nigeria, the apex bank announced the Naira redesign policy in October 2022 with the intention of mopping up excess liquidity outside the formal system to control money supply, and to a lesser extent, ensure the promotion of more digital payments and transparency. There was an estimated ₦2.7 trillion held outside the banking industry. In addition to increased transparency, the policy implemented was intended to support the cashless initiatives of the central bank and the use of electronic channels and improved financial inclusion.

In the pension industry we also saw the Pension Commission increase the minimum required regularly capital from ₦1 billion to ₦5 billion within the pensions administrations base. In 2022, we acquired a significant shareholding in Sigma Pensions and First Guarantee Pensions, and therefore completed two M&A transactions within two quarters. The combined entity was unveiled as Access Pensions and currently ranked among the top PFAs in Nigeria today.

With respect to the African subsidiaries, sticking to the regulatory highlights across the rest of Africa, notably amidst the Ghana sovereign debt crisis, the Ghanaian government announced plans in December 2022 to restructure its debt portfolio. Local bondholders were asked to swap about ₵137.3 billion worth of domestic debt for new bonds. The domestic debt exchange closed on 10th of February and the result of Ghana’s Ministry of Finance showed participation in the exchange was approximately about 85% of eligible holders. Discussion with the rest of the Eurobonds is currently at an early stage.

Now, unfortunately the debt crisis in Ghana resulted in a huge impairment write down of about ₦103 billion from a 30% haircut to cover both local and Eurobond exposures to Access Bank, and this has depressed the overall 2022 figures for the corporation. However, this is a one-time event, and we do not anticipate any future write-downs at this stage. In Kenya, we saw some stringent checks on digital lenders leading to the deregistration of several small digital lenders at the market.

Slide 11 speaks to a global network of scale. Access Corporation continues to grow and expand into a connected ecosystem. As at the end of 2022, we had about 58 million individual customers and about 63 million unique accounts in 17 countries across the world, and with a network of over 600 branches and over 6,000 professional staff. And this continues to grow. We are established market leaders for sustainable business practices in Nigeria and Africa. Our digital banking network continues to expand, leveraging innovation and best in class technology infrastructure to make budget seamless and convenient for our customers.

Our vision remains to create globally connected community and ecosystem inspired by Africa for the world. Growing our network on Africa, we have been able to build a strong universal payment gateway to support trade across the continent. With respect to economic, social and governance initiatives, we issued a senior unsecured $50 million step-up green bond in May 2022 with a five year tenure due in 2027 in the international capital market following the original five year green bond issued in 2019, which was the first of its kind from a corporate in Sub Saharan Africa. And on the back of that commitment to ESG, we have been identified as global players in the Nigeria Sustainable Banking Principles Steering Committee, the United Nations Principles for Responsible Investments, the Equitable Principles, the United Nations Task Force for Climate Change Financial Disclosures, and as a result, we have been recognised with several international and local ESG accolades.

At this point, I’d like to just provide a highlight with respect to our 2018 to 2022 five year plan which is just ended. For the benefit of those who only just joined us recently, or halfway through the last cycle, it’s good to recap the key achievements of the last strategic cycle which was concluded in 2022. Access Bank worked towards the vision to become the world’s most respected African bank, the number one bank in the country, and a strong franchise outside of Nigeria over the five years. We have executed and expanded our footprint in a clear, disciplined manner in this whole process. In 2017, we were present in nine countries, and we have now seen that grow to 17 different countries.

Our retail business is second to none. It’s now at 58 million individual customers and 63 million accounts, surpassing the original 35 million accounts that was planned. We’ve also built a universal payment gateway ensuring seamless payments across the entire continent between 2020 and 2022. We continue to boast of a very strong, robust risk management framework, and this is demonstrated in our healthy ratios including our non-performing loan ratio of 3.1%, which is possibly one of the lowest in the industry. The strategic importance of the network we have built, and which we continue to build in Africa and beyond Africa, cannot be underestimated. For our corporate clients, we have been able to build key trade finance routes, encouraging value chain businesses through increased correspondent banking services within the franchise, allowing us to offer a vast array of enterprise solutions.

In January 2023, we unveiled our new five year corporate strategic plan from 2023 to 2027 to the market, highlighting our strategic objectives, and how we will achieve them by leveraging the Access ecosystem through increased collaboration. Africa is ripe with growth potential. All the metrics tell the same story. And over the last few years, we have finally started to see strides across the financial services market on the continent and the global stage. And it’s our belief that properly managed for risk, and with emphasis on payments, we believe that we would benefit from a very strong presence.

With respect to global footprint, and in line with our African expansion strategy, we commenced full operations in four African countries between 2021 and 2022, which are Botswana, South Africa, Kenya and Cameroon. We have also received regulatory approval to commence operations in other European countries, fully reflected in 2022. We expect to kick off operations in the second half of 2023 with our presence in France, basically to support our Francophone business and trading. We will continue to capitalise on these opportunities to expand into countries with better risk ratings and a complementary business landscape. Egypt, the United States of America, Angola, Morocco and Tanzania are some of the several markets we will explore opportunities that will bring value to shareholders.

I will now proceed to the financial and operating highlights of our performance in 2022, starting from slide 17. Our institution had a gross revenue of ₦1.388 trillion, which is a significant increase by about 3% from last year. Our shareholders funds now stands at ₦1.2 trillion whilst our total asset is currently about ₦15.1 trillion. Access Corporation is the first banking group to cross ₦1 trillion in gross earnings and over ₦15 trillion in total assets in the industry today.

Over the past years, we have seen a steady growth in structural inefficiency in the businesses which we’ll cover in greater depth in subsequent slides, having significant impact on overall margins. The level of inefficiency we have seen is quite disproportionate, given our size and growth rate, particularly in Nigeria. And we expect that when this is corrected, there will be a significant upside for Access Bank and allow us to get a bit more monetary cash reserves that the central bank has asked for in excess of the statutory cash reserves. However, we’ve taken a long term view, but nonetheless, we will continue to be very profitable even in the short term.

On slide 18, we will see a snapshot of our financial performance as we delivered stellar earnings with a solid balance sheet and improved efficiency across key performance metrics. Our net interest income increased or improved to ₦309.4 billion, which is a 19.2% improvement from last year. And the growth for the revenue line was largely driven by a corresponding 25% growth on our gross loan book. Our noninterest income stood at ₦561 billion, representing a 51% improvement from last year. Operating expenses increased by 35% to ₦502 billion driven by double digit inflation environment, continuous investments in technology and innovation to drive skill across Access Corporation. We also saw the full impact of the newer banking subsidiaries recognised in 2022.

Our profit before tax, PBT, before impairment was ₦275 billion, and this represents our core sustainable numbers and represents a 55% growth from last year. Our PBT post impairments, and this is more speaking to the issues around Ghana, stood at ₦167.6 billion, which is basically 5.1% down from our numbers last year. Still on slide 18, our loans and advances, customer deposits and total assets all had double digit growth of about 25% last year. Now, this is driven by several factors, including our channels optimisation strategy, our customer deposits across business segments, credit disbursements to critical sectors of the economy to support growth and development, and our overall strategy of building a strong and resilient balance sheet.

Our regulatory ratios are well above the minimum thresholds with our capital adequacy ratio and liquidity ratio at 19.6% or 35% respectively. Our cost to income ratio improved by approximately 90 basis points as we continued to implement our various efficiency drives across the corporation. Return on average equity dipped to 13.4% off the back of a lower profit after tax which was driven by the impairments from the Ghana debt restructuring programme. And of course, the fact that we have recently added additional tier 1 capital which has basically helped to dilute some of these results.

Our cost of risk increased by 20 basis points year over year to 2.2% – last year, it was 2.0% – again, on the back of the sovereign debt impairments from Ghana, while our cost of risk excluding impairments dropped from 2.0% to 1.4%. We continue to see a persistent drop in NPL ratio as you move on. Slide 19 and 20 show the pictorial highlights of our overall performance in 2022. On slide 19 I would draw your attention to the yield on assets, which has improved to 9.2%. And cost to income ratio with the year-on-year improvement of about 90 basis points despite the high inflationary environment.

On slide 20, customer deposits grew to ₦9.25 trillion from ₦6.9 trillion in 2021, while our loans and advances grew to ₦5.6 trillion from ₦4.4 trillion in the corresponding period last year. Our NPL ratio improved to 3.1% from 4% in 2021, which is well below the regulatory ceiling of 5%. Our CASA ratio improved to the 63% in the financial year ended 2022 from 58% in 2021. On slide 21, we will see the full impact of the cash reserve ratio on principle ratios. And this is very important. When you assess our performance, you will understand the significant amounts of mandatory cash reserves separate from the statutory required and the overall impact on the institution.

Now, Access Bank’s restricted deposits with the central bank has grown at a rate of 39% over the past five years, and it now stands at ₦2.1 trillion, representing 40% of total assets. Now, the whole idea is that as you grow and the bigger you are, this whole ratio acts disproportionately in terms of how it affects you. Now, this has continued to put a strain on our net interest margin and liquidity ratio, considering the material growth in non-interest bearing assets over the years. The cash reserve ratio was increased to 32.5% in 2022 from 27.5%, which further sterilised an additional ₦675 billion in deposits.

On slide 22 we see the impact of the regulatory cost again coming from our size, and the banking group has continuously paid the highest regulatory fees out of the five tier 1 banks since 2020 with the CAGR 18% between 2019 and 2022. As we continue to grow our asset base, this figure will continue to grow. But despite all these pressures, we have continued to grow our revenue lines throughout the year and intensified our efforts on income diversification and making sure that we continue to be extremely profitable as we move on.

Slide 23 focuses on the breakdown of our revenue across the franchise which basically attests in this case to the resilience and diversified nature of our revenue streams. Now, our gross earnings grew by 43% year on year to close at about ₦1.39 trillion in the period, comprising 60% of interest income and 40% of non-interest income. Our compounded annual growth rate increased by 35% over the past three years, which denotes sustained growth above ambition in the business. Our interest income drivers, we saw a 31% year on year increase in interest on loans and advances to ₦481 billion despite the high inflationary environment. And the increase in interest income was also driven by a corresponding year on year growth by about 35% of our loan portfolio. So, it was both a volume game and a price game.

We also saw a 64% year on year increase in interest income from investment securities to ₦333.6 billion from ₦203.7 billion last year as yields continued to improve across the markets in the second half of 2022. Now, with respect to non-interest income, we saw a 23% growth. At our full year ended 2022, that figure is at ₦566 billion. And of course, we also saw a 131% growth in our trading income to ₦335.5 billion from ₦145 billion in 2021. And of course, this was largely driven from the significant increase we made in the local currency and foreign currency investments, which are basically invested in treasury instruments for both private and public sector counterparties that are a very safe investments. We saw a 24% year on year increase in our fees and commissions to ₦197.6 billion, and this was largely driven from the credit related fees and commissions especially which grew by about 107% year on year.

On slide 22, we see double digit growth in interest income. Our interest expense also grew by double digits year on year due to the high interest rate environment that existed of both local currency and foreign currency. In Q1 2023 we have had already debit of ₦243 billion, further exacerbating the pressure on our NIM and other ratios. But again, we expect to see a growth in interest expense, which will be driven by higher cost of fund, because each time you find a significant increase in cash reserves, technically, what you’re likely to see is a rearrangement as far as our cost of funds within the system is concerned as part of the interest rate regime which has shown consistent increases as far as interest rates are concerned. To practically support healthy margins across the business, we will continue with the initiatives of basically making sure that we manage our deposit mobilisation – and I’m talking about our current accounts and savings accounts – to support the NIM growth. And of course, good quality loans at healthy margins to support the business segments.

Slide 25 shows the positive impact of our customer acquisition and retention strategies on deposits. We saw customer deposits increase by 33% to ₦9.25 trillion from the impact of our channel optimisation strategy on customer acquisition and deposit mobilisation. CASA account deposits increased to ₦5.7 trillion from ₦4.1 trillion, accounting for 63% of deposits. And at the end of 2022, Nigeria showed a higher CASA mix of 67% to 37% compared to what happened in 2021 of 60% to 40%.

On slide 26 we have the breakdown of operating expenses. Our overall cost to income ratio improved year on year to 57.9% coming from 58.8% as our revenue base improved. And we have concurrently doubled down on cost containment strategies. This is approximately 550 basis points reduction over the past two years despite the significant growth in inflation across the entire continent in the period. We spoke to the market about our continuous investment, and it’s evident that we are beginning to see the positive impact of this investment in our revenue growth. The year on year growth you see in opex was impacted by the double digit inflation environment, driving inflation, currency devaluation, material growth in regulatory fees which I have shared earlier, significant investment as far as IT is consent, and of course, the increasing number of subsidiaries and number of staff.

Our cost of risk focussed on the core loan book excluding impairments taken on Ghana sovereign debt, and this dropped from 2.0% in 2021 to 1.4% in 2022. If the Ghanaian impairments are factored in, our overall cost of risk increased from 2% to 2.2%. So, without Ghana risk, it would have come down to 1.4%. Slide 27 shows a consolidated snapshot of the revenue contribution of the business verticals across key performance indicators. From the dashboard we can see the banking group still contributes a significant portion of revenue along with fee income lines. This will become more diversified as we progress in the current strategic cycle as the other business verticals begin to make money and transition from their respective gestational phases to creating collective value. We’re excited about the opportunities in the pensions, payments and lending verticals, given the market size and growth potential across different jurisdictions.

With respect to our banking group performance highlights, I’ll be speaking to the performance of the banking group from slide 29 onwards. Here we see the result of our commitment to building a resilient balance sheet across capital, funding sources, deposit mix, regulatory ratios and risk assessment portfolio. Our capital adequacy for the banking group is above regulatory limit of 15% at 20.2%. Our risk weighted assets grew by ₦1.9 trillion, primarily driven by strong, cautious and quality growth in the group’s asset portfolio. Our customer deposits continue to dominate the bank’s funding strategy mix at 62%. And as we deepen market share or wallet of our corporate, commercial and retail customers, we expect that this ratio will continue to show great improvement. Our liquidity ratio remains well above the regulatory minimum at 39.5%, 50.7% in this time last year. That was largely affected by the significant jump in our CRR.

If I move on to slide 31, we will see the loans and advances distribution per segment where we have a well-diversified loan book of ₦5.6 trillion, reflecting our approach of mitigating concentration risk with quality credit to critical and growth sectors of the economy. The foreign currency portion of our loan book increased to 23.7% as we continued to support our customers to grow their businesses during periods of low FX availability. Our loan to deposit ratio closed at 58.7% as of 31 December 2022, reflecting a healthy and cautious growth in the loan book.

On slide 32, we show the breakdown of our NPL analysis. It clearly illustrates a continued improvement in asset quality. Our asset quality continues to improve with our NPL ratio down to 3.1%, below the regulatory ceiling of 5%. And it also hints at the proactive arrangements as far as loan disbursement is concerned and robust risk management practices we have.

If you turn to slides 34, 35 and 36, we speak specifically to the performance of the banking subsidiaries. And on slide 34, we will see the key takeaways on the performance of Africa and international subsidiaries. As far as African subsidiaries are concerned, we saw a 30% growth in revenue, but the impairments up by 329% largely due to the Ghana debt crisis. Deposits increased by 10% and is now about ₦ 1 trillion, while loans and advances grew by 9%. The Ghana sovereign debt restructuring impacted the Ghana subsidiary standalone PBT by as much as 132% as that company had to take a loss.

But on international subsidiaries outside of Africa, we saw a 52% growth in revenue, impairments up by 8%. Deposits increased by 10% at approximately ₦400 billion, while loans and advances grew by 36%. We’ve secured approval from the registry authorities for our planned subsidiary, and we will hope that by the second half of this year, it to be able to open its doors for full operation.

Here on slide 35, we have reached the update on Ghana’s sovereign debt crisis. And we are committed to ensuring that our Ghana business will continue to be profitable. Slide 36 shows the banking subsidiaries by country. The subsidiaries’ contribution to the banking performance stood at 11% and was dampened by the impairments taken from the Ghana debt crisis. Now, Access Bank UK and Ghana accounted for 59% of banking group subsidiaries operating income of ₦198 billion, up 11% year on year. Access Bank Ghana reported a PBT loss position of ₦22.3 billion due to the 20% loss in the value of investment securities in African subsidiaries. But total deposits in subsidiaries amounted to ₦2.67 trillion, 23% of our total banking group deposits.

This presentation will not be complete without touching on our digital lending business, which is a significant growth area. And of course, the year-end performance is on slide 38 and 39. Now, on digital lending, the portfolio continues to show strong sustainable growth. Disbursements increased 15% year on year although there was a 24% decrease in the actual number of digital loans issued in the year because of a more stringent eligibility criteria that was established for the payday loans. But in terms of revenue, digital lending generated about ₦23.6 billion, which was up by 85% from our 2021 position. On our retail channels, our transaction values have grown at an annual rate of 46% since 2020, recording a transaction value in the same period of about ₦69.5 trillion. We continue to make investments in customer experience and our IT infrastructure to ensure smooth service delivery across all channels.

Our outlook for 2023. Here we have the guidance for 2023 and our 2027 targets. In view of the current market realities, our guidance for 2023 will be return on average equity of 18% with the impact of the freshly increased capital of $300 million. A return an average yield of over 2%. A yield on assets of greater than 10%, and cost of risk of 2% or below. Non-performing loan ratio less than 5%. Cost to income ratio less than 60%. A net interest margin of over 5%. Capital adequacy ratio north of 20%. And finally, we will grow our assets under management for our pension business from approximately ₦1.3 trillion.

In concluding, we are confident in the momentum we’ve built so far. We’re excited about the coming year as we go a step closer to creating a global connected community and ecosystem inspired by Africa for the world. I want to thank you all so very much for your time. I will now open the lines for all your questions covering the last financial year, and for those who are interested, the first quarter of this year if it has already been hosted, as it must be.

Operator
Thank you very much, sir. Ladies and gentlemen, if you would like to ask a question, please press * and then 1 on your touchtone phone or on the keypad on your screen. If you decide to withdraw the question, please press * and then 2 to remove yourself from the list. Again, for the participants that have dialled in, if you’d like to ask a question, please press * and then 1. Just a reminder for the participants on the webcast, if you’d like to ask your questions, please type your questions in the webcast question box. One moment please while we pause for questions. The first question comes from Kato Arnold Mukuru from EFG Hermes. Please proceed with your question, Kato.

Kato Mukuru
Hello, everybody. Can you hear me?

Herbert Wigwe
Yes, we can.

Kato Mukuru
Thank you, Herbert, for a detailed presentation. I really appreciate you making the time. My first question is, I was looking at your currency risk analysis in your FY 22 financials. And I noticed that your US Dollar deposits increased by ₦1 trillion at the half year. For the full year they actually fell roughly around ₦300 billion. So, over the full year, they increased by about ₦700 billion. To put that into context, GTB, for example, just to put it in context, had a Dollar book that increased about ₦160 billion. What drove this tremendous increase? Because it was actually in the first half of last year, not actually during the demonetization at all. In a country that actually has no Dollars, how did you manage to grow that book so strong in Nigeria? And I’m almost certain it’s Nigeria, because if I look at your country segmentation analysis, that’s where the growth in deposit was. So that’s my first question.

My second question is your net trading gains increased from ₦44.8 billion in 2021 to ₦281 billion. That’s over sixfold, isn’t it? How did you manage to do that? If I look at your peers, again, nobody’s making that type of money, with the exception of one. I don’t need to name. In trading, what exactly happened? Because if I look at your bond book, the treasury book did increase, but not by that much. If I look at the treasury book and your bond book, they did increase, but nowhere near by that amount. What is it that you’re doing that the rest haven’t figured out on the trading side? Thank you.

Roosevelt Ogbonna
Thank you very much. Kato, thank you, and good afternoon. So, I’ll start with the FCY deposit growth. I think we’ve been very deliberate. I suspect, and I think I’ll be right in saying this, we happen to be the only international Nigerian bank that banks all the IOCs and has active relationships with IOCs. The IOCs remain a large provider of FCY deposits in the books of banks. Anytime there’s a market fracture, as you know, there’s always flight to quality, and we have been the beneficiary of that flight to quality. So, we’ve seen, without mentioning names, IOCs who have moved from what was zero to about $330 million in deposits with the bank. We also bank the sovereign oil company. And in the course of the last 12 to 18 months, we’ve built such a strategic alliance that has seen that deposit growth also happen on our balance sheet.

I guess the third is our Access UK business. That business has grown its balance sheet and a lot of that balance sheet is Dollarised as well. So, you’ve seen the deposit growth either through some of the sovereign relationships that we have, or the large corporates that the bank has in the UK that has seen that deposit grow. The deliberate pay down at the end of the year, which has seen that trend from about a $1 billion to $700 million was just us managing costs. You would have seen the Fed increasing interest rate about three or four times in the course of last year. Our customer deposits outside of the IOCs, which is really a transactional balance, has grown. And so, when we did raise cheaper sources of funding, we had to try and reduce those payments. Some of it came through from the pay down on the swaps with the sovereign. So, as those monies came through, we applied the funds towards bringing down the cost of deposits, and of course, the cost of doing business.

On the net trading gains, two things have driven that. If you look at our books, you’d have seen that we grew… I like the comparison you are making, but you will also see that the Nigerian bank grew about ₦2.2 trillion in deposits, overall deposit. Now, that deposit had to be deployed. In a market where there’s a liquidity conundrum and we’re not lending aggressively, as you’d have seen in our loan to deposit ratio, we had to deploy that liquidity. And a lot of it, as you’d have seen, as Herbert alluded to in his presentation, the mix of that deposit has moved from a 60/40 CASA to total deposit towards about 67/33. And if you look at today, we have crossed the 70% threshold, which is something we struggled with for several years. So, that’s a cheap source of deposits.

We are signing 1.5 million accounts every month, raising that deposit from financial inclusion. It was at near zero, or at least it was 1.1 in the course of most of last year. And what we’ve done is deployed to fixed income. So that had a significant impact in terms of returns. It could have allocated to the loan portfolio or it could have been in fixed income. But as I said, given the liquidity conundrum, we chose to invest in fixed securities. The second, and I think quite instructive, is just our swap book. The fixed income securities that we invest in Naira liquidity that comes through was priced at an average of about 12%. In the course of the last 12 months, we’ve seen interest rates trend up. We have a significant part of that group that matures after April. So, we have seen the impact of that interest increase or gain that will play out in the course of that period. So, we saw what was an average of about 12% on the book to about 16.5% or 17%. So, almost a 400 to 450 basis point increase. It made that impact.

I think the last thing you’d have seen in this gain is the exchange gains that would have come through. At the time the deals were booked, the Bloomberg forward rates versus where they were at the end of the year showed some clarity. All of that contributed to that net trading gain. I think the way to look at it is just to look at the overall earnings. I mean, we could have deployed this in capital, in loans and advances, and we would not have quarrelled that we had growth in interest income. So, it’s either net interest income or it is net trading gains. Ultimately, it’s just about how we deployed the ₦2.4 trillion deposits that were generated and how efficiently we run our balance sheet ultimately, working with the counterparties that we’ve dealt with.

Herbert Wigwe
Kato, just to support Roosevelt’s point, I think the rate of growth of the institution, the cost of funds, the tilt towards CASA is creating such a strong institution in terms of earnings. And I guess the deployment of those resources is what you’re seeing in the results. And of course, you’ll see it more and more as we go into this financial year. But thank you very much. Next question.

Operator
Thank you. The next question comes from Konstantin Rozantsev from JP Morgan. Please proceed with your question, Konstantin.

Konstantin Rozantsev
Yes. Thank you very much for the presentation and for taking my questions. I had a few questions that I wanted to ask. The first one, I’m looking and comparing the resu