Unsurprisingly, gross earnings declined by 13.0% in FY’21, following the material contraction of trading income (-74.5%). Available breakdowns indicate that trading income constitutes 34.6% of NIR and 14.6% of gross earnings. Thus, its plunge (a consequence of tamer volatility) was the clearcut driver of earnings pressure in the period. However, improved market activities and volatility appear to have kickstarted the resurgence in the line item. We note the 3.2x surge in trading income in Q1’22, which, per attribution analysis, accounted for 75.3% of gross income growth in the quarter. We expect this momentum to subsist and forecast NIR 21.2% higher YoY at N116.1 billion in FY’22E.

Farther out, NIR is likely to grow at a CAGR of 12.9% over our forecast horizon (vs previous 5-year CAGR of 7.0%). This projection primarily reflects the impact of the low-base effect from FY’21 and the gradual recovery in trading income to historical mean levels. We also highlight that in the midto-long-term, the newly onboarded life assurance business and the planned establishment of a FinTech subsidiary could portend positively for NIR.