Access Holdings Plc (ACCESSCORP) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the Access Bank Plc 2021 Investor Engagement Forum. [Operator Instructions] Please note that this call is being recorded. I'd now like to turn the conference over to Herbert Wigwe. Please go ahead, sir.

Thank you very much. Good afternoon, ladies and gentlemen. Let me start by thanking you all for dialing to our investor presentation. The essence of our presentation is to share with you sufficient information with respect to how our institution has been realized for growth particularly given the various corporate actions that have happened over the past 12 months. It will also provide clarity to investors on what is guiding our decision-making and give you the complete picture of where the institution is headed. It will also serve to provide an update by regional group since the acquisition of Diamond Bank and a clear revelation that no African bank of our scale has embraced digital in the manner that we have. I will start by introducing our executive management team, some of whom you are very familiar with, starting with Mr. Roosevelt Ogbonna, who has been our -- who is our Group Deputy Managing Director. We have Mr. Victor Etuokwu, who is the Executive Director, Personal Banking. We have Mr. Greg Jobome, who is Executive Director of Risk Management; Hadiza Ambursa, Executive Director of Commercial Banking; Mr. Ade Bajomo, who is the Executive Director of Commercial Technology and Operations; and Mrs. Chizoma Okoli, our Executive Director in charge of our Business Banking Division; and our most recent addition, Mr. Seyi Kumapayi, who is the Executive Director, African Subsidiaries, play the crucial role because of the growth we are seeing within the continent. I will start by speaking to Africa and Nigeria. Nigeria remains our primary market, our home market, a very significant market, one in which we have to continue to entrench ourselves very deeply in. And by definition, Africa, which is basically the continent through which we do business. And then we will then start to look at our business outside of the continent. Now this is extremely important because as we grew as an institution and attaining global scale, it is important for us to entrench and make sure -- just like other institutions that have followed this strategy in the past in more developed markets, and make sure that we're extremely strong at home and our immediate environments. So Nigeria and Africa remain extremely important to us not just because we are from here but also because of the scale which is available and the opportunities that we see. And of course, to ensure there is a proper balance, we will also need to have reasonable presence outside of Africa to ensure us good earnings and capital preservation given the strong occurrences we have outside of the continent. Looking at Africa, and this is the slide we have in front of you. Basically, it's one that come out of the higher level of Central Bank. We have a population today of about 1.3 billion and, of course, running up to 1.4 billion by 2023. Nigeria is one of the most populous, if not the most populous country in the continent. We have current population of about 206 million people. We expect that by 2023, that will go into 222 million. For Ghana, already from 30 million, it will go to 32 million by 2022. And of course, closing at South Africa, which we see running to about 62.4 million people by 2023. GDP growth rates. Obviously, everybody has been suffered by COVID. But we expect that by 2023, overall growth rate within the continent should be about 4.3%. For Nigeria, it's expected to be 3.8%. We do believe that there are a couple of things we thought less of doing. And should they do well, we should be able to see -- to have higher growth rates than that. Ghana, about 7.4%; Kenya, 5.8%; South Africa, 1.5%. Inflation rates. Again, the continent, to be about 6.9%, of course, brought down by the average at the realm of South Africa and Kenya. For Nigeria, we still expect to see very low double-digit inflation rate of about 11%, and that is a projection we see by 2023; for Ghana, about 6.8%. Exchange rates are expected to be stable. I think we may see a bit more deterioration in the case of Nigeria just because of interest rate parities; for Ghana, obviously, same type of thing; Kenya, same type of deterioration. What you see across the continent is that, again, when benchmarked to global currencies and all of that, you will see gradually some form of devaluation coming from the interest rate parities which you normally see across the world. The margin policy rates are [indiscernible]. There is an assumption that oil price will improve from about $50 per barrel to about $66 per barrel. So this is where Access Bank sit in the context of Nigeria and across the continent. This is our global network and scale. We have 42 million customers across the entire continent. Actually, this is in Nigeria. We have -- which is basically more than 18% of African countries in terms of the population, so which is very significant, if you like. Okay? We have a very strong and growing digital footprint. We have about 3,000 ATMs; about 9.5 million unique mobile applications; 53,000 point-of-sales equipment; unstructured sales service, USSD users, about 9 million customers; 633 branches; about 46,000 agents. And this figure is growing by the day and just to show you the sheer scale of our digital footprint. We are present in 10 African countries. We do have a reasonable presence in the U.K. and, of course, in Dubai. And we have offices in China, India and Netherlands. Our financial performance has remained strong. If you look at our 9 months ended September 2020, gross revenues were at about NGN 592 billion. It's an attractive figure because it is larger than any other bank in the context of [ Africa ]. And we have, of course, our profit before tax at about NGN 116 billion. Return on equity, about 20.9%, that figure began to inch up after the absorption, after the acquisition of Diamond. What normally happens when there's an acquisition is that, obviously, you see some inefficiencies. And before you start to sweat the equity, you sweat the assets which you have. So that figure is now beginning to move up. Capital adequacy ratio of 21.2%, Tier 1 ratio of 15.84%, healthy ratios in the context of the country and the continent in which we're operating. Again, gender is very important to us. Very strong gender diversity, it's almost an equal number. Sometimes, it is higher than this, 53% male, 47% female, as of the date this was done. We continue to have global recognition for our strong financial performance. These are the risk ratings. You will see a little bit of a change. Obviously, every risk rating is capped by your sovereign rating. So Standard & Poor's basically downgraded Nigeria, so again, solvency-led pretty much with respect to [ some ]. And of course, Fitch did not downgrade Nigeria, and so we'll also see where we are as far as that is concerned. But in the main, the numbers -- or rather the risk ratings continue to show a strong performance and an institution that is basically poised to basically remain there for a very long time. And perhaps we can get this much stronger as we grow and diversify not just across the continent but other parts of the world where you have stronger risk ratings. And that will continue to [ interpolate ] to a point where, you never know, we may have a stronger risk rating in most of countries in which we're operating. Again, we received several accolades, being the best bank in Africa for SMEs from Euromoney, down to things which we've done in the agri space. And of course, one that we remain extremely proud of is things that have to do with sustainability, and we'll continue to win all the awards right from the top, provided by the Central Bank of Nigeria; and that by the Karlsruhe Sustainable Finance, where we basically won those awards 5 or 6 years in a row. We're really extremely proud of what we're doing in that space. Now this is how we fair our present value over time. And just to show the compounded annual growth rate for different indices, for customers, we grew at about 36% year-on-year from 2009, helped, of course, by the acquisition which we did in 2019, which was the Diamond Bank acquisition. So basically, we've shown stronger growth rates than others. Technically, at the gross revenue end, we've shown a strong performance. And I think it's Banque Populaire that are basically close to us. What we've done is we've taken the top 10 banks, as you'll see, the MSMI -- MSCI Index rather, and of course, brought that in here because they will typically be present in markets in which we operate. And that could be a good benchmark for us to look at ourselves. And profit before tax, obviously, yes, the numbers appear to be getting significantly better. But the reason you have that number there is the fact that, again, coming from the combination, the huge expense costs that normally come with it, which is being resolved as we speak, would normally taper that number and because we've seen from the numbers, all right, those -- that has been resolved, as we saw in the third quarter of 2020 and going into the future. We have the largest customer base in the continent. And this is extremely important because it shows we believe that scale is important, very, very important. But efficiency is almost equally as important and that we need to sweat the assets to get the true benefits of scale. We have shown this figure that for 2019, we have 36 million customers at the time this was done, out of which we had -- in terms of number of digital customers, we had 19 million digital customers, followed closely by -- well, not closely, followed by KCB and some of our colleagues out here in Nigeria. But I think it was significant part of the story, has to do with the digitally active customer base; in the case of Access, 44%. Now so if I pull that on the customer base, all right, it begins to show the benefits of the power what will come out of it. So even though KCB has 62%, it has that of a more smaller customer base. Now we grow our customer base in Access by something close to 500,000 customers -- fresh customers on a monthly basis. And that growth rate, if we basically shoot up -- push out the efficiencies, all right, then we basically start to see some very, very large substantive overall contribution to profitability as we go on. But that is an extremely important number because it just shows the true -- it should begin to show the opportunity and potential that can come out given the size and scale of the institution. So we speak about our group financial highlights and look at our most recent numbers. That is not the most important thing, but again, we begin to see the opportunities that come out of it. And then we look into the future, we speak to things that have to do with how we've expanded over the last year, what we're doing, what are the greater opportunities we see within the continent and outside the continent. And then we'll take questions from you. So we continue to deliver very strong results. If you look at our 2019 as compared to 2020 numbers, again, our gross earnings grew by 15% despite of the difficult environment that 2020 showed. We ended up with gross earnings of about NGN 592 billion, which is the highest that any other Nigerian banks showed. Our net interest income basically took just a little glide, coming from the low yield on assets. But all of this led to profit before tax of about NGN 116 billion as of the 9 months ended September 30, 2020, compared to NGN 100 billion in the corresponding period of the previous year. That figure you see coming from the operating expenses is actually a result of the fact that the figures of 2019 showed 3 quarters of the combination with Diamond. The first quarter, we don't have Diamond, all right? But the rest of it had it, so we had 3 quarters of the Diamond. While in 2020, we had a full combined institution, all right, officially the full year for a much larger franchise. So that is what the growth in the period is all about. So the balance sheet as well reflects some form of growth in 2020. 2020, we have to be very careful with growth rates. Given the impact of coronavirus, it's a [ difficult ] time to grow your asset group. So once you see that, again, we'll have the result of some form of devaluation rather than a significant growth in assets in real terms. We've also seen a growth in customer deposit, but that one was for real because it will see a big increase as far as our savings accounts and retail deposit is concerned and you will see when we look through the financial detail and, of course, the accretion for our shareholders, shareholder response. With respect to prudential ratios, we are on track. Our cost-to-income ratio continues to see improvement quarter-on-quarter. We continue to recognize strong capital adequacy ratios, strong liquidity ratios. Our loan-to-funding ratio drops, not exactly what I read [indiscernible] at this point in time but because of the growth we have seen on the liability side without growing the risk asset in the same proportion [indiscernible]. But I guess as we get into more stable times, we will clear up [ factors of ] risk. Given the current environment, we will begin to push that number up a bit more as we get into 2021 and 2022. So we focus on generating sustainable revenue across all lines. All aspects of our business continue to show significant improvements. But for us, the one that is most important and which we feel extremely happy to share has to do with getting expansive retail banking growth and the increased velocity of transactions. A lot of things we've done are absolutely digital. We are tracking customers, tracking customer activities, creating products that would resolve lifestyle issues of customers and will become extremely important evidence during the lockdown period that we've had. Our normal uptake is in the wholesale business. And we'll continue to optimize the value chain as far as that is concerned. But again, having said all of that, pure retail remains extremely important. It introduces diversity from an income standpoint into the books of the institution. It introduces diversity on the lending side, on the non-lending commission and fees and all of that. Last year, we were generating unique -- 45,000 unique loans per day to customers, 45,000 to unique customers, which meant that we're basically providing about 450,000 loans to unique customers on a monthly basis. Slowed down again by corona, all right, but it just shows the extent to which we are pushing retail. It does come with larger margins, larger commissions, but most importantly, increased stickiness, all right, from customers to what we're doing. So we are prioritizing margin growth by making sure that we have the right balance sheet structure and bringing down our overall cost of funds. And we have 5-year payments, which is in line with our 5-year corporate strategic plan. Payments is [ beaming ], as you would see, as we move this through our [ institution ], one within the country, making sure that customers basically use our various point-of-sale equipment, our points-of-contact branches, uses our digital devices in terms of telephones, our Internet banking, our cards, et cetera, et cetera, et cetera, and of course, trying to make sure that we delight customers at every touch point. Sometimes, it's a bit difficult because you have 42 million customers. And so any issue that happens in the overall market will impact you negatively, all right? But we are coming up with ways and expanding our overall infrastructure to make sure we have to lift up the overall customer experience. And that's the main goal as we get into 2021, all right, making sure that all 42 million customers and growing, we can delight them as much as possible. So we've seen, again, like we said, our scale is coming up. And as we are basically reaping the synergies of the combination, we are beginning to see some focus on efficiency to bring down the overall cost. And you see, as we move down from quarter 1 all the way to quarter 3, so far, we've seen consistent reductions in our cost-to-income ratio. Quarter-over-quarter, we see a drop in the cost levels 2.2%; second quarter, 7.8%. This is quarter-on-quarter, all right? And of course, the third quarter, 50%. The whole idea is that we will continue to push the cost-to-income ratio over time, all right? I would think that in line with global best practice, once we can get this on the average on an annual basis of about 50%, then we get the full power of the institution, and the full impact on revenue will be felt. So on an annual basis, you will see it tick down. But of course, over the next 2 years or 3 years, you will see that's exactly where you want to be. And the scale of the institution, that will spit out a lot of money particularly when you go [indiscernible] provided in larger gross earnings compared to any other institution in the country. The overall figure that will come to the bottom line will be so much better. With digital, about 10% of our customer journeys, important, digitalized 400 of our processes, consolidated labor contracts. So all we've done is to make sure that we continue to improve our efficiencies and ensure that, again, bringing costs tighter, all right, so that our overall profitability starts to basically inch up to where we wanted to get to. So retail expansion is important, like as I said. Again, there's a very, very strong focus on consumer lending. We've realized that the more we do it, the more specialized it is, contrary to what a lot of people think. Payments or remittance are critical, all right? And all aspects of payments are critical alternative payment methods and methodologies and making sure you have full control of your infrastructure. So all of these things are critical, all right, and enable us to basically [ save ] these for our customers and ensure that the cost of onboarding customers is cheap and saving these customers over time, and therefore, at the end of the day, it will run in much of our operations. So today, we have about 42 million customers and growing as of the first quarter. We have that number of customers, but the number of account that we have is 46 million, obviously, because there is some duplication in terms of number of accounts, where customer may have 1 to 2 accounts. So we have 42 million unique customers and 46 million account holders. Again, we've acquired 2.6 million digital customers in the period. Again, we've seen about 3.2 million unique users to our mobile banking platform. We've issued 6 million cards. Savings accounts are up by about -- to about NGN 1.2 trillion now. It is a very important thing. At the time at which the combination was done, that was about NGN 700 billion. The card business is up about [ NGN 600 billion and a bit ]. It is up and goes to about NGN 1.2 trillion. USSD users, 9 million of them, but of course, we have about 9.5 million on our mobile app platform. So when you look at the graph on the right-hand side, which begins to share with you what this means in real number terms. I would like to look at the bottom-right hand. And the number is important is that in 2018, the first 9 months, all that was made [indiscernible], digital revenue was NGN 5.6 billion; in the 9 months of 2019, same period, about NGN 19 billion; 9 months of 2020, that figure has doubled. This is the sign of the fact that the Central Bank have introduced measures to reduce the costs to customers by as much as 30%. So if you grossed up, you can begin to understand what that figure means. Now this is still at the point where we have about 17 million customers yet to be mined, all right, and optimized, all right? So we see very, very big potential as far as this is concerned from the existing customer base even before talking about the growth which you have seen on a monthly basis. So to talk about the COVID that's on the top section of what is that, [ probably recorded net interest ] is mainly coming from the retail business, which is growing from the lending book which we are creating. We continue to maintain strong capital levels. Risk -- return on risk-weighted assets, as we dropped from 2017 about 2.96 to about 3.96, so we're pushing the efficiency. Our capital adequacy ratios have gone up as well. And we've seen that we are basically optimizing our capital structure between Tier 1 and Tier 2. But I think the right-hand side begins to show you the capital adequacy ratio which we have seen under recession, which has moved up [ about 184 ] basis points from December 2014, that's basically about 14% are the common Tier 1 -- common equity Tier 1 ratio to about close to 16% by September 2020. Basically, what we are just saying here that, again, we have strong ratios and getting stronger through the increased profitability that we'll see. But it's important to say a couple of things here. As we continue to push this 2021, what you will see is the access to the capital retention and strengthening the balanced capital position. We will continue to finance, grow, all right, our business outside of Africa, all right, which is strong, the U.K., Dubai, et cetera, where there are stronger currencies; and for them to retain all of those earnings with the view to ensuring that we retain capital and strengthen the overall capital base given the fact that a lot of African countries normally see strong devaluation over time. So as it may, all right, this combination of mixture that we are strong at home, have strong ROEs, will be complemented by making sure that outside of Africa business remains strong as well, all right? That's when we create an institution that is sustainable and will be fully in the midst of trajectory that most of the very successful banks have done in the very developed markets, all right, to basically create global enterprises. So where are we headed? Again, I think digital remains a very important part of what we are doing on an existing customer base of 42 million and growing by about 500,000 on a monthly basis. We will be the clear-cut digital leader in the continent. I don't think there is any African bank our scale that has embraced digital in the manner which we've done. We've digitized our customer journeys, has done a lot more work as deemed critical to advance analytics, et cetera. And this is fully mindful of the fact that where you have the nature of customer base that we have, you have to invest quite a bit to the infrastructure to support them. And if you have problems with [ horizontal, national switch ] and all of that, it impacts you the most. So you have to start creating those structure, the ability and should have your exciting customer experience. So we're doing everything that is possible. We are digitizing our subsidiaries, our core integrated system to ensure that we are absolutely secure at the time when you have cyber crime going on at the manner which it is going. We will digitize our core. And of course, we are basically ensuring that our staff are a lot more efficient and, of course, digitize the entire cycle. Now what is important is we need the right type of people. I'm talking of potential staff and training, which we're doing. We need to build the appropriate partnerships in terms of our leases with our technology partners, all right, and also supported with right governance and processes to support all of these things. Digital and IT are extremely tricky things to do if you don't have the appropriate governance structure to support that. It's not only about having the infrastructure or understanding the mechanism of payment and what -- which affect [indiscernible] but also having the governance to make sure that the overall institution is protected as we continue investing in all of those things. This is where we begin to see some of the impact of what we've done. We've seen in -- if you look at the 9 months ended September 2017 in number of digital transactions, in Access, it was 110 million transactions that we're doing on an annual basis. And that is a combination of ATM transaction, mobile and Internet banking and USSD. By September 2020, what we've seen is about 800 million different transactions, so it's grown by 7.5x. Now if you go get a lot more interest when you look at the volume of the transactions. So we're doing NGN 2 trillion of such transactions in 2017. We are doing NGN 20.2 trillion of this kind of transactions in '20 -- 9 months of 2020. It just shows the power of what we're doing. And we are not even 50% of the way yet, all right, in terms of what we need to do with our customers and to increase the level of customer experience. As we improve on our customer experience, provide and ensure that the alternative channels are working as efficiently as they should, all right, this figure could double or triple if we get the product nicely apart from the fact that we are basically making sure that we grow our customer base on a month-on-month basis. We'll speak about the international expansion, one that I've spoken about with quite a number of people, and I'll share with you where we're headed. Now in doing that, I continue to mention that Nigeria is our home base. And of course, Africa is the continent in which we operate. And there is significant similarity across the continent even though there are peculiarity to specific markets that we can take advantage of, inclusive of the Africa free trade agreement. And so if we are strong at home and strong in the continent, all right, we will have normalized ROE, normalized around the inflation or devaluation that we see, all right, the devaluation that we see, and if we continue to grow outside of Africa, we will have a prominent institution that is basically ensuring that it is strong internationally, it is maintaining capital levels that is strong and growing over time, all right, whilst remaining one of the most profitable couple of businesses within and outside the continent. Now so in terms of Africa, we said in the initial slides, but we still have about 370 million on bank accounts across the continent. And we have about $5.6 trillion in terms of projected consumer spend by 2025. These are World Bank numbers. In terms of electronic payments revenue, there's about $8.2 billion on the table. In terms of remittances and cross-border payments, about 9.2 billion. We have sub-Saharan trade of about $830 billion. Now these are very significant sums because you don't have proper African banks that are interconnected and making sure that you have the right payment mechanisms happening. We have about 400 customers that have over $1 billion in revenue, each of them. We have about 122 million active users of mobile financial services and, therefore, potential -- strong potential retail names. And of course, we have about 89 cities, all right, of over 1 million inhabitants by 2025. All this is just to show the potential and opportunities for growth in the continent. Now where you imagine that some of the large Western banks are not present yet, it means that there is an opportunity for an African bank that is well known, that understands compliance and has capacity to support trade, corresponding banking and all of that, all right, and the right technology infrastructure to support payment and remittances without taking incremental risk, and we think we are best positioned to basically do most of all of that. So for us, our expansion strategy has been delivered with our discipline and, of course, supported by key enablers. What are we doing? The focus is on becoming the right gateway in Africa. We're building a global payment gateway and providing key finance support and corresponding banking across the continent and to institution that are [indiscernible]. We are focusing on the key markets, as we've always said, to support regional trade. And there are a couple of them, and you will see them on the slide. The key regional places where you have huge streets, et cetera, are setting up the gateway required to support all of that. But of course, providing the foreign currency that is required for international remittances, leveraging on our AccessAfrica product to basically ensure the connections to wallet and payment platforms is happening seamlessly. Now how will these be done? We need to have the appropriate operational hubs to ensure that each particular hub is well managed, whether it's within West Africa, whether it's within East Africa or Southern Africa or Francophone, all right, and ensuring that we have the right operational framework to support all of that, right compliance framework to support all of that as well and, of course, making that we have the centralized IT infrastructure, one, within the operation, of course; and second, that is central to ensure that this -- the whole group is being managed efficiently from an IT standpoint. I would get the robust benefits of purchasing largely our scale. Now support functions required for the subsidiary would have to be set properly and making sure that we benefit from the different center of excellence. There will be parts of the world, in Southern Africa, for instance, where you may see strong IT capabilities, where you basically take all of that [indiscernible] and bring to West Africa, et cetera, et cetera, and just make sure that we are benefiting from what we see in the different centers of excellence. But between all of this, the approach will always be that in the countries in which we choose to go to, we have the right skill. We will not just give jobs in the country in which we are present, we will make sure that we physically have an impactful presence in each of the major countries in which we are present in, all right, to basically reap the economies of scale and leverage digital to the [ test ]. In doing it, we are also mindful of the countries in which we're going to, all right, to diversify any of our risk in those specific countries and the risk rating of the specific countries to make sure that, at the end of the day, all of these things are done in a manner, all right, that will be of benefit to the parent. And of course, as we do it, we are working with our friends and partners, largely the DFIs, who are investing and co-investing with us, across the entire continental [ security ]. The whole idea is that it is going to be beneficial to the [ central ] and to the period in terms of the overall contribution and risk management framework, that [ profitability pays off ]. And of course, compliance, which is extremely critical as we move along. So in this slide, [ I'm not showing ] -- okay. Now so this is Africa. You've all heard about Africa free trade agreements, which has started. And I know there's a big announcement coming up in February. I think that, where we are positioned, we are going to take full advantage of all of this. We're going to use our digital framework to benefit. We've created products that allow Access [ to lead ] across the continent. We are using our subsidiary in the U.K. to provide for expanded banking services across the continent and all of that. We must be in a position to benefit and support financial flows across the continent using our platform. And if you look at the benefits, I mean intra-African trade is supposed to grow by 53%. You have global -- we have strong sales across the continent. [ What I like is ] we are exceeding well in cement, transporting across the entire and shipping goods across the entire continent with what they have been in refinery, which is coming up. So all these things will put a significant trade across the continent. And that institution that is present in the [ principal ports ], all right, and has the strong technology platform, we'll be able to use that platform to ensure [ specimens ] across in whatever they're doing at minimum price. Again, the GDP of the overall continent is supposed to grow by about -- to about [ 2.5 trillion ] over this period of time. We expect to see increased financial flows. We hear there'll be a conditional tariff on intra-African trade. Whether that happens immediately or it's delayed, et cetera, the overall point being made here is that they are going to impact to support African trade, intra-African trade. It may not happen at the 100%, it's 20%, 25%, 30% boost in overall-type of change, the [ functions ] of the continent. And that bank that is positioned to take advantage of it will make incremental income, sometimes without taking incremental risk. But being present in the countries in which can connect the dots remains important to optimize everything. Now if we are present in different countries in the past and you are not present at the physical anchor point, you may not get the full benefit. But now our own objective of having done a lot of work, so by posing it on what we've seen coming, all right, even in this year, we think that we now have the presence, all right, given some of the things that have happened over the last 12 months to be able to take full advantage of Africa. So again, coming to Nigeria. I continue to describe Nigeria and Africa, not because that's how we do it, because we view things outside of the continent. We think that there is still so much, so much to be done, and we need to continue to entrench ourselves in the local market more and more and more. We have [ NGN 22 million ] on bank strictly in Nigeria. I think that's so much needs to be done and actually might be best positioned to do it. There are few [ equipment ] or remittance flows. I would see it there's [ 47% ] growth between 2015 and 2018 in the context of Nigeria. I think we, as Access Bank, we continue to see so much that can be done, and we've done it. And we've demonstrated the capacity to capture some of this. The impact from where we ought to be because there's still so much work to be done, if you take our digital lending book. I mean we've seen that whole thing grow on a strong customer base, all right, from where it was about 25% in 2019, [ NGN 80 billion to NGN 100 billion ] there. But despite that, we're generating 450 -- 45,000 unique loans on a daily basis, all right, which is 480 -- I can't remember. I mean I've got -- we need the significant [ Power and regional ] loans that are being created on a monthly basis is something that shows our [ integral ] engine for rapid growth. If you see our digital income on that upward swing, it is something that would have to be maintained at the absolute minimum, I'm talking of the trajectory, to continue to increase in volumes. Now I don't want to speak much about the healthy volumes because I think people know us as wholesale bankers. We think that there's so much more that needs to be done over the period for us to get to where we're going to. We've seen 6 times growth in our commission and fees. Now our bank has shown partnerships, which is a big area for big growth, all right, in 2021, moving into the future. It's one that we expect to capture so much from the program. There is microinsurance, and we are partnered with Coronation Insurance, all right. As far as our bancassurance is concerned, I would think it's a brand new area that we can pursue things and optimize as well as given the raise of [ capital fees ] that is required. In terms of ROE, [ those of us are going to go through very significant storms ] as we move into 2021. Next slide. So yes, having spoken about Africa, I've spoken about Nigeria and the opportunity around Africa free trade agreements, that is not just enough. We are trying to create a global enterprise, one that is sustainable and one that we're going to be extremely proud of as Nigerians and as Africans. Now we do realize that there are some limitations with the continent. And one of those limitations is the fact that until we get our local indices right, you will continue to see some form of [ valuation ] over time. And so if we are not careful, from a capital standpoint, you will see depletion over time. So what we're also doing is that we are using our Access U.K. as an anchor for growth. And we're basically ensuring that we continue to pursue growth outside of the continent. Access U.K. is the only African bank that is on the clearing platform in the U.K., I would say the very significant thing. So we don't need it for a funding bank ourselves. I'm talking about Access Bank U.K. There's so much that [ decision ] is doing. We do have a presence in Dubai. You will see a couple of things coming up over the next couple of months or years, all right, which is this issue that this is leading to the question of a proper global franchise, one that is strong at home, and building up in very significant currencies or building in countries of [ similar ] currencies and using it to sort of the [ up its ] case and the strong capital retention. So as -- and it's the wake of volatile operating markets in Africa as well. And we are constricting our operations as a global payment gateway, and ensuring that using Access U.K., providing corresponding banking services, strong digital platform that the overall profitability of our franchise is one that -- it's not as strong within this continent, but we are creating a sustainable franchise, one that may be similar when this history is written in several years to start from that or other institutions that have grown locally and decided to grow outside of their continent to make sure there's proper diversity. So we are doing this to re-optimize, to capture all of these opportunities. So we will be transitioning to a full structure, and I think this has come within public domain. And the -- through this organization, we will create new product revenues without taking incremental risk. We'll ensure that there's diversification of [ players ], and of course, the support of our -- outside of Africa especially will ensure that [ the insurance is very healthy ]. So the Access Bank holdco will consist 1 of the Access Bank group itself, which is the banking group, [ admission ] payments, and this is well since -- this is probably on our 5-year corporate strategic plan. We will have a very strong payment business. And I'm talking of not just providing the provisional infrastructure, I'm talking of that which has to do with the payments themselves. We're going to strengthen our consumer lending and agency banking business and have people continue to say that this may sit well normally within a bank. As we've grown it into much more finer details at the end, et cetera, et cetera, we'll begin to see that this requires some level of specialization. And if you get it right, the yield, the return on equity coming from this can be very significant. So we will create that business. There is the insurance group business that comes out and the normal call up of our bancassurance business which will also enable us optimized income as much as [ it's really been possible ] and as far as that business rules, given our large retail base, I want to be doing with that partner as far as Coronation -- as far as bancassurance is concerned. Again, this is the banking group, one you are familiar with, broken down into Nigeria, which is the -- which basically is the parent of the bank. We have Anglophone. We have Francophone. Of course, the international, which is anchored by Access U.K. This graph -- or this table will continue to change, [ right enough to move on side ], again, done very deliberately, taking capital into consideration, taking return on equity into consideration and the risk ratings from the specific countries. We want to create an institution that will have a risk rating over time that will be better than most of the countries that we've invested in. And no one knows perhaps as we -- [ it may be us ], obviously, we don't know what the [ idea from ] very strongly rated institution. So the primary subsidiary is one -- is going to consist of a very strong suite of banking assets. We will cover -- it is one that is not just going to come in Nigeria. We have the partnerships, whether it's Visa, with Mastercard and several of the others with the GSM companies, et cetera, et cetera. And it's not one that we restricted to Nigeria, but basically, one that cut across the entire continent. We will be, and in fact, issuer, not just in Nigeria but in other African countries. There's huge, huge potential for growth. And you've -- we've shared this slide before. If you take our digital revenue that is growing, that figure will grow in geometric progression as we move into holdco. The cash transactional volumes and the efficiencies coming from [indiscernible] of what needs to be done and the efficiency of supporting the entire franchise, we will see, both the number of cards and the card volumes and the income coming from it are doing very significant things. Today, we've done quite well as far as Nigeria is concerned, but I think there's still so much, so much room for growth. Basically 1 out of 3 transactions generally from a value standpoint settle on our platform. We think that there is so much more room for growth as we chose to basically diversify our overall retail base and make it stronger and make sure that perhaps over the next couple of years, by 2023, maybe 1 out of every 2 Nigerians will be banking actively in Access Bank. We shared the electronic space with you -- African electronic payment space with you, and I think I already spoke to that. But what this slide also shows you are the potential that come from it. They also come from the GDP growth we see. COVID, yes, for the [ 5 month ] have brought new payments habits to people. And of course, what we are seeing is a great shift from cash to non-cash payment methodologies. And we think that the growth is good to our historical performance. Now that institution that is postured and present in the major course, where you have a huge population, and you have the major [ settling ] agreement on banks of presence, all right, will seek advantage of all of this. And we think that more than any other bank, not just in Nigeria, across the continent, that understands how to replace this market, Access Bank will be able to take advantage of all of these things. So African payment -- electronic payments market is expected to do exceedingly well. And by 2025, we start to see -- we would have seen very, very significant growth that will come from it. The consumer -- the banking business, lending business, like I mentioned, is one that is very specialized. Whereas in terms of providing PayDay Loans in huge, huge numbers. Perhaps one day, we'll be giving up to 1 million unique loans a month, maybe to 2 million unique loans. It does come with benefits in terms of the spreads. It comes with benefit in terms of fees and all of that. All of those things would help to push our overall digital revenue from -- in terms of how -- the amounts of fee we make locally. But it's not just about making money locally. We are replicating this process across the continent. And we're doing it in Ghana, we're doing it in Rwanda and we've moved it again to Zambia. So we are beginning to become more and more experts at it, all right, and the creation of this separate lending business that basically make sure that all of this is coordinated properly, all right, and ensuring that all the franchises, and of course, the mother franchise, all right, is optimizing income is [ one of our little pushing activity ]. And the final -- how to deal with the insurance. Again, we talked about bancassurance model, which we are pursuing with Coronation, which has started. There is a big follow-up which is the insurance booking, which would have -- they have to go elsewhere. It's what we try to retaining within the book within our bank. This figure may not appear to be as significant as people think it is today, even though it has a high ROE. But guess what? Over the next 5 year, as people have increased insurance more and more, down to the retail level as is still in parts of Africa, this figure can become anything. We've seen it. We saw how -- if you take the PFS, for instance, when it first started, it did not get it, [ it was not possible ]. Over time, [indiscernible], we feel as if it may happen yet, and that will bring significant benefit to us. So finally, to the proper round up. These are areas or things that have yet to -- things that have to do with ESG, things that have to do with sustainability. We will continue to prioritize our sustainability issues. And of course, make sure that we continue to win all the accolades, not because we want to win accolades, but because we think that this is a responsible way to doing business. As a financial institution, that is aspiring to become global, this thing becomes more and more important. And you will see us play a lot more in this space, as we've done in the past. I think more than any other African bank, even if I have to say so myself. We've embraced sustainability to very, very, very significant levels. Again, this might just speak to the fact that, one it has been an [ invaluable part ] of our lives. What I sense of the capacity, on our Board, or the capacity in terms of our workforce or things which we've done with [ records of ] refinance, where there will be [ private lending ] back in the continent. It may not appear to be very significant right now. But we do want to stand out, and we're pushing it more and more. The Central Bank of Nigeria, our FX regulator has recognized this. Some of the leading institutions like [ Carls Group Finance ] has recognized this. I would think that sustainability will play a much bigger role in the life of every institution, particularly coming out of COVID, and all of that as we move on. Then the full benefits of what we're doing will replay. Now financial inclusion in Africa is critical given the levels of anything that people have. And we have created agents to ensure that there is greater financial technique. It's not only profitable because we are now using technology to drive it, but it is something that will lead to the overall [ difference ] and change and growth in the GDP of the countries in which we are pushing it. All of these things, which will increase savings rate, I think that -- given legislators in the country which we are present and the markets we want to operate in, that things which are extremely important, just -- not just from a profitability standpoint, but also, all right, to show our regulators and the countries in which we are operating in, the fact that we put it to those markets as well. So in conclusion, like I mentioned at the very beginning, we have shown a disciplined growth of our time, which has been value accretive. We continue to lead on several metrics. We are the most digitally transformed enterprise and use to support our skills and innovation. We will be transitioning to our holdco to capture continent-wide opportunities and support our international expansion, which is done deliberately in a deliberate manner to basically as sort of capitalist reserve and enhance. And of course, making sure that our overall philosophy to have an approach, whilst it will be organic and inorganic growth, depending on where we are, we have understood how this combination will work, whether it's one that we're going to continue to be driven by value. Capital accumulation and protection is important to us, and we will do all that we need to do to ensure that, over time, we do not just reap capital in nominal terms in the continent, but because of the retention towards, meaning outside of Africa, we are enhancing the overall value of the franchise. There is a deliberate strategy to diversify any exposure in soft currencies in which we operate. We have a very strong bench of talent, it's one that people have asked questions about with respect to our expansion. We have physically -- within our HR function, functional growing talent across the continents, and making sure that we all have one culture. It's been affected by COVID, but we've tried to do it virtually. And once COVID is finished, we will make sure that, again, those places where we got somebody [ that's not assimilation ] is central, people coming to spend time in Nigeria have followed that in turn. But in terms of the leadership team, the middle management team required to steer this decision to growth, we think that we've basically invested enough. Never ever will it be sufficient, but we have sort of enough to push us through or go into or continue to invest in it, all right, given the aspirations that we have. So we continue to execute it around with our [ private ] corporate strategic plan. All of these things sits firmly on that, which basically is in 2023, and hopefully, all right, we will emerge as perhaps one of the strongest African banks, 1 of the top 10 banks in the continent, by the time we get to 2023. Thank you very much. Ladies and gentlemen, the floor will now be open to questions. And my colleagues shall support me in providing answers to whatever questions you may have. Thank you.

[Operator Instructions]

There's a question coming through with respect to capital and ROE impacts given our African expansion. I'll let Roosevelt speak to that. Roosevelt, who is our Deputy Managing Director of Group Operations, will speak to that question that had been connected.

All right. Thank you very much, Herbert. Today, we are present in about 12 African countries. From the map that were shared when Herbert was presenting, you see that there's a very deliberate entry into the rest of Africa. What you would have seen on that map is that there are some other countries that look -- that are interesting from just an AfCFTA trade and payment perspective. So we will look at those markets as we have said. But all of this is being done on the very disciplined capital approach. We're not going to go into markets where we can't acquire scale, where we cannot meet the ROE thresholds that we've created as a group, looking at weighted average cost of capital. We also are not going to go into markets or do any transaction, be it organic or inorganic, where it would be capital eroding even in the best year. So every transaction we've done in 2020 has been capital accretive. And that's the structure that we will run as we continue to expand across Africa. So it's been very deliberate. And that doesn't really give us concern. We -- we're not -- it's not a return on ego, as we say, within the institution. We are very deliberate as to why we're going into those markets. They justify the ROEs even within the first 12 to 18 months of them being settled. Thank you.

The first question comes from Adesoji Solanke from Renaissance Capital.

Can you hear me?

Yes. We can hear you now, Soji. Please go ahead.

I think one thing you guys sets you never fill in is dreaming big. So thank you for how well you clearly articulated the strategy. I do have a few questions, well, quite a few questions. So the first one is just around progress you flagged around digital. So you mentioned, I think, a tax increase due to the transactions by value, which is incredible. I'm just wondering, can you spend a few minutes just talking about how you're able to achieve this? And it would be good if you can talk about how you managed to sustain the wins -- the digital wins post your merger with Diamond Bank. My second question is you somewhat mentioned something about the global payments gateway. What does this mean and entail? My third question is, in your presentation, you spoke about some countries you consider major countries in which you intend to have scale. How will you achieve this scale? That's the first question around this. And the second one is, I guess looking into 2021, which new countries do you expect to get into? And how much capital are you allocating to this expansion? Then my final question is just around costs. Can you give any sort of guidance around what sort of OpEx quarterly run rate you should expect in 2021? Those are my questions for now.

Thank you. Thank you, Soji. Again, we apologize that we were cut off a little bit. But let me just speak to some of these questions you raised. Now with respect to digital transactions. One of the things that we made sure we pulled up through as soon as we basically did the combination with Diamond was things that had to do with digital analytics, A, understanding customer behavior, we introduced all that [indiscernible], all right? And all that was happening was how many transactions are being done through digital means on a daily basis. We basically ensure that branches were competing among themselves and would have targets for customers, all without retail target for account officers, right down to those who have [ credit fee license, the GSPs] in the market. And we're asking them, how many customers have you signed on using cards? How many of them are using cash? The digital concierge is the branch. It's making sure that, wait a minute, this guy came with a check, how do we make sure he has his card, all right, and how many transactions is he doing? For the analytics framework and the engine to check, the volume of transactions being handled digitally on a branch-by-branch basis was fine-tuned, okay? So we said it that will become. Now 2021 has started, all right, and we started the whole process again. We have what we call the extra wins which have been adopted. A couple of other bank have tried to the same thing, and we really don't mind about that. And the fourth idea was if you basically use digital channels at a particular threshold, you get the win, all right? And it's almost like [ it would ] and it was happening. And this thing is set to increase service accounts in spite of all that was happening, all right? So those things have led to a significant increase as far as digital revenue is concerned. But it's not over yet. We use it as a tool, all right, to basically reactivate several accounts. And as I've said, I'm talking about in terms of the activity levels of several accounts. We still have, to my mind, that we may have about [ 17 million ] accounts that need to be pushed even a bit more. So we're using gamification. We're using all of those tricks, all right, in a digital manner, all right, to ensure that the amount of activity people are kind of on our platform is significant. I don't think that, in my mind, that we'll move on 20% of the way. I don't think so. I think you'll still see so much in 2021, 2022, and going on. And as we get more and more customers, all right, you would then see the fact. What I'm talking about how far we've got, and we were talking about the existing customer base, still so much more to be done. Now the question of a gateway, in my mind, it's almost a digital gateway. We will make sure that transactions between all the way from Nigeria to wherever you are in the continent happens seamlessly. By the way, that is almost happening now. Using Access Africa, you can make a transfer within specific thresholds to anywhere in the continent, and it happens real time. I'm talking about instantaneously. So if you're here to pay accounts to a place in Ghana, the same way you will do it, transfer, all right, to anywhere in the world. The same way you do a transfer within Nigeria. If you do that payment, it gets there on the second. Same thing if you're transferring to Rwanda. Same thing if you're transferring to Kenya, et cetera. So we're going to make sure we set up the switch network across the entire continent to make sure that it's all about we have a physical gateway with the right compliance framework, all right, tracking everything. And [ starting to trial our securities ], all right, to make sure that there are no [ broken laws ] once this gets started. Now yes, we will be present according to scale. The map we showed identified critical companies. Scale means a couple of things. Scale means population. Scale means GDP. Scale means -- just the opportunities are all of that. Now if you check how we've done all of these things, they are all withing capital equity, all right, and the manner with which has been done has been responsive even to the period, we benefited without, in several cases, taking in additional capital. I mean that's the amount [ exposure that I can't ] share with you right now. But I'll tell you a couple of things. Now scale is important for you to reap the benefits. Being [ on top ] in a specific country sometimes does not allow you to basically achieve what you want to do. So you may see that you have an aggregator strategy in a specific country where you use your local subsidiary to buy a couple of bank and definitely increase in terms of price of scale and scope, all right, and therefore, you move from being #10 to #3 in that country. And therefore, you can still be relevant to plan framework and all of that to -- this is, of course, a [ quarter of that value chain ]. But even if you use combinations, you're doing it in a manner that is capital accretive and sometimes does not require you to take an additional capital into those countries. And by the time you look at it, with the right manifest team and the right governance structure, all of those things will become profitable. So that is how we create in those country. You will see in specific countries as we get to some of them, we will not pull out an aggregator strategy. We will not pull out an acquisition strategy. We may just start to follow an organic strategy. And I'll give you a simple example. The rule around [indiscernible] countries and the nature of the laws and provisioning and all of that, given the standard [ wheels ], they require that you just follow a strict organic growth process, all right, so that you don't find yourself in a risk that you don't understand because of how they basically capture themselves. So all of those things are things we have taken into consideration as far as growth is concerned. But I'd like Seyi to speak to issues around OpEx, all right? And in each of run rate we've seen over the next -- over the course of the year and into 2021.

Thank you, Herbert. I mean, so yes, as you recall, the accounting firm, [ AMCON ], the large part of that, I think it's about [ 20% ] of our cost today happens in the first 2 quarters. So you see significant variability between Q1, Q2 and Q3, Q4. So on an average, you're right, the cost of the year, you see between [ NGN 75 billion ] to [ NGN 80 billion ] in OpEx Africa. That's what we see. And on a year-on-year basis, all right, we've kept it very, very low in terms of whatever growth. It was maybe to be about 5%, 6%, which is essentially well below inflation. This is given the fact that our [ anchor ] cost has increased. So really, you have to make that adjustment, cost has actually come down year-on-year.

The next question comes from Ronak Gadhia from EFG Hermes.

My first question is just a follow-up on capital. If I look at your capital base as in the first half, you had roughly about slightly more than $1 billion of capital in Nigeria. And if I take away the group capital -- and if I take away the Nigerian capital from the group capital, that leaves roughly about $300 million, $350 million for the rest of the group. I was just wondering if that is -- that looks quite insufficient, especially when I compare to some of the big players in some of the countries that you are in: Kenya, Ghana, Côte d'Ivoire. Some of the bigger banks there have much, much larger capital bases. So I was just wondering if your strategy of gaining scale in this market is feasible, given the amount of capital that you're committing to these markets? The second question is on your payments business. As you rightly mentioned, the growth potential there is quite significant. We're seeing a big migration from cashless payment -- cash payments to cashless payments. But within that as well, we're seeing increasing competition from nontraditional players, specifically telcos. So could you just identify -- or could you just share your thoughts on what you think of telcos as -- and other fintechs as your competitors, and how that might affect your strategy? And then the final question is on your -- the historical numbers. So I've seen very, very big growth in mobile and Internet banking. So could you just -- maybe I sound a bit naive, but maybe just share a bit more in terms of what you -- what kind of transactions going -- do you count within that?

Thank you, Ronak. I'll let my colleagues speak to that. I'll let Roosevelt speak to the issue around capital and sufficiency of capital needs in Africa and the partnerships which we have created in -- which we're creating with some of our partner like close in continent in a capital accretive manner. Roosevelt, do you want to speak to that?

Sure.

And the competitors.

So let me give you a background. I recall this question coming up when we were starting out in U.K. And it was always that this was a very mature market, significant players, what exactly is that which I'm going to do in the U.K. and how do we make it work. And I recall the conversation that we had then, and that conversation continues to be relevant. It's around the strategy that you are going into those markets knowing exactly what it is you want to do. So we're not going into Kenya, South Africa and several of those markets that you mentioned because we want to confront the #1 or #2 banks head on, at least not today. So the idea is that we are clear as to our strategy around one-bank name. So what we refer to as our global relationships. We've seen that worked in Zambia. We've seen it gained scale in markets like Zambia. We've already started testing it in Kenya, and it is working. For the size of capital we've taken into Kenya, it is sufficient to be able to support those corporate. We're seeing it in Mozambique strangely, even in the oil and gas sector where we have significant IOCs, and those businesses naturally are coming to Access Bank because of the global relationships that we have. So our strategy going into those markets is very clear and unique. The same way we drove our business and assets, you see us leveraging this trade in cross-border banking and is today the largest African bank that exists in that market. In the same way we are looking at each of these banks, our own bank, for example, is going to be our hub for the commercial region. And we know the level of trade that it's going to do in South Africa, Mozambique, Kenya, Rwanda, Botswana and markets like that. And we see significant opportunities which, today, no one is looking at. It looks very obvious, but it's interesting to know that no one is looking at those opportunities today. And it's something we think we can very quickly begin to take advantage of. I guess the other thing to look at is, in some of these markets, we are also building partnerships. So we're not going there on a stand-alone basis to act as just Access Bank looking at the rest of the markets to compete. In markets where we can build scale, sometimes we are not actually buying banks, we actually partner with existing banks in those markets because we see that as significant synergies that coming together will provide. It's a model we tested in Mozambique. It's a model we are testing in Zambia. And we see that as significant value accretion that is coming to us even with less capital that we have put into the market. For some of those businesses in the future, there might be a need to buy out the existing equity holders. But where we are today suggests that we can play in those markets, be relevant, gain scale without having to put too much capital as those are being controlled and still being in control of cost, which is very important to us.

Okay. Now in terms of the payment fees and competition. I think it's a space that is opening up, and we are bridging all players, fintechs, et cetera, et cetera, telcos, et cetera. In the course of my presentation, we spoke about partnerships. And that is one that we -- and that is something that we believed on both at Access Bank and in the combination with Diamond and -- Access with Diamond, all right? If you look at the nature of relationships we've had with the telcos and all the things we've done, it's by making sure that we basically partner with all of them. And I don't think it's going to change. But I think we'd love to reinvent ourselves as we move on more, particularly given the foolproof structure to ensure that we basically play in that space in a very slightly different way than we've played out with traditional bank. So we will be able to compete with some of the players in that market, all right, but in a manner in which that nobody can be disengaged also from institution. Is there any institution that's always been structured, all right, in terms of digital aspiration? But the things we're doing, all right, to ensure that if there is a condition, things going to happen, we'll choose the one making sure it happens. So we are not worried about it. We think that it's a brand-new market that all of us can benefit from and it's only banks that choose to remain traditional that lose the fight. So we are really [ hesitant ] to follow that. Historically, I think we spoke to the impact of mobile and Internet banking, it's -- it continues to grow. And I thought I answered it in the first phase of what I spoke to. I think that, that particular contribution to income is part of our royalty, so profitability will grow, all right? You will see in 2020 numbers -- you will see the 2021 number as we move on, all right? And I think it's just somewhat official. When you look at those who are still using non-digital means to basically support what we're doing, all right, it is very insignificant. It is very insignificant compared to those who are using digital means. And I think there's still so much room for growth. Roosevelt, you wanted to say something?

Just going to add to that. I mean you have seen the numbers from 2017 to date, we have seen a compounded annual growth rate of about 42.2%. And this is across profitability on our digital platforms. It does itself speaks to the fact that there's significant opportunities we've taken advantage of. And as Herbert said, we are only scratching the surface. We think there's so much yet that exists in the market not just because we'll be growing our customer base or we'll be entrenching a stronger ecosystem and value chain, leveraging the key companies that we have strong relationships with. So I think there's still so much room for growth. 42.2% doesn't looks like lasting over 2, 3 years. But I think there's so much more that we can do.

Sorry. Can I have follow-up? Is that okay?

Ronak would like to know if he can pose a follow-up question?

Please.

Yes. Sorry, just a couple of follow-ups on that, my question on the -- my last question on mobile banking. I just wanted to know what products do you include within that? Is it just NIPs or NEFTs and a couple of other products within that? Because the growth seems extremely phenomenal, and I just wanted to get a better understanding of that product. So that's just the first follow-up. And then the second one, going back to capital and scale. Roosevelt, I get your point. You're being innovative. But if I look at your own experience in Nigeria, for a very long time, you didn't have the scale, and your ROE therefore suffered as a result of that. And that meaningfully changed when the bank acquired Intercontinental 8, 9 years ago. And so again, going back to that question. Given that you're committing about $300 million in these various countries, can you really get meaningful scale to earn decent ROEs out of these subsidiaries? Sorry, I'm just being a bit more...

Okay. Let me put it in a different way, Ronak. You will see from the fact that we're going to be accretive over this year, and that has to come another $350 million about, $700 million about with limited injection from our own banks. You will see us partner with DFIs who are committed to support. You will see different types of things, not just Tier 1 capital, I'm talking about supported by Tier 2 capital, if you get a product estimate coming across to support all of these things. So $350 million, if you look at it today, is not significant. It is going to be complemented by monies which we are going to raise through our different partners. In places where we see all the competitions, we are not paying our people. Those are measures and are measures that are value and capital accretive to us. And that's not just it. We will basically get long-term capital to support a lot of those places. Even in Ghana, which we have a presence in, we do have very strong capital ratios, which we have yet to deploy. And compared to the Ghanaian banks, in markets which is considered significant in the context of West Africa, all right, we do have enough capital. There will be a very fine balance that needs to be achieved. Remember that in most of these countries, you have countries -- you have capital -- you have currencies that devalue. You have to come up with a very intelligent constructs of Tier 1 capital and a dollar-based Tier 2 capital, all right, that obviously, all right, lends in local currency, all right, as supported with one-bank names that shows that from a capital standpoint, you remain very, very strong. So you will see Tier 2 capital friends coming up, all right, which will ensure that we basically have the right capital to support all that is happening. I'll give you an example. There were several countries that called for significant capital, and all of those capital -- all that capital had to be converted to local currency. For banks that did that, that was a total destruction of value, if they didn't get to do that properly. So work with combinations that ensure that we meet the Tier 1 threshold, but as supported by friends, all right? In Tier 2, that may be in foreign currency to ensure that capital is preserved. So it's something that we study and the clear model for us. And we basically know how we are rolling that across the continent. We will not do anything that does not allow us sufficient capital to accrete for fund and efficiently given the target market that we speak in the specific quarters in which we also have our accretion. Now with respect to mobile and Internet banking. And Ronak, the -- these volumes -- figures you've seen are still NIP-type numbers. There are still numbers that are built on just pay and receive today as it is. And we have not included some of the other implications of things which were achieved through digital wins, as shown for the [ sell-in ] volume because that one showed up over net revenue from a funds standpoint. If one out of every three transactions that we need to see through and there, we are building to shift this a bit more and deepen that market, I think that nobody can still -- maintain the still nature of creating our RCC, if you get the product readily. So there's still so much to be done. And it's even more painful for some of us, each time you have -- it's a problem with international, which we feel, as more than others. So we have to create a council that protects us, all right? And that way, we have a much stronger customer experience and much more profitability coming from our digital offerings. Thank you.

The next question comes from Tunde Ogunleye from SBG Securities.

I just wanted to clarify on the new holding co's structure. You mentioned that you are going to be creating a separate lending segment. I wanted to find out if the lending segment is going to be with the core banking, that's in Access Bank Group, or is it going to be with the payment business? Just more clarity on the lending segment. And the second question is on your expansion into the South African market. So you -- in your press release, you stated that you made an initial cash consideration of [ 49% ] and with the aim to increase it to a majority stake in the second tranche. So when is this second tranche expected to be completed? And then the second tranche, is it going to be by cash contribution as well? And then the final question is on your applications in the digital banking space. So you've launched QuickBuck, PayDay Loans and then Access Loan app in the digital banking space. So I wanted to know if you'd be adding more inventions coming to 2021. Yes. That is all my question.

All right. Tunde, let Roosevelt speak to this -- to all of these questions. Roosevelt, do you want to take this?

Yes. Sure. So the payment business is not going to sit within the bank at maturity. So that's a separate aspect of our business. I think whenever we speak in the nature that in one of these, we found out that there's a bit of specialization that exists in each of those businesses. So you could do it online within the bank. But we think the final benefits that we should get from setting up a pure payment business will be lost, if we don't do it in the manner in which we are thinking. So it's the outside of the traditional bank to focus specifically on payment. So that's what that is. On South Africa, it will be a 1-transaction flow. We're not going to break it into 2, the 49%, and then subsequent. We've -- we were advised by the regulators as much we can faster to do it in the manner in which we initially had proposed. So this will be done as one transaction. I think the question you had asked around capital and what happens. So I think in South Africa, yes, there will be a capital demand, it's not significant, nowhere near what you would imagine. And we're going into South Africa again as partnerships with 2 other institutions. We will be the dominant bank in that partnership, controlling, what, from a Tier 1 equity will be north of 80%. Our partners are coming in with Tier 2 capital and with some preference shares as we speak. And the preference shares will be held in USD. I think we've emphasized throughout this call the idea of retaining capital in very strong currencies and ensuring that we don't go into a market 2 or 3 years later. Just because of devaluation, we see that we are shrinking in size and scale. So as a lot of companies, we'll as well be in partnership. Yes, we will front end some Tier 1 capital, not significant. And then our partners who are DFIs, as Herbert had mentioned earlier, and some strategic investors in FI across Africa as well will be working with us in the South African markets. Thank you.

We have no further questions on the audio line. Can I hand back to you for questions from the webcast? While we are waiting for questions from the webcast, can we take another question from the phone line?

Yes, please.

The next question is a follow-up question from Timothy Wambu from Absa.

Just to -- I mean, first of all, I would say, congratulations on this strategy. It is quite ambitious, I would say. It seems some of your peers had ventured to East Africa, to Southern Africa as well and you -- when you track their performances. And this is referring to your Nigerian peers. We've seen it not really grow in those -- as your savings. They've been functional in those markets. So -- but just to start off, I just want to find out, are you willing to tell us what multiples you're paying for? Let's say, BancABC wasn't big, and what you pay for coming on Zambia and maybe the ROEs of those banks, I think that will be helpful, and maybe also what you paid for transactional bank and the ROEs. Then maybe after that, could just give us a sense of the positions in those markets, albeit -- I mean Tier 1, Tier 2, Tier 3 banks? Just to get a sense of -- from a scale point of view, where exactly they sit. So I know that, for instance, that Access Bank Kenya still remains a little bit -- I mean it is a small Tier 3 bank. And so I just want to get a sense of Zambia following the acquisition of Cavmont Bank by Access and then also the position of BancABC as well. My other question will be on strategy in, let's say, because you've spoken about your ambition to scale up. And so let's say, in Kenya, is it going to be a retail-driven strategy? And you mentioned in the presentation that you look into bank corporates. What -- so I would assume this is largely intra-Africa corporates, given a lot of inter-Africa trade. Maybe just a bit on that strategy on, let's say, how you intend to grow your current business. And then just lastly, on your payments business. Is there any possibility that you invested in the payment service banks, that's why I believe -- which I think banks in Nigeria are potentially looking at being a part of.

Okay. Thank you. Several questions asked in one, but I'll try to see if I can answer the different questions. And I think one of the things you were asking about has to do with the relative positioning in the different markets in which we basically done acquisitions. In the course of my presentation, I mentioned to you there are the key hubs. We will not just in hubs. And so we will continue to take whatever actions required, all right, to scale up, required to scale up to the point that is required for us to set the market that we want to basically set. So in Zambia, we've done the first step, which is the acquisition of Cavmont. We think that, that has taken us, shifted us to be a Tier-2-type institutions. Coming from one of the smaller institutions, we continue to look for ways in which we can improve and enhance our acquisition in Zambia. The overall capital of Zambia -- Access Bank Zambia has changed. And I think if you were to look at the top 5 banks or top 7 banks from a capital standpoint already, we are getting there. But we'll do several other things required in Zambia to basically to come to Tier 1 -- to the Tier 1 number. Now we will be a top 5 bank, definitely, in Zambia over the next year. Definitely, you can see that soon obviously. Now with that level, if you begin to understand that the level of imports or trade between South Africa and Zambia is about $5 billion I think, if I recall. And of course, to Mozambique, almost the same, if I recall, maybe a bit less to Zambia. There is significant connectivity -- or in terms of business between those countries. In Mozambique, we've basically taken ourselves again up in that ladder through the combination with BancABC, all right? And that combination hopefully should be consummated immediately -- imminently because most of the things have already been done. If that happens again, we're moving from 1, where we are Tier 3 player to a strong Tier 2 contender in terms of that resume. So definitely, we will be one of the top again, top 10 banks in Mozambique, all right? And based on the capital that we've had from a capital equity, believe me, this will propel us to become one of the top 5. So you can see that in each of these. And by the way, the ROE competition is such that in all of these franchises, you will see a 20% not ROE over the next 3 years. None of them is going to be loss-making from day 1. The rego that we are putting in the combination and the structure and all of that is such that we are making sure that a lot of the problems are dealt with at the very beginning. It is true that we would never finish doing everything. Some of the skeletons may come out after, all right? But I think you should give us a little bit of credit for one institution that have done more combinations than any other institution in the continent today. Now speaking of the payments business, it is important that we establish ourselves firmly, particularly given our growing retail expansion within the country of Nigeria and the continent. Are we going to get a PMB license as anybody? Yes. We will continue to look for the best way to basically optimize value we think with regulatory constraints that we pay, all right? But let's just put it this way. Even from just stressing on what we have, all right, that payment leaves us to be extremely profitable from day 1. Now on the webcast, I see a very interesting question coming out. And that came from Greg Barker of Sustainable Capital. And he spoke to the fact that with respect to the dividend payout ratio, is it 28% for Access compared to 50% for our comparators, i.e., I think 1 or 2 banks he's talking about. And do we think we're going to pay more dividends out? Greg, my simple answer is this. We have a residual dividend policy. Our dividend policy is to achieve 2 things. One, make sure that we can support our expansion, goods and infrastructure requirements properly. And secondly, all right, make sure that our capital adequacy is north of, let's say, 20%, all right? And then, of course, make sure that our dividend yield does not fall below the threshold of 5%. But I've got to tell you something more interesting. The growth we are creating is about creating franchise that will stand beyond us and will ensure that perhaps 3 to 5 years from now, we'll be still as a strong global player whilst maintaining that balance with what needs to be paid to those shareholders who require some cash. So a lot of the money will continue to be retained to support our growth trajectory. In some countries like the U.K., we will not pay any dividend because we are using it as our own capital hedge, if you get the point I'm trying to make, all right? And the whole idea is to make sure that we create a decision, whether it's like Santander or some of the other global players that are in a mess like this, over time while making sure that you have adequate capital to support yourself with increased profitability, obviously. With increased profitability, we may see the need to pay out a bit more dividends. And I think that will happen given what we are seeing with respect to the increased profitability coming from retail and all the things we're doing. But it's not to say that there will be a fair dividend ratio, the dividend -- a fair dividend payout ratio. The idea is to make sure that out of what is considered a strong capital, that we'll take any large part to -- that is required to support that group is done and that dividend payment in terms of cash is residual, but hopefully, we'll be sufficiently comfortable to ensure that, that amount or -- it will continue to grow and because of significant payment in behalf of the retail shareholders. There is no one that fits to the transition to holdco. We have started the process, obviously. There are legal things that need to the accomplished. We expect to go through it in the course of the year. I'm a bit careful with giving you any specific dates because, obviously, there is some fine print and legal things on this. But I think that if we take this year, it should happen sometime in the latter part of this year. I have not said how would Cavmont's -- I think the bank's bottom line. I think Cavmont's basically will -- is value accretive to Access Bank Zambia, and the ROE of the combined entity will be north of 20%. So it will be profitable. But compared to the overall size and our total of returns of 2020 -- but when in terms of 2020, which are just facts, it will not be anything because some of it, except with tiny little components, if you look at the corporate overall size of Access, but compared to Zambia, it's maybe something visible, but nothing in terms of the overall size. Whether the expectations of having the pressure will drive the share price on the local boat, I don't know. All what this pressure is doing is increasing value. We will push value. We will grow the profitability. We will grow the ROE. That's what's important to me. We will continue to measure in terms of scale and scope and global relevance that the institution continues to get it all. And of course, it is market we find as soon as we move on. There is a question that speaks to our group. In industry banking, what are the risks involved? And how are the banks considering mitigating those risks? And how does the bank, let's say, show the cost of -- runs off with its agent? Very tricky question. Given the extension, very, very tricky question. That's why it's also just been moved to holdco because the number of agents is an issue. There are operational risks. But let me put it this way. If you look at the overall contribution to our savings account business, which grew from -- which doubled, actually, in 2020, all right, do the terms amount to nothing compared to what has happened? But like you said, we need to think about culture issues and all of those agents, and so we need to create a separate vehicle, all right, given how the money and what that means in terms from an -- any standpoint and the expectations and their career path, et cetera, et cetera. So that is how we intend to deal with that. So just one overall -- was the one who asked that question. That covered all the questions received on the webcast. And I'll leave it to, again, the telephone lines to see if there's any more questions before we draw today's presentation to a close.

[Operator Instructions] The next question is a follow-up question from Adesoji Solanke from Renaissance Capital.

Herbert, I just wanted to ask in terms of Nigeria, right, and M&A, what -- what's your view in terms of how things play out from a strategic viewpoint? Do you think you could potentially banner the bank? And just also, how are you assessing the responses from your peers to the competitive dynamics in the Nigeria market?

Okay. So let me put it this way. We acquired very significant scale through the combinations we've done. And we are digesting what we're doing. And that remains our focus for now. I think that if you go around the market, there is no institution that understands M&A like we do. People have grown a benefit, which is fine, quite frankly, but understanding M&A is a different skill altogether. But we want to focus on making sure that we have one culture. Some of the tipping issues that come from combinations are resolved. Some of these million issues are resolved. Some of the contract issues are resolved. But it does not mean that it -- it would be a remiss to say that if there was an opportunity that was compelling and that we can have, but we didn't look at it. But the idea for us now is that with this trajectory, we still are forcing down those costs, which we're criticized for. But I think one thing is clear to me in my mind, the market will understand all we are doing, and that all we've been doing is investing for the future. All you need to do is just cast your mind back 8 years, 9 years, 10 years ago. Who would have thought that we are going to be where we are today, all right? So we have a clear strategy because we are building a global franchise. We are investing for the future. And anything that would make us to continue to be strong at home, in Nigeria specifically, and of course, in continent, all right, and increasing the offering prospects from outside, we will look at it because we understand the framework that we put in place, the framework to do it. Now with respect to how our colleagues -- the strategic responses from our colleagues, I think that, quite frankly, we -- from a risk standpoint, the Nigerian banking industry is so much better than it was maybe 10 years ago. But people are playing actually to their strengths. If you don't understand M&A and growth organically and you want to accept it, it does come with this one issue and the brand issues, et cetera, et cetera. But then, there's only so far organic growth can also take you. So people are looking at all of those opportunities and looking at where their strengths lie and looking for how to grow. But I think at the end of the day, what you will see is that, for us, it's not just a competition with Nigerian banks, we have a global market space. The world is changing. The payment environment is changing. You may wake up 1 day and find out that you are talking to the new competitor. And what we need to do is keep our eyes on that larger boat and make sure we're getting there. You will see a lot of Nigerian banks who have the same aspirations, if you like. What we need to -- we need to race against time and all the innovation that we've seen in the market, and we are determined to be ahead of everybody else.

Can I ask -- essentially, for the rest, just one quick follow-up just in terms of what's been going on locally. Because there's this softness of liquidity in the local market, I know this is not an earnings call, but if you can just talk around how you think the low-interest-rate environment could affect, whether it's the profitability of the industry, what sort of responses could banks potentially have to this environment because it's a strained one, clearly. So I'm just going to get your thoughts.

It is. It is. And you saw it as far as the interest income is concerned on our own financials. It drops because, obviously, this government has decided to pursue a low-interest-rate regime. And the thing that, that is difficult to expand leads to some expansion in terms of credit to the real sector and all of that. Is there a merit to this? Yes, there is other question surrounding that question. But the Central Bank, for it to please give -- make sure that it continues to protect itself as it supports its growth in the real sector. Now how would banks respond to it? Obviously, people are looking for where to lend money and what to do, et cetera. We have pursuit a retail growth. And we think that even growing from the transaction banking that we are doing can make up for a lot of that loss which we'd lost. Now you have seen it in the balance sheet. You see it in our P&L. It's not an earnings call, but there's a lot more things you see. Are we going to keep pushing margins on our retail loan? The answer is yes, all right? Is there a room for people to take those loans? The answer is yes. If you also look at costs compared to everybody else, in terms of the crush, in terms of the cost of funds, we have brought it down faster than anybody else. So people have an initial significant advantage overall at the time of the combination. But for us, we've come down very, very significantly while they have little room to achieve. So at the time when people are looking to suffer and profitability will remain reasonably flat; in our own case, it will be moving up, if you get at least one compared to a bank. But it's going to create significant pressure on banks as well in 2021 because of the low-interest rates regime. We think we are on the better side of this given where we're coming from. And to our peers, the combination with D was just fortuitous because I mean how could you -- how could we have known that this was the one we're going to play out, if you like. And so we start to benefit from it. But it is a very competitive and intense period. So people have to look for accretive ways to actually lend to the real sector.

Herbert and team, we have no further questions in the queue. Can I perhaps hand back to you for closing comments?

Okay. Well, all that is left is for me to thank everyone who has been able to come on to this call. It was not an earnings call. Actually, this showed some interest in our institution and we thought the need to also share with you where we're headed. We look forward to the more appropriate earnings call after the end of the -- after our financials are approved. And once again, thank you so much for dialing in. Have a great day.

Thank you very much, sir. Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You may now disconnect your lines.