Ecobank Transnational Incorporated (ETI) Earnings Call Transcript & Summary

Welcome to Ecobank's Full Year Earnings Call. This call is being recorded. [Operator Instructions] This afternoon, I'm joined by our Group CEO, Jeremy Awori; our Chief Financial Officer, Ayo Adepoju; and our Chief Risk Officer, Chinedu Ikwudinma, who will discuss our results and answer your questions. Please note that some of the statements we are making today are forward looking and are based on our best view of the wealth and our businesses as we see them today. For more information on forward-looking statements, please refer to the disclaimer at the back of the slide deck. We will not go live with the presentation. At this time, I would like to turn the call over to Jeremy. Please go ahead.

Thank you, Aldo, and good afternoon, ladies and gentlemen. A very warm welcome, and thank you for joining our call today. I think as well as you are all fairly well aware, Ecobank is a unique and important Pan African franchise that has significant potential to meet the needs of African households and businesses whilst also creating value for shareholders. In addition, the group's vision to contribute to Africa's economic development and financial integration has a significant layer of importance to its purpose. I'm confident that the opportunities are meaningful and that we will meet the expectations of our stakeholders. Before I move on, I would like to specifically thank Ade Ayeyemi, my predecessor, the Board and all Ecobankers for their invaluable contribution to the group's financial performance in 2022. I thought let me start by just giving a quick description on the prevailing macroeconomic environment and the trends that have characterized 2022.  Rising prices of goods and services, mainly driven by the Russia-Ukraine war pose challenges for many African households and businesses. Moreover, inflation left unresolved could be damaging to any economy. Therefore, central banks took decisive decisions and started to increase their benchmark borrowing rates. In alignment with the U.S. Federal Reserve and other Western Nation Central Bank this monetary adjustment added a lay of difficulty for many economic participants. And surprisingly, African currencies depreciated against the dollar as interest rates rose, resulting in an increase in the cost of servicing their debts. In addition, the combination of higher interest rates in developed economies as well as concerns about certain emerging market debt servicing capacities [ world ] leading to investor jitters and precipitating a sell-off of debt and exits from some markets. Consequently, FX liquidity was adversely impacted, making conditions difficult for governments, businesses and households. The spillover of these economic outcomes presented challenges for the group, FX liquidity issues in Nigeria in particular. The debt restructuring exercise in Ghana, hyperinflation in Zimbabwe, monetary tightening in [ UMR ] region to name a few. And mostly, the adverse effects of depreciating currencies to the U.S. dollar, which tends to reduce our reported revenues and earnings when we translate the earnings of our affiliates in local currencies into dollars. This is why we encourage you to pay attention to our performance in constant currencies because it reveals the underlying momentum of our businesses. Coming to our results specifically. Despite these challenges, the strength of our diversified business model, underlying growth momentum and efficiency contributed to the profit before tax increasing to $540 million, translating into earnings per share growth of 10% and delivering a record return on shareholder equity of 21.1%. As a result, the Board has recommended a dividend of [ $21.01 ]. We exercised cost discipline in how we manage the business, helping to further improve the cost/income ratio to 56.4%. Our deposit franchise remained stable with an increase in CASA deposits lifting overall deposit growth 6% to almost $21 billion. Lending grew strongly by 13% in dollar terms, especially within our corporate banking business. We're pleased with improvements in the credit quality, reflecting an NPL ratio of 5.2%. However, we took an impairment hit in Ghana relating to the Government of Ghana restructuring exercise. Ayo will provide more details in his presentation. And despite the hit to our capital from foreign currency translations, our capital levels are above regulatory minimums. Now just coming to my preliminary thoughts as I take over the role. I started my role as Group CEO on the 1st of March 2023, having taken over from Ade Ayeyemi. The former Group CEO. Before that, I spent a few weeks in transition shadowing and having discussions with Ade and spent some time traveling and visited 6 of our country businesses to meet key stakeholders, customers, colleagues, our boards in those markets and importantly, our regulators. This was imperative to get a more full understanding of the challenges our affiliates face and, more importantly, the opportunities we can harvest in the future. From these engagements, one thing became clear to me. That a lot has been achieved under the road map to leadership and execution momentum strategies of Ade and team. We still have a few lingering problems to solve, and further opportunities exist to improve our performance strongly in the future. However, to fully capture this potential, we must move with focus and urgency to fix the problems that will enable the bank to fully maximize value beyond what we have done to date. The first point I want to talk about really revolves around strategic clarity. Further refining our strategic clarity will be a core focus, and we are working on creating a strategic road map that will drive growth, transformation and returns. We plan to share a strategy refresh with all of you in the second half of this year. As we do this critical piece of work with the team, we will also focus on executing programs that will focus on driving up revenues, managing costs and profits in the immediate term to generate investment pace for the medium to long term.  Some of the areas we will focus as we do so, include focusing on driving up our productivity through using cross-functional squads in areas where we feel we have the biggest opportunities. We will have more intense focus on balance sheet management, growth, efficiency and optimization with emphasis on growing liabilities and CASA liabilities, in particular, which will fund future asset growth as we drive transactional revenues. We'll be more assertive on the sales front, cross-selling more of our products to our customers and getting more people to focus on sales. Scale is important, and we need to grow our total number of customers and in particular, the total number of active customers further. We will drive further digitization and automation of the labor-intensive manual processes to free up our Ecobankers time to serve customers better and more efficiently. Lastly, entering into the right strategic partnerships that are critical to drive future growth will be key. And given our API infrastructure, we are well placed to do this.  Ladies and gentlemen, we recognize we will have to make trade-offs to allow focus on the biggest, most valuable opportunities. We will be transparent with our trade-offs and highlight the things we will do and the things we will not do. And then with discipline, execute our agendas, tracking progress against milestones and KPIs for which we will keep you updated. Ladies and gentlemen, customer centricity will be core to what we do. I know many companies pay lip service to this age old adage. These 3 words will characterize the customer's journey with us. Essentially, we will be easier, faster and better as we serve them. We will take our customer experience even more seriously and build off what has done before and align our objectives and rewards to drive the right behaviors. In order to drive exceptional customer experiences across the continent, we will make the necessary investments in our processes, platforms and technology, both to provide the functionality customers want but also to simplify the experience with intuitive services. We will use data analytics to better provide financial services to our customers as well as manage risk more effectively. We will reengineer our processes, especially the top 20% of processes that typically drive 70% to 80% of our transactions and cost.  Ultimately, we want to offer them a much more personal, relevant and rewarding experience than ever before, and simplicity will be at the core of our customer service delivery agenda. It's still early in my role, and I don't pretend to have all the answers. But when I think about the businesses and where we should prioritize. I think it's essential to understand our business model, how it makes money and grows. I'm engaging with the senior teams in each of the businesses and markets to determine what more it will take for us to win in the marketplace. For instance, how has the marketplace changed and where are the growth opportunities? Do we have the right teams in place? Do we have the right sales capabilities? Do we have supportive systems and processes, products that get the job done for clients? And do we have the right culture of accountability and customer service? To name but a few. These will need a systematic approach to address these issues, which we will adopt as we execute. The opportunities for accelerated growth in our Consumer and Commercial Banking businesses are significant within the sheer quantum of underbanked retail customers and the increasing number of SMEs. Small businesses in Africa need a bank that listens, understands their financial needs and build solutions for them, likewise, consumers. In many of our markets, the revenue pools are growing faster in the retail and SME segments, and we should not miss out on these opportunities to grow. We will invest to grow safely. To be clear, by giving more attention to our Consumer and Commercial Banking businesses does not mean that we'll be neglecting our core corporate and investment banking business. We still see significant opportunities for growth, and we'll continue to invest appropriately, especially in our trade fixed income currencies and commodities capabilities. But importantly, there's room for us to further optimize the balance sheet of CIP and particularly in the risk-weighted asset optimization as well as doubling down on our recoveries. We will focus on getting better returns from the deployment of our balance sheet. What we will also do more of is to ensure that we deliver to our clients the synergistic power of our 3 businesses as are collect to enable us to capture increased revenue opportunities across ecosystems. This is critical. We need to bank our customers end-to-end to bank the corporate, suppliers, distributors and employees and to capture their trade and payment flows. We need to do this to stem any revenue leakages and drive up revenues per client. To set us up for success, we will incentivize appropriately to ensure delivery, not in a manner that will confer any inappropriate sales practices, but one that exposes a value-based approach. Making this work will require investments in data and analytics tools and capabilities, which will, in turn, help us drive revenue growth and lower unit costs. We see exciting opportunities to take our payments business to the next level. Our existing platforms and network are a key competitive advantage on the continent. Our technology and digitization is driving the interconnectedness of Africa, small- and medium-sized companies as they grow [ seed ] customers across borders. African governments are also seeing the benefits of interconnectedness in transforming their economies and the livelihoods of their citizens. It is unsurprising that governments are championing initiatives such as the African Continental Free Trade area and Pan African payments and settlement systems to increase business activity across African households and businesses. Ecobank is in a sweet spot to capture these trade payment flows and to be an essential enabler for Africa's economic growth. Additionally, we've built competitive advantage through our significant investments in our payment infrastructure. For example, our payment processing which enables us to undertake cross-border payments in real time. It also allows us to build enduring partnerships that will help us scale revenues and reduce unit costs.  As we look at our affiliates across the continent, we recognize that we have some businesses that are not performing to their potential with high cost income ratios or a level of returns where the ROE is not greater than their COE or where we are subscale in the market. We will work with these affiliates to develop and implement strategic competitive models that will improve their returns and their contribution in form of dividends to our holding company and shareholders. I think we are well aware of our Nigerian business, which I'm sure we will talk about during the call, which is obviously a complex market and large market with a number of legacy issues, but we still see significant future potential. It holds approximately 30% of the total capital invested, but right now is delivering low single-digit returns. I've visited our businesses there twice already, and the management team are committed and understand the scale of work and urgency it requires, and we will work closely with them to improve their performance. We have some other businesses, several of which are in our CESA region that we are rethinking our participation model and believe that this will help improve their business competitiveness and overall financial performance. We're unique in our pan-African DNA and here in lies attention between our commitment to Africa and shareholders' returns. For this reason, a centralized approach and effective participation model will be fundamental in enabling us to generate the sum of the part returns that are more significant than the whole. And to that end, we will be flexible, adaptable and agile in our execution to ensure that we achieve success. On the brand and marketing front, we will need to start making another investments, mainly in our brand marketing and advertising to drive greater connection and relevant in the hearts and minds of our customers, especially as we accelerate performance in our consumer and commercial banking businesses. As part of the ongoing deep dives into these businesses, I've charged management teams to find areas where we can drive greater efficiencies and make savings in order to unlock funds to support these investments. We will prioritize and pace our investments and expenditure to improve customer experience across our franchise, while still delivering in the short term. I believe we can build one of the strongest brand franchises across the continent. As we go about implementing our strategy, we'll incorporate a much heightened sense of discipline, building off what we've done. Discipline is essential to the way we run our business, and we will exercise discipline around our different types of risk, especially credit risk, liquidity risk, market risk, operational risk and regulatory risk. We will similarly have a structured approach to managing our expense base and infrastructure investments. As a bank, our stakeholders and especially our regulators, depositors and shareholders expect us to be prudent risk management managers and our customers give us their deposits for this reason. But we must not take the confidence that they repose on us for granted, and we will conduct our business with care. Additionally, we will focus on our expense structure where, I believe, the opportunities to contain cost and efficiency saves, and we will redeploy resources to our opportunities to profitably grow market share and revenues. In driving this effort, data and analytics will serve us well, and we will invest in these areas. It will help us to make better decisions based on objective data rather than anecdotal information. We will invest, as I say, significantly, in particular in our credit risk scoring capabilities, which will be essential to safely grow our consumer and commercial businesses. We will also prioritize our talent and corporate culture. Banking is a people business. That's why 43% of our operating costs are staff costs. Our success depends wholly on the quality and honesty and effort of our people. Therefore, attracting talent, training and retaining them is pivot table to delivering our planned strategy, and we are working closely to make sure the businesses have the right people, tools and resources to serve the marketplace daily and win. There is fierce competition out there and winning hinges on having the collective talent of a purposeful and engaged workforce.  On the culture side, a lot has already been done on culture and values, but there is room to build off great work that was done by my predecessor and his team. We will preserve some essential aspects of our culture. However, we need to do certain things differently. They need to do certain things differently is inevitable for the transformation we seek to achieve in some of our businesses and regions. We will provide an open performance-oriented culture that enables talent to thrive, better decision-making and teamwork. Our actions and words must reflect in the culture that we shall buy into. And our senior executives across our businesses and regions will own our culture and lead by example. We will not tolerate bureaucracy in CDS politics within the culture. It hurts innovation affects staff morale and eventually drives away good talent. As I come towards the end, sustainability and community engagement is going to be essential. We must be relevant in society and in the communities that we serve. Social good today has benefits tomorrow for the group, focusing on initiatives that advance financial and digital intent, gender parity, female education, supporting local municipalities and doing our fair share in environmental, social and governance will serve Ecobank well in the future. We'll embed into the planned strategic sustainability and community engagement initiatives. Ultimately, we aim to be a force for good in the communities that we serve. It has value and cements goodwill. So to wrap up, I will borrow a statement from Tom Murphy, former Chairman and CEO of Capital Cities and long-term Director of Berkshire Hathaway. "The goal is not to have the longest train but to arrive at the station first using the least fuel." Simply put, we will still across the group, the importance of capital allocation that is wisely using the corporate dollars that have been allocated to ourselves by our shareholders. So we will be discerning about what we do and what we don't. We will keep it simple, but no simpler, doing the basics exceptionally well time after time and build off that. The strategic approach will provide the lens, which we focus our business, products and geography. [ if it's ] survival group rests on how well we do this. We ultimately plan to host an Investor Day and strategy session later in the second half of the year, and we will communicate further details once those plans are finalized. I'm looking forward to further engagement with yourselves. Thank you very much for your attention.

Yes. Thank you, Jeremy, and good afternoon or good evening to you all, depending on your time zone. I will walk you through our financial results, providing further insight into the drivers behind our earnings. So please turn to Slide #10. This slide shows the key performance indicators. As Jeremy noted, the operating environment in 2022 was a challenging one. However, the benefit of our diversified business model, underlying growth momentum and discipline in cost and credit loss management served the company well. As a result, our performance was overall solid, a record return on tangible equity of 21.1% and earnings per share growth of 10% in U.S. dollar terms. We continue to deliver efficiency gains with our cost-to-income ratio improving to 56.4%, the lowest in a decade. In addition, our cost-to-asset ratio further improved to 3.7%, reflecting good cost management related to the balance sheet size. Another key highlight I'd like to point out is our noninterest revenue ratio of 45.6%, reflecting a revenue base comprising less volatile and stable recurring revenues, such as fees from payments, cash management and trade finance. Please turn to the next slide. This shows a summary of the income statement. Our major African currencies depreciated quite significantly in 2022 against the U.S. dollars. That is why we encourage our users of the financials to pay attention to the constant currency growth since it depicted on the line part of the franchise. Our profit before tax grew by 13%, but excluding the effect of foreign currency translation, pretax profit increased by 52%. Net revenues were up 6% in nominal terms or 26% in constant currency. With steady revenue growth and continued cost saves, our pre-provision pretax operating profit rose by 12% or 40% in constant currency, reflecting the size of the group's positive operating leverage. Let me touch on a few essential items that impacted our endings. First, we released $126 million of $206 million impairment previously under allocated to resolution vehicle. The decision to write back this expected credit losses on the income statement was based on evaluation of the loan collateral performed by an independent third-party valuer and the subsequent payments assessment. This resulted in an on assigned and unallocated impairment of $126 million, which was therefore, released by IFRS provision rules. Secondly, we took a $17 million to our earnings from the government of Ghana's debt audience. As you already know, due to the country's debt sustainability challenges and as part of the [ apartment ] needed to secure an IMF deal to support its economy, Ghana had to restructure its vast public debt comprising local and foreign debt. I'll provide further details in the next slide. It is also important to note that about $10 million of interest income, that's interest accrued, not as you see was not recognized as revenue on euro bonds in 2022 due to the suspension of coupon payments announced by the government in December. Thirdly, as part of the agreement with orders of the $400 million convertible debt, which was secured in 2017, if the orders were not to convert, then repayment should include a 10% premium on top of the principal amount.  Finally, hyperinflation in Zimbabwe and also in South Sudan resulted in net monetary loss of about $34 million. And the finish of this slide, let me briefly touch on regional performance. A key observation is [ LD ] underlying fundamentals we saw that across the board. At constant currency basis, revenues and profit grew at double digits, except in our region due to the Ghana impairments. Now let's turn to the next slide, Slide #12. This slide shows a summary of the Ghana debt portfolio. I know you're all waiting for insight into how the group dealt with the Government of Ghana's debt restructuring exercise, which included swapping existing eligible local bonds for the new government of Ghana bonds and also its Euro bond. For the local leg of the debt program, the government provided information and it's extreme memorandum to support the exercise after having exhaustive discussions with many stakeholders, including the Bankers Association. Additionally, in assessing the impairment impact on these bonds, we were duly guided by International Financial Report and Standards and also the guidance of the Institute of Chartered Accountants of Ghana that also ensure [ we're focusing ] in the application of the standard across board. However, on the Euro bonds, we have to base our impairment assessment, unfortunately, on external benchmark data, including unofficial pronouncements from the government authorities. Therefore, our impairment on the Eurobond reflect the best estimate of all the available information as at the time of closing the books.  Overall, we took impairment charges of $17 million across our exposures to the government of Ghana local bonds and the Eurobonds. Our exposure to local bonds was about $69 million of face value with a balance sheet carrying value of about $628 million. On this exposure, we took an impairment charge of about $96 million in the 2022 results. The impact of the debt exchange program as performance was adverse in 2022. As expected, it would impact the ability of the affiliate to pay diverse [ auto ] for 2022 financial year. Additionally, its outlook for net interest income will be slightly affected in 2023, given that these new bonds have a lower coupon than the previous one. That said, the medium long-term fundamentals of the economy of Ghana remains stable, and we are optimistic in the government and citizens to navigate well through this economic hardship, which we view as short term. Unlocking the IMF $3 billion financing as part of efforts to stabilize the economy would be very crucial. The Eurobonds, have had an exposure of about $5 million, $6 million of face value with a current value of $425 million, on which we have taken impairment charges of $5 million as of December 2022. As we advance, we wait to receive official guidance from authorities as they look to engage with creditors and we'll revise our impairment assessment accordingly on the basis of latest available information as we go into the future. We continue to stabilize interest income on these new bonds pending the conclusion of the debt restructuring efforts. Turning to Slide 13 on net interest income. The NII was up 7% in nominal terms or 29% at constant currency, propelled by higher interest rates and also higher earning asset volumes. Rates [indiscernible] catalyst for margins as the net interest margin increased by circa 20 basis points from 4.7% in 2021 to 4.9% in 2022.  Turning to the next slide, #14, on noninterest revenue. Our noninterest revenue increased by 4% in nominal terms or 24% in constant currency. As I noted earlier, the noninterest revenue ratio of 45.6% reflects a revenue base that is stable and less volatile. In addition, this year's noninterest revenue included circa $20 million of one-off gain of Ecobank Nigeria from the sale of its previous head office. We are pleased with customer activities across payments, trade and client-driven foreign currency sales. As a result, net fees and commission income were up 4% and net trading income jumped by 5%. Turning to Slide #4 on payments. Ecobank's solid brand, technology, processing capabilities, strong partnerships and geographical spread continue to sell us well. More of our customers are using our digital chaos for payment, especially small businesses. So we continue to see healthy growth in our payment business with revenues climbing 12% to $234 million. As Jeremy noted in his earlier remarks, we'll continue to focus intensely on our payment business as it holds massive opportunities for accelerated growth. Moving on to Slide #16. This offers a snapshot of our growth on our digital and physical channels. The number of our customers that engage with us digitally continues to increase and also the reason for the increased volumes that we've seen across most of our channels. I'll turn to Slide #17. On expenses. Here, we saw that operating expenses increased by 2% in nominal expense or 18% in constant currency, about $1.1 billion, partly driven by the general increase in prices and services across our market. Despite rising costs, the cost-to-income ratio improved to 56.4%, the lowest in a decade and which also represents an improvement of 250 basis points over prior year. Also, the cost of average total assets of 3.7% was an improvement over 21, demonstrating further enhancements we continue to make around the bank's cost base.  Turning to Slide #18 on customer deposits. It is important to note that the group's deposit base is strong, stable and diversified across businesses. In 2020, we grew deposits by 6% in nominal terms or 19% in constant currency to $21 billion, surpassing the $20 billion mark for the very first time. More importantly, our CASA deposits mainly accounted for the increase that we saw in our deposit, jumping by 6% to $17 billion. That's a growth of $1 billion. And our CASA represents about 82% of our total customer deposits. The deposit growth was robust in our commercial banking business, West Mall Business and [indiscernible] deposits with us and benefit from our payment solutions, trade services and omnichannel options. As part of efforts to capture quick wins in the current environment, we are placing urgent emphasis on growing low-cost deposits. Turning to Slide 19 on loans. Because of the deepening customer relationships, we saw increased lending activity across our businesses and regions, especially in the fourth quarter. Particularly encouraging is the growth we are starting to see in our commercial banking business, where we have historically stayed cautious. We create origination as we walk through remediation of nonperforming loans, while innovating to put in place the proper risk management tools and culture to lend SME market. Moving to the next slide on our lines of businesses. The key takeaway is that we navigated a challenging operating environment well and posted solid growth. The pre-provision and pretax operating profits were strong, jumping $50 million in our commercial business, $40 million in our consumer business and $30 million in our Corporate and Investment Banking business. That showed we continue to grow revenues and also manage costs well.  On the profit side, our commercial banking business grew profit by 10% and consumer back by 50%. However, profit decline in our Corporate and Investment Banking business, primarily due to the impairment charges we took in Ghana. Moving to the next slide on our geographic regions. The rising rate environment, solid customer activity in FICC, payments and trade underpin substantial underlying revenue earnings growth in each region and profitability in terms of returns on equity improved across the board. [ Juramoir ] delivered a return on equity of 21.6% compared to 20.3% in the previous year, primarily driven by cost savings and also lower impairments. And before West Africa, return on equity of 14.2% decline from 25.8% in 2021, primarily due to Ghana's impairment charges. It would have been closer to 29%, if not for the debt impairment. Despite the drag of hyperinflation in Zimbabwe and South Sudan, CESA sustained its return on equity at 22.3%, with solid growth in pre-provision and pretax operating profit, partially offset by an increase in impairment. Finally, Nigeria return on equity of 3.8% was an increase of our prior year but well build expectations and delayed cost of equity. Suffice to say that the operating environment was challenging, characterized by lower oil output, higher inflation and FX liquidity challenges. That being said, we are cognizant that getting get deliver returns above cost of capital, we significantly improve the fortunes of the group. But as Jeremy noted, once we complete the strategic road map exercise, we'll share better insight into how we plan to unleash the power of our Managerial business. Moving on to Page 22 on capital. Here, we have provided estimated capital ratios as of 31st December 2022. They are only estimates because we are yet to submit to a regulator for approval, which is due by end of April. Our [ CET1 ]ratio, Tier 1 ratio and total capital adequacy ratio were 9.7%, 10.3% and 14.4% compared with 10.7%, 10.7% and 14.8% over a year ago. The slight decrease in our capital ratio was predominantly driven by the adverse effect of foreign currency translation references on our Tier 1 capital, the numerator, which is carried in local currencies, partially offset by local currency assets within the risk-weighted assets, the RWA in the denominator. As a result, the net impact of FCCR on regulatory capital is relatively diminished. The RWAs were $15.1 billion as of the end of 2022, slightly down compared to RWAs of $15.3 billion a year ago. One area we will focus more on is risk-weighted asset management to strengthen our balance sheet further and generate superior risk-adjusted returns.  Finally, moving on to Slide 24 and 25 on our guidance. We are pleased with our performance against guidance given the headwinds we faced in 2022. We did well on our metrics, particularly on the balance sheet, where growth in loans and deposits came in strongly above expectations. In addition, revenues increased from higher rates and volumes and continued expense discipline drove efficiency gains, allowing us to register the cost-to-income ratio surpassing our target range. Cost of risk of 9 basis points reflect the $126 million of impairment write-backs from the resolution vehicles. As a result of the write-back, we lost some ground in terms of the coverage ratio and posted 86.5% coverage ratio, which is below a target of 100%. The progress we continue to make on asset quality led to an NPL ratio of 5.2%, which was at the lower end of the target range and also since 2015. Moving to Slide 25, which talks to the guidance for 2023. We expect operating conditions to be challenging as inflation rates and rates climb. We lent balance sheet growth to remain related on account of cars depreciation with possibilities to enjoy episodic opportunities. Revenue growth is expected to be low single digits in U.S. dollar terms, given currency depreciation headwinds, non-repeat offsetting one-off revenue items in 2022. And the net interest income impact on our Ghana business from the debt exchange, including the sterilization of interest income on the Ghana Eurobond portfolio. We expect the cost-to-income ratio to align with 2022 with planned short-term opportunity wins funded by cost savings that we will on at as we aggressively pursue our cost management agenda. Investing for the future, we keep the ratio close out to the 58% territory. We expect the cost of risk to normalize within 125 to 13 basis points and the cover ratios end up between 90% and 95%. Thank you, ladies and gentlemen. And with that, I hand over to Chinedu to walk us through the group's asset quality metrics and related drivers.

Thank you very much, Ayo, and thank you to the CEO, and thank you for our partners for joining today's call. I think [ GC ] have covered a large component of the indices that we're talking to, but I'm trying to give more texture to that commentary. So I'll be speaking through the asset quality, liquidity, loan portfolio and the IFRS [ 19 ] indices. So if you look at the slide here, I think beyond does the indices is there, I think if you look at the trend, of those graphs. So you look at the deposits within the institution, which grew by about 5.6%. In dollar terms and actually in constant currency terms, that is 19%. And beyond that, if you consider that across the past 3 years from 2019 to 2022, you had COVID-19 impact, you had the Russian-Ukraine conflict and the impacts on our market. But within that period, deposits grew by almost 30%. It speaks to the fact that the customer community within our market considers our destination for safety in stress periods and this has continued to be indicated in our numbers, and we expect to sustain that are actually advanced from that going to the future. So as I had indicated, we closed the year with deposit of $20.8 billion, which reflects this tempo, as I indicated. And the quality of those deposits continues to be very strong. So demand component of that to the overall continues to trend in the right direction. So 65.2%, up from 3.9% in the previous year. Again, we're indicating the fact that we are in typical destination in stress times and normal times for our customers, reflecting the depth of our business in the markets in which we operate.  The loan-to-deposit ratio trended up for the first time in 3 years since 2020. Of course, we closed because of Covid period, the [ event ] of likely. But in the course of 2022, there was a bit more of intent, and that is reflected in the number there of 5.4%. However, having said that, it reflects again the depth of resources we have in terms of our capacity to grow our loan book. It also highlights the fact that we have been undertaking this in a conservative way, looking to add loans to our books, which are safe and will progress to our portfolio without the deterioration we have seen about 7, 6 years ago. Again, the quality and the coverage of our loan book by noninterest bearing deposits fixed to the capacity we have in our balance sheet to continue to generate strong net income across the board. Again, that's more than 30%, which has remained above 100% since 2020. If we go to Slide 28, which speaks to some of the key credit indices. As the CFO has mentioned to you, we achieved the best level of NPL ratio of 5.2% that was seen for almost a decade. This reflects the consistent work that has been done across the past several years to improve our portfolio quality to defend against deterioration despite the fact that we've gone through 1 in a 100-year event in terms of COVID-19, 1in a 80 year like the Russia-Ukraine conflict, that's the evolving impact on our markets. We've managed to defend and hold our portfolio in good quality. We expect that to continue. And that again speaks to our capacity going to the future. If you look at the level of coverage, we closed that reflects to some extent what I highlighted where we released some provisions to address the Ghana impairment scenario. But this, again, this figure is well within the best of our peers across the market that we're building. And we expect, as the guidance I indicated to you that we shall return this in the 90% range in due course. So again, that's a metric that you've seen us manage actively across time. If you look at the trend from 2019, that has been progressively in the positive directly in terms of the level of over that we have. If you regard cost of risk, this actually the best we've had. That impact, of course, it reflects, to some extent, ed release of provisions from the central [indiscernible]. I think the hit got in to highlight what [ kind ] of setup was that these are provisions we took at the center at an inoculation activity considering the portfolio or the markets that we get in that's very anticipatory as a defensive move. And as indicated, is exactly what we've been able to do with this is why we have been taking those central pralines. And I think that highlights there. So our cost of risk at 0.09%. If you look at the guidance that has been the King to the future, we think this will come in at about 1.2% to 1.5%, which is consistent with the trend that we think is reasonable given the markets that we're dealing and the market conditions that we see ahead of us. Again, our portfolio, if we go to Slide #29, we diversified. You have a good mix of government, cybers, manufacturing, retail, within certain markets, the concentrations in different buckets moving higher here and better than that spectates of our business in terms of its classification and the benefit we get from that. Again, if you look at it in terms of region, [ Yung ] region, which became dominant within the past 5 years as the main market for our loans continues to show that flavor. So 9% of our loans is in [ amori ] Nigeria is 22% and CASA at 17% , that profile, we expect to be sustained going into the future. We do anticipate that if there were a devaluation of the Nigerian Naira the course of this year, you may find that the component of the Nigerian portfolio for the group may actually go towards 20% because by that you would say the fall scenario because an area has been convert held at certain levels, we found that it's one of the better performing currencies in terms of devaluation of that to some extent in terms of this waiting. By business, as Ayo had shared, the CIB business continues to have a substantial portion of our loan book, we anticipate, as we roll out, as [ Jisha ] mentioned to you in the context of the future growth of the franchise that we will see a somewhat half proportion from commercial banks and consumer banks or during the near term, we do anticipate because of the weight of CIB, it will remain the dominant component of our loan book. Note also that some of the growth [indiscernible] commercial Bank is actually in transaction banking. It is a non-lending activity. So that has, again, is important to bear in mind. In terms of the currency of our loan book likely is safe. This captures the results from [ UN Mo and SEBAC ]. Those are increasing important markets for us. And you again note that because those conferences in the context of devaluation last year went up about 6% compared to others, let's say, the Ghanaina CD and Co. So you've seen the wait kind of become accentuated because the currencies are linked to the euro. So that mix, we anticipate will be sustained. U.S. 7%. Again, that reflects some of the sold our Stage 3 names, which are kind of a [ coal ] long term, which were restructured and mostly for oil line gas names out of Nigeria. So we expect invested in component to be sticky in the near term and resolved and to lower figures in the future. Next slide. If you go to Slide 30, we just highlighted me basically the movement in terms of TDI, Stage 2 C3 in IFRS 9 staging parameters. So you've seen the stone go from $8.5 billion to $9.7 billion, an increase, as I said, reflects the increasing momentum of origination of good quality loans. Within that mix, of course, you have some of these go loans will liquidate during the year. So you had a reduction of $3.9 billion and an additional EUR 5.4 billion to bring us to that level. If you look at Stage 2 loans. Again, that was a marginal increase from 1.043 to 1.74%. Again, this is a net impact of incoming and outgoing in there. And I think the thing to highlight here is that for the first time, in several years, we were able to bring the combination of 2 and stage 3 loans to less than 15% of our loan portfolio. This has been above that level for a while. That's actually a period that were almost 20%. That trend we expect to continue to the future as we net more and more better quality loans going into the future. If you look at the stage 3 indices, again, we were able to bring that down from $69 million to $599 million. It's important to highlight that part of the reduction we write-offs of obligations, which have been fully provision in our books. It's important to highlight the write-off [ denomin ] abandonment, and I will continue to pursue those state fee loans, so we've written off loans for collection, and we have a very good track record in terms of this. with impact on our P&L going into the future. I think those are the key parameters, I would like to share with you with this, I'll hand over to [ Atu ] hand all the sit.

[Operator Instructions]

[indiscernible] Thank you very much, Art. Good day, and on and congratulations, on. So Jeremy on your internet as we can in the best. Thank you. So I have a couple of questions. The first is more a follow-up question on Ghana. Just want to understand how -- I guess, it's still kind of LNBs still trying to understand how you are treating other credit exposures from Canada related to the [ sobering ]. So outside the Eurobond and the local bonds. And I want to understand if those exposures, interest payment is currently being made. And so that's First question. Secondly, still kind of linked to Ghana, trying to understand how you expect, I guess, the ROE outlook to evolve going forward? So I think Ghana is one of the more historical use with the fab, highly far the business that yielded very high, high yields. So how do you see that going forward? And I guess how you model medium-term expectations on that? Then thirdly, this is on Nigeria. So for you, we still may be LDs as well. But as you have a limit the overall business. But I want to understand what kind of levers do you think you would need to move to improve profitability in Nigeria? And so was trying to also understand how much of the rent challenge is more environmental regulatory versus Ecobank specific limitations. Those are my questions.

Okay. I think thank you, , for those questions. I'll just make some general comments, and then I'll ask a to speak to the Ghana matters that you raised. I mean ultimately, for us, Ghana still remains a very important business for us where it's got significant size and scale and our commitment remains, and we really believe that in the medium to long term, it will come back once these matters wash through, depending on the actions of the government, why I mentioned earlier about diversifying out our business, it gives us that kind of cover and gives us alternate revenue streams that we believe will continue to come. So continuing to grow in scale in terms of our number of customers, our fee income is going to be important as we do so, and we see we have further opportunities. Payments continues to evolve, give us more fee opportunities and to continue to drive through returns, whether the returns on equity and/or our overall revenues per client. But let me stop and just give the mic to speak more specifically about the questions on Ghana and I'll come back and make comments on Nigeria.

Yes. Thank you, Jeremy. So I'll start off with the ROE outlook. I think if you look at the historical trend of our Ghana business, it's one of the best-performing subsidiary that we have in the group return on equity have been an average of about 25% plus over the last 3 to 5 years, of course, excluding 2022. Our broad expectation is there would be an impact of this debt on the margin because basically, you're replacing bonds have higher coupons with bonds that have lower coupons. So there will be an impact on margin. And also the fact that we've started suspending the coupon on the Eurobond portfolio itself as well. So all of this would impact the margin. We expect the volumes of business to also be affected. So it's just a 1 impact on the margin and also the volumes. But overall, we still believe that the business for 2023 should be able to generate an ROE that is closed up to the 20% mark, meaning that what it was doing before about 26%, 27% because of all of this impact. We're recently expecting that the ROE for Ghana should be around that 20% mark. But of course, because we are an established player in the market. We've got market, decent market share. Most of the flight to safety that we're seeing in the Ghana market is actually to our benefit. We're seeing deposits also growing because phones are moving from the small tier banks to Ecobank being the biggest bank in Ghana. So our situation is quite different from the rest of the park. Our capital ratios continue to be above regulatory minimum. There is no plan or intention to inject any capital into Ghana because we don't need it. And also because the capacity of the franchise that generates returns through the cycle is also out there. In terms of the second question of how we dealt with the credit exposures outside of the Eurobond, don't forget, of course, we assess all of our loan book through the impairment model some of the government entities, they have independent cash flows on their own. So we're able to assess impairment on that basis. So we've taken the right amount of the impairment on those exposures for 2022. But of course, as market conditions change, we will continue to revisit that. But based on information available to us as of December, we've done that assessment, and that has been adequately booked in our 2022 result. I think the last question is on Nigeria, so before Jeremy talks on the Nigeria question, Chinedu would have some insight on the Ghana situation as well.

Well, thank you very much. I think your question also is how we are addressing the other exposures that may be connected in its own way to the government of Ghana. In addition to what I had said, we have looked through our portfolio. And typically, in our engagements, particularly with [ stage ] on enterprises in Ghana, we have the defenders of engagement. So some of those engagements involve covering our exposures with heavies or taxes. I'll give you an example, if we are lending to the abrasome of these covered by payments at the ports. So if you're lending to the airport authority, these are covered by fees collected by that entity directly, which are not in combined by the government in any form. So for some of those kinds of names, we have them, of course, under watch, and we are watching that. But we haven't seen any deterioration in the capacity to meet obligations and that's ongoing. Of course, there are some names typically small individuals and stuff where you may have given a facility against some of these bonds and which are now reissued and go. For those names, as you have said, we have assessed those and where we believe there is a need to restate those names or to take impairments we have done that, and that's an ongoing exercise.

And maybe just to comment on Nigeria. Like I said earlier, I mean this is a market of big opportunities as well as some historic challenges. I think when we look at the macro level, some of the challenges we faced are the high CRR levels, which obviously it's into our margins. We've had some challenges within the market around FX liquidity and just the whole run-up to just market confidence whenever the elections people are always looking. And then when you compound that with high interest rates in other markets that affect it. I think the way we're kind of looking at this is that we almost have 2 businesses in one. We have the legacy business. We know we have some more challenged NPLs, and that's obviously affecting our yields. And I think in general, within the loan book, our NII is arguably much lower than it should be. So there will be a focus around what we can do to really reposition that and to improve the NII that we have there. I think the second thing that we also recognize is that we have higher cost of deposits than many of the other players. So I think we've already started, in fact, just looking at the cost of these deposits and also some deposit campaigns that will drive up our CASA numbers. Our CASA numbers typically in Nigeria are running in the sort of early 60s versus some of our peers who are probably closer to the 80s. And of course, that in its own right, should be able to help. And we've made some investments in some of our systems that we'll be rolling out shortly that will hopefully help us to be able to open more accounts at scale as well as to drive up utilization. I think in the past, we've also had some level of dormancy or inactivity, and we've got specific actions that are actually getting customers to start using the Ecobank accounts with us. And we're starting to see some early success there, and that will drive not just balances, but fee income as we move forward. I think the other area is really around the fee income proportions. I think we need to drive that further. And like I mentioned, I think the payments business, Nigeria is probably one of the much more significant markets. And again, investments we are making to be ultracompetitive in this space will help. I think on the cost side, we've got some quite advanced plans that we can take an action to just manage our expense base that will free up investments around -- Into areas that we see future growth. And in some areas, as you say, we are working with our regulators around how to optimize this. And then all the other actions that I mentioned really around being quite disciplined where we have the flexibility around looking at our risk-weighted assets, are we getting sufficient returns are we getting sufficient share of wallet from those customers to be able to drive it. So it's a combination of those actions. It's a combination of growing our retail and SME businesses, and that's not so much just lending, but it's also as a source of liabilities and fee income. And then those other actions of just being more efficient with the way we use our balance sheet and our P&L, we believe we can start making some inroads and get our returns back to where we would expect them to be. And the reason to focus here is that this is arguably a huge, single big opportunity that if we get right, we'll really uplift the fortunes of the group in and of its own rate.

And your next question will come from [indiscernible].

So very quickly, I have a few questions. The first...

Can you tell us your organization, where you're coming from, please?

My name is [ Bob from Karsten ]. Ask some questions. The first is on the loan growth side for 2023. Checking the [ Athabascan ] 2, it's set to that 10%. But the barge for 23 is within 0 to 2% reach. So is the bank less optimistic about loan groups going into the future. Secondly, particularly a while to turn around in a business, do you want to speak to some initiatives that have been put in place in the past, I guess success stories above.  And I think you've spoken a bit to the outlook going forward. If I want to share more light on that. And then the next question, you spoke about some businesses that are not performing -- are we likely to see divestments anytime soon? And then the last 2 questions is on Ghana. What's the current value of the swap point and what's the outlook for the resolution of Eurobonds exposures? Thank you.

Okay. So probably, again, what I'll do is quite I just talk about the loan growth and Chinedu has got some comments on that. I'll come in to -- and possibly what you may also want to do is to maybe just comment because I was not in the management team around any of the actions that might have been taken and any success stories. And then I'll comment on the underperforming countries as you've described them. I think on the swap on, maybe you can carry that if you want to answer your section, then I can come in at the end.

Yes. Thank for those questions. Let me start with the loan target. I think Chinedu can also have when it gets to him as well. So you're right, 2022 was an exceptional year. Our target for 2023 has been put forward, taking into consideration also our expectation of currency depreciation in our market. Because this guidance that we provided are in U.S. dollar terms and the fact that most of our operating currencies are depreciated against the dollar. I'll give you an example. For example, Ghana Cities, we closed the year with about 8.5%. [indiscernible] at about 11, 12 to $1, right. So you look at demand has been stable. But of course, there's a broad expectation that once the new government comes in and all of that, there might be some step action from [ Inara point ]. So we're factoring our broad expectation of the currency depreciation that we expect in the cost of 2023. If you unwind those currency depreciation, we'll be looking at a loan growth that is closed out to the 10% territory. Let me take the question around the Nigeria turnaround and if there has been some success story. Just like the groups you mentioned, there's still lots of work to be done. On the Nigerian franchise, our performances are not where we would love it to be. But if we cast the mine back, if you look at the asset quality, some heavy lifting has been done. You look at the NPL ratio, which today is about less than 7%. Historically, that has been much higher. I think 2018, the ratio was about 24%. And that this 6.9% that we ended 2020 with is actually the lowest in Ecobank Nigeria since 2014. And the coverage ratio was about 76.4%. If you look at the historical trend of Nigeria, that also has been the highest since 2014. So there has been some actions taken on the asset portfolio, which also included the sale to the resolution vehicle, both in 2016 and also in 2020. We've had some successes in terms of rightsizing the skill of our branch network in that market. You'll recall that like 3, 4 years ago, we used to have a branch network, which was bloated in the over-400 region. Today, we have a much smaller size in the 250 region. So a difficult action has been made in trying to right size our productive capacity taking out the redundant branches as well. So actions have been also done on that space as well. But of course, the return is still about 4%. So we're still not satisfied about where we are. And that is why the groups here mentioned we need to re-look at the strategy. We need to, of course, take cognizant to our own peculiarity, the conditions of the market to set the right strategy to take tender and realize its potential and opportunity for our group. In terms of the Ghana, let me talk of Ghana before I hand over to Chinedu, if you want to talk more on the loan growth and before that goes back to group.  In terms of Ghana, if you look at Slide 14, we've actually taken time to show you because we knew that there will be lots and lots of questions on Ghana. So we've set out one particular slide to deal with all of those questions. So as you know, the swap has been done in terms of the local bond. So those old bonds were replaced with new bonds effective the 21st of February. So if you look at the top left side of the graph, you will see that everything that relates to the local bonds. So that's what has happened on the 21st of February. So the impact of the local bond is known, is done. And I must also mention that, of course, we got the same face value. So it's not there's a reduction in face value. What has happened is because you've extended the maturity of these bonds, and also reduce the coupon on those bonds. So by the time you do a fair value calculation of the fair value of those new bonds, they are much more lower than the current bonds. So that is where construct of the impairments or the modification comes to play. So it's not we're getting bonds of lower face value. The same thing is well because the tenor has been extended. That has informed why there have been impairment. I must mention also because I know the question would come. So just to use these opportunities since we're talking about Ghana. So been less to compare impairment numbers have been taken, by Bank A or Bank B, or Bank C. But from our point of view, there will be divergence in the quantum. And the reason being that a number of points. Number one is the discount rate that's being used for the [ permission ]. The local Institute of Charter of Accountant in Ghana, I work with the Central Bank to come up with a broad range, which was about 15.67% to about 21%. So depending on the discount rate used by the bank, of course, the IR discount rates, the lower the fair value and the adages in terms of impairment and modification. In fact, that is the biggest factor in terms of what impairment number is.  The second point is in terms of the purchase price. Banks with our board, these instruments at different points in time. So the purchase price, the entry point for Bank A will be different from Bank B and that would also be reflected in the amount of impairment that would have been absorbed by the bank itself. The third point is also in terms of the maturity [indiscernible]. Yes, it's the same government of Ghana instrument, but there are lots of different instruments, and they have different maturity [ blocker ]. So if Bank A has a longer data instrument and Bang has a shorter dated. Of course, bank Babe has lower impairment charge. So the maturity [ Blockhead] of your old bonds is also current determining the level of impairment. Another point is to consider also the class fission bucket way. So there are 3 broad classification in terms of IFRS 9, what at amortized cost, the auto collect of the fair vital OCI or the fair virtual P&L. So banks are defined business model, and that would have triggered different classification. And of course, the calculation of the impairment defers across this classification bucket as well. It is also possible that some banks have also decided to have some central overlays based on the GA and judgment. So I just tried to highlight this point just to point to perspective, but some of these numbers might be different from across the bank, particularly for the Eurobond because for the Eurobond, there hasn't been any restructuring proposal that the government has put on the table. So for Eurobond, banks would have used best estimates are available to them, whether looking at other countries of the world that have gone through this sort of activity, whether it's Greece or Barbados or Jamaica this world and also some African experience as well. It's also possible for each leverage on Ecobank data, the [ Moody's ] that feed the S&Ps of this world. From an Eurobond interview, there will be different methodology because it's all about information availability at this point in time. For us, we've done our assessment. We booked just like I mentioned, about $75 million on a Eurobond. In terms of the local bond, we've done our assessment, which was also reviewed by location [ Grupo Rita ] and that came about $96 million. So for the Eurobond, the issue is not undoubt -- so there is no additional pain points to come in '20, '24, 2025, as set if the government comes back with another restructuring proposal, but the pain point for the domestic bond is known and dealt with. The only thing is around the Eurobond where we use best available information. And of course, by the time the government comes to the market in terms of proposal, we'll revisit that and also take that into consideration as we go forward into the future. I think that ends the question on the Ghana. I will hand over to the group's CEO.

Yes. Thanks. Just talking about the countries that you mentioned, whether we're looking at divesting. I think the approach that we're taking -- as you can imagine, as I come in into the role is really to sort of dissect and look at the numbers and look at the initiatives that we've taken in the past, look at the dynamics of those markets. And really, our focus is going to be around investing in the short run, especially in markets where we see simply the biggest opportunity and the propensity for us to be able to compete in those respective markets. We are going through a structured process to look at each of these markets. But the fundamental message is that a market cannot continue to deliver that to be operating at high cost income ratios and delivering a return on equity that are significantly below cost of equity. We want our markets to be delivering return on equities that are higher than the cost of equity and contribute more importantly, dividend subside to the group. So I think it will be more challenging for markets that are not delivering to keep asking for capital because capital is something which we're going to direct to where we see the opportunities. As part of the structure, we are going to look at the nature of play that we are going through. You could start from what I would call a full service line way for corporate. You've got the consumer, you've got SME, you've got treasury, et cetera. Or you can go down where you could have a model which is probably a strong CIB play. We also have the option of what I would call mixed retail and consumer, less corporate. And then we could have a model which is literally much more led by retail. And this is also a function of the level of the market, the competitiveness of the market and the players in the market and our ability to compete. So we're going to be quite specific about that. We'll also look very carefully at the cost and organizational structures that operate in these markets. I think there's room for us to be able to be a bit more efficient with those structures and leverage some of the clusters that we have. For certain, we definitely will need to pay attention to EAC as an area of opportunity because those are quite large revenue pools where we are subscale. We'll be focusing on the efficiency measures that we are looking at to be able to free up some of those whilst driving revenue growth upwards once we've agreed the model. And I think ultimately, probably the thing that might be different is that we will given similarities of many of these markets, we will probably have a team that will focus specifically on helping these countries take the necessary steps and to link in very strongly with the group, be it the consumer, commercial or corporate bank to drive up their business in line with the risk appetite we have for those markets. So we'll be working on those structures and strategies in the course of the coming months and doing so as a means of urgency to get their contribution stronger for the group.

And your next question will be coming from [ Rona Diagaa. ]

Thanks, Arthur. Yes, this is [ Rone Gadia ] from EFG Hermes. Thank you for the details on the Ghana government bond restructuring and the differences in provisioning. You really preempted my question. But just as a follow-up to that. So firstly, you said one of the differences could be because the discount rate range was 15% to 21%. Could you maybe share what discount rate Ecobank used? The second sort of follow-up from that was -- you said the other difference could be because some of the bonds could be classified as held to maturity, which do not need to be mark-to-market. But I'm not sure why that is in play here. Surely, even if it's held to maturity and there's an NPV loss modification loss, it still would be prudent to make the modification loss because ultimately, like you said, there has been a modification there has been a change in cash flow. So I guess you would have to make provisions for that. So if you could just clarify whether Ecobank made the provisions on their held-to-maturity portfolio. Third one, again, on Ghana, -- what's -- just what's the capital adequacy ratio of the Ghana subsidiary post the losses that it made last year? And finally, last question, again, sort of related to this whole topic. We've seen Ghana restructure its debt portfolio. But when you look at the African economies from north to south, there are quite a few other economies that are in a similar -- That might be in a similar situation to Ghana that might need some restructuring, in particular, Nigeria has been sending the red thing. So could you maybe just talk about the risks that you're seeing on the sovereign side from Nigeria? And what mitigating strategies you might be implementing to reduce the debt exposure.

Thanks, Rona. So first question, what discount rate did we use? We used 15.67%. And we've also disclosed it in our financials as well. That is the range that we used -- but also just to clarify, this essentially is a trade-off right, a tradeoff between the current and the future because effectively, this country that you used for the impairment modification is what we use for the accrual of the income going forward. So as long as we sit within the range, that is fine. The second question around provision on to maturity Yes, we are aligned, and that's exactly what we've done. So we've taken impairment on the HTM book as well. So that we aligned and that also is consistent with the accounting standards. The third question on the Ghana capital adequacy ratio, like you know, part of the relief was the reduction in the capital conservation buffer from 3% to 0%. So the minimum capital requirements in Ghana today is 10% instead of the previous 10%. At the end of the year, we ended at about 12.4%. This is on a fully loaded impact. But if you consider the phased amortization impact, which the Central Bank has put into place, if you use a 3 year, the capital ratio increases to 14.9%. If you use a full year amortization, it increases to 15.9%. So we are well above the regulatory minimum of 10%. That is why I said earlier that we don't need actual injection in carpet in Ghana. And because of the fact that we have the any generation capacity of our franchise in Ghana as well.  In terms of the broader risk, you talked about Nigeria all of that. I think if you look at the star of Nigeria, I think this is a world documents. The problem of Nigeria is largely a revenue-driven challenge. So if you look at its debt to GDP is on West South Africa and also globally as well. But of course, if you look at the debt servicing as a proportion of your revenue, that's where you see the glaring problems. And if you think about it, today, the deal for the subsidy annually is close to $15 billion. If you look at the manifesto of the precedent Alexia has mentioned that it would take out subsidies. So if that goes out, $15 billion, that would materially impact the ability of government. And also if you look at the crude oil production, the cost continues to be the mainstay of the government a year ago, I was producing about 1 million barrel per day today because of the fact that they've been able to deal with the security challenges based on the last report of the NNPC as of February, that production has gone up to 1.7 million barrels per day as well. And also, if you look at some of the plans of the Minister of Finance in terms of the tax initiative, trying to take out some incentives, which are no longer needed, especially to some sectors or industries or companies. That would also help in plugging some of the revenue challenges. The risk is there. But overall, for Nigeria, it is largely a revenue-driven problem. And of course, with the income in new government, we expect that some of this will be dealt with one way of the other and the risk around the debt sustainability would be reduced. So I don't know if that answers the question.

No, that is very clear, very concise. Thank you very much. Thank you.

And our next question is coming from SEB. Hello. Good evening, everyone. In the evening. My name is [ Bev Ines ] -- is it okay now?

So my name is [ Bevan ] and I am in an and I am here for myself as an ATI shareholder not from an organization. So I have 3 questions. And my first question goes to our new CEO, I mean, our new group CEO. And my question is what are the objectives that have been assigned to you as our new group CEO. And my second question is about the dividend payment, which is USD 0.11. I don't know if you remember, but during the last investor call, if I have a good memory, it will say that since the Smart subsidiaries are now allowed to pay dividend for the 2022 financial year, you were expecting a total dividend payment of around $130 million. But finally, you decided to pay $28 million. Can I get any comment on that? And there is one last question that I will ask later. So the last question is about a statement that our Chairman,[Mr. Alan Concho ] said during the last annual report, and he said, "I could even though our share price has increased even though our share price has increased the market still values our stock at a discount to the carrying value of reported shareholders' value. So my question to the team is, according to you, on the Ghana Stock Exchange, because I am a shareholder on the Ghana Stock Exchange. So according to you, on the Ghana Stock Exchange, what is the price per share that can reflect the real value of ETI? That was my last question.

Thank you, [ Bevan ]. What I'll do is I'll talk to mine and then transition for the final because I think they also make reference to things of -- from 2022. In I think, obviously, coming in into this role, the first assignment given to me was to make sure that there was a successful transition between myself and Ade Ayeyemi, who has very ably with the team, brought the business to this space, and as I've said, unfortunately, just sometimes the work that is done and especially the heavy lifting that we've done with the team dealing with some legacy matters and difficult loans. These take time to bring back to remediation. But there's been a lot of investments done in the past. And now we're sort of at the tail end of just making sure that we can really commercialize those. So part of the mandates that have been given is to drive this business forward and to deliver returns that meet the expectations of shareholders. And obviously, in doing so, that really obviously includes paying dividend, as you've just indicated. But it's also about very specifically looking at the 3 areas that I talked about, which is its growth, transformation and returns. The banking world, as we know it, has changed and we've seen even how it just changed in the last few weeks. We have to work on these 3 areas, and we have to identify how can we grow faster? How do we compete better? How do we transform our business to be relevant to clients' needs both now and in the future and how do we give the returns for our clients. So it's really working with the teams here to drive that ultimately with the desired outcome of not just dividends, but total shareholder return and increase in the value of the shares on the stock exchange. So that's really what the mandate really was. Now I wasn't as I say, I wasn't here when you discussed about the SMA dividend. But what I would simply transition and say is, I think, at the time probably when you're having those conversations, the Ghana situation was not on the books. So when you look at what dividend Ghana would pay and what dividend it was able to pay due to the impairments that would have impacted what we were able to pay. And I think the Board wanted to just make sure, look, we're still in uncertain times, we are all seeing it not unique to Ecobank and not unique to Africa. I think it's a global uncertainty. So at points in time, I think there was the feeling of, look, let's do the right thing, which we've done but make sure that we're also well positioned and take somewhat of a conservative stance. But let me pass over to Auto maybe make any further comments.

Yes. Thanks, Jeremy. I think you've asked the question, just to have 1 or 2 things. I think you're right. If you look at what we said, we said we want to pay dividend. And that is the right thing to do because it's not just about return on equity, it is also a return on equity. But that objective function have to be sited within the context of environment as well. So it was purely from a conservative stance that we decided to just reduce the dividend amount slightly, but we still want to pass across the message that it is our intention to be a consistent dividend paying stock. And don't forget also what we're not paying out is still within the business. And our return, for example, for 2022, is about 21%. And as long as we continue to generate that return, which is both cost of equity, ultimately when the next opportunity comes up for dividend, we'll be able to return much more to our shareholders. I think you alluded to standard dividend coming. And yes, you're right. We did mention that we've been able to get the note of the Central Bank to resume the payment of dividend from [ CEMAC ]. That is going to come in this year. But on the flip side, Ghana paid dividend last year is not paying dividend this year. So it's on a large extent, the market dividend is coming to block the ore that Ghana is going to leave on the table. And I think on your third question, you raised a very relevant, important topic as well. If you look at our current market evolutions today, if I look at the share price as of close of business today, our total market valuation is about $600 million. And if you look at our shareholders' fund, we did about $1.4 billion. So we're still trading at less than 0.5% book, our price to earnings ratio is about 2x, right? If you look at most of our peers, especially on the West African coast, they have price to earnings of about 3, some of them 4 times. If you look at East Africa, easily, you can get 5x, 6x price to earnings. So this is also something that we're very much not satisfied with. And the path to driving that is to continue to deliver our superior returns above our cost of equity. And that is the message that Jeremy is also selling across the institution. And as we come in the second half of the year with a rebound strategy, that will be center of that strategy as well. And we'll continue to tell our story in terms of the huge opportunity, our competitive advantage in the marketplace, and that would help the market understand our story much better. And all those are things that the groups you mentioned in terms of growing our consumer and commercial business faster and also not less in our CIB business. The Payment business is a critical part of what we want to do and also fix in Nigeria is [ Centry ] and also addressing the subscale market. So once we do all of this very strongly with all the enablers, as we talked about, that would help position the bank and it would help address some of these gaps in our market valuation.

Alright. Thank you. And your next question will be coming from [ Constantin ]

Yes. This is Constantin from JPMorgan Research. I had 2 questions that I wanted to ask. The first one, all of these relate to [ that you're in ] business. So the first question, how high do you see the risk that you would need to recognize additional sizable loan losses in the Nigerian Bank? And the second question, again, related to that, have you stress tested your loan portfolio in the year-end. If yes, what do the results of this stress test suggests? And what conditions for the currency, for the oil prices, for any other factors under what conditions would you expect to see increased pressure on the land quality there and you need to recognize such additional [ line ] losses, which are not currently identified.

Thank you for those questions. I think for Nigeria, clearly, we have conducted various steps. In terms of the prognosis for further deterioration in that portfolio, we have worked very hard over the past year to try to derisk as much as we can for the Nigeria portfolio. The main headwinds in Nigeria today relates to the foreign exchange scenario. So just to describe that. You do have a number of obligations, for example, in the system, which relate to letters of credit, for example, which need to be paid in foreign currency, and that is a strategy of our incurrence in the system. Now if you had a situation where there was a devaluation that is very strong and before these obligations are paid, it is reasonable to expect there will be some customers who will struggle to meet obligations. Now what we have done way back from more than a year ago is to constrict that portfolio to look very closely at the people that we are originating such transactions with. Typically, there would need to be entities that have resilience that have shown capacity to survive such scenarios as have transpired in the past without 2016/2017, largely in 5 years prior to that. We had such scenarios also to evolve. So we are comfortable that within our portfolio, we are dealing with most of the exposure in terms of this is with entities that have the scope to meet these kind of obligations. Now of course, there will be -- there may be some names. We had this may be a challenge. So we have most of these names on our watch list, where we think that could be a challenge. What also we've done is that in many cases, we have taken [indiscernible] local currency, multiples of the exposure. So the rate of exchange is maybe 460, we demand for [ contolization ] at the level of maybe over 500. Our expectation is that the end of the day, if you look at what happened in 2016 when there was also a scenario with FX, we do not think that the resolution of the obligations in terms of foreign exchange obligations in the system is going to go towards the prior market rates, which is 100. If you remember, in 2016, at some point, those rates were in the 500 range. When they resolve, the result at about 3 cross out 300 from 200 from 200. So we have the same perspective. Our anticipation is that at a resolution point because there is a lot of pent-up demand for inflows into the country does not comment because of uncertainty on policy or certain on government. We think this will likely be in the over 500 to 600 range thereabouts. At that level, we are comfortable with the portfolio that we have, and we do not expect material deterioration in the Nigerian portfolio in the near term.

And just to add something, I'm sure part of the question is what is the impact on capital on the currency depreciation. So today, the exchange rate is about 41%. And if you look at where the 12 months forward for in trading, which is about 68 as of one go at I checked. So even if the new government comes in and decides to take the exchange rate to that 60 level. We'll still be able to minimum regulatory capital requirements in Nigeria and also at the group level. So I just wanted to add that point as well since I'm sure that's one of your major concerns.

Your next question is from Dimitrov, please.

[indiscernible] I have questions. So the first one is regarding the timing of the $126 million provision release.

We can barely hear you. Could you repeat your question?

I was wondering about the timing of the $126 million provision release. Why it didn't happen in the third quarter when you transfer $200 million worth of bad loans to the resolution vehicle. Somehow it looks like a very convenient provision release against the [ Ghana charge ]. The second question is about the 500 million barrels that you have maturing in about a year. And I was wondering about your plans to refinance those. The third question is about capital. I'm looking at your Tier 1 ratio is currently 10.5%. And I know in the past, you've said that you would like to see it go to 12%. Clearly, there's still a lot of room for improvement on that front. But you also mentioned in the past that there is a potential that you're going to issue AT1 capital in late 2023 to bring the Tier 1 capital ratio to your target of 12%. I was wondering what is the plan now that markets are clearly closed, not just for Ecobank but for any bank to issue a Tier 1 considering the Credit Suisse scenario. And my last question is on risk-weighted assets. So you have an amazing chart that shows how the risk-weighted assets that it has declined to the mid low 50% I was wondering whether you would agree that your risk-weighted assets maybe misrepresent the amount of credit risk considering the experience of cane and the fact that your sovereign exposures are 0% risk weighted. When in reality, we know that there is a probability. I don't want to say a high probability, but there is a fair probability that some of these exposures could end up being restructured. And I'm also mindful of the fact that when I look at your tangible equity to tangible assets, it's in the low 4%. I was wondering what you think regarding that metric as well. Thank you.

Thanks, Dimitra. -- that like 5 or 6 questions. I'll try to be quick with them. The first one, the timing of $126 million. So you would recall that we did the loan sale in the third quarter of 2022. At that point in time, we had not completed the valuation of the collateral of one of those loans. And this is an oil and gas name and to do a proper valuation of the facility. This is something that takes 2 to 3 months in general because of the nature. It's not like a building or a car that you can easily do the evaluation in 1 day or 2 days and all of that. So that took quite some time. The visits to the oil fields, which are not in the west of the country. It is in the East where there are also some destructions and all of that. So that's the administrative details of that took some time, and we didn't conclude that valuation exercise until December. And that explains the timing of the conclusion of the impairments release. On the second question on the refinancing of the senior $500 million exposure in actually. So it matures in April next year. So we've put it together a plan looking at all our various options, including bilateral or syndicated also liability management up to even including the market action later in the year or the fourth quarter of next year. All of the options are on the table. We've started some pre-mine engagement. We've gotten some positive feedback from some of our counterparts. And we're very optimistic that, that would be done and will meet our obligations as in the fold. Don't forget, is the best predictor of the future is to look at what has happened in the past. In 2020, when we had Covid, which was a 100 year event, we had to refinance about $100 million of our exposure. That was done despite the closure of market access. In 2022, despite the Russia-Ukraine impact, our convertible bond of $400 million matured in September, October last year, we had to repay back as well despite the conditions of the market environment. So we've done this before, and we've got a plan on how to take this out. I will just execute to ensure that there is no slippage in that recap. In terms of the question on the Tier 1 ratio, yes, you're right. Our Board target is to get to a 12% Tier 1 ratio. And we said that take out that destination will be dealt with us in AT1. But looking at what has happened globally, especially with the credit situation, the market appetite as of today is not there for an AT1. But of course, we're quite aware that market changes quite rapidly. So this is something that we'll continue to put as part of our plan. Should market conditions change, that is something that we can easily revisit. And I know in the past, we've got any questions around AT1, what is the nature of the loss absorption capacity and all of that. So this credit situation actually demonstrate that AT1 has a loss absorption capacity and should be considered as part of the capital stock. I think that is one of the major positives out of the Credit [ Suisse ] situation. But of course, it is important that as an organization, we don't intend to get to the point where we would have to write down on AT1 or come to the AT1 instrument. In terms of the risk-weighted asset, I think you made a valid point, and this is not just Ecobank. This is a market systemic issue. All the banks in risk rate so ran at 0%. So this is a big lesson for all of the markets in general. Of course, this is an isolated situation, and this is something that we'll continue to review and revisit as we go into the future. But not to take anything away from your point, just like the groups you have mentioned, one of the key major attacks is to focus on how do we better manage our [ Adobe ] to show that, number one, we optimize. And number 2, we extract IR returns on the outdoor BA. And the last point that you raised on the net interest margin, which is around 4.9%, and if you look at Ecobank where we are structured, right? So about half of our balance sheet sits in the CFA zone, whether it is [ Verma ] or the Central Africa region. And this is a low interest rate environment. So the margins for most banks in [ Uenma ] is around the 4% range. If you go to the [ SEMAC ] region, the margin for most banks is around the 5% range. So if you've got about half of your balance sheet existed in that market. So that draws the net interest margin much lower. But of course, there are opportunities for us to upsize our net interest margin. There's a market where our margins are well below the market and will be intentional with regards to the efforts to try to address those issues. But overall, that is a big factor explaining why our net interest margin is at that 4.9% level. But of course, actually going forward, optimizing our performances, especially in the subscale market and also in Nigeria, that would help drive up our net interest margin.

The next question, please unmute yourself...

Can you hear me? Please go ahead. Yes. Thank you... 3 quick questions from me. First one on expected ratios. So you have the slide with Tier 1 ratios expectations, I think at Slide 22. So for example, CET ratio, 9.8% expected at the end of 2023. Could you kind of provide more color on the FX rates you use in this kind of forecast? And what's like high level sensitivity, if like U.S. dollar appreciated by 10%, 20%, what's the impact on the CET ratio in your forecast? The first question. The second question, could you kind of give us a bit more color on the holding level cash position and double leverage ratios, again, like it's kind of also important for rating agencies. And the last kind of quick question also on the sensitivities. You discussed like a lot of this game situation that you used like 30% haircut for the principal and coupon this is something that expected in the market at this stage. But like what's like also maybe some sensitivity of haircuts will be, let's say, more than 30%, they have a sensitivity for us to share impact on your CET ratio as an example.

So I'll start with the first one. In terms of the CET1 and the expectations. So we've shown what we're expecting for 2023 on Slide 22. And also what we're expecting for 2024. I must mention, of course, the number of the big movement, of course, dividend reduces that. So when we pay the $28 million subject to the AGM approval, that would marginally reduce it. We've also assumed the last tranche of the IFRS 9 Day 1. So there's a $75 million last tranche. If you recall, in 2018, we added $300 million each from a day 1 impact of IFRS 9 that was faced over 5 years. So the last tranche of the $75 million comes in, in 2023. That is also a big factor. The next one is in terms of what we've assumed for the FCR, which is your question. For our modeling proposes, we consumed an FCTR impact of about $200 million. Don't forget, in 2021, the asset impact is about $176 million. In 2022, because of the or situation of the U.S. Fed increasing rates and all of that, that is a one-off year where the FCTR went to about $323 million from a shareholder equity point of view. But based on our view of the words of today, the fact that the U.S. Fed has almost got into the tail end of its way to increases. And most of the market analysts are projecting just a 25 bps increase at its next mention in May. After May, we don't expect any further increases in rate by the U.S. Fed. On the other hand, the ECB is projected to increase rate by 25 bps in May, 25 bps in June, 25 pages in July. So that would also help from the CFA dollar exchange rate. So we're reasonably comfortable with our assumption of $200 million in terms of FCTR impact for 2023. You've asked a question around the [ auto liquidity ]. Yes, if I just went through the key numbers. From a dividend -- let me start with the inflows. From a dividend standpoint, we're expecting a dividend inflow of about $17 million this year in 2023. And also, we're expecting our management fees of about $25 million to $30 million this year. In terms of the major outflows, our financing costs, in terms of our debt book is about $135 million. And also the running cost is about $29 million. So the total inflow is far above the total outflow. So the liquidity of the [ oracle ] is sufficient to continue to meet this obligation as and when they fall to you. In terms of double leverage ratio, we've had an exceptional year, just like I mentioned, in terms of the currency depreciation that we had in 2022. And that is what has influenced the double leverage ratio that we have as of end of 2022 to be about 160%. If you strip out the impact of the FCTR, that double leverage ratio is about 151% for 2022. On the sensitivity on the Ghana book, you're right, we based assessment on the Eurobond primarily using unofficial statements of up to 30% ACO. That is what we've done. And the sensitivity is very easy to do. So we've got a current value of about $425 million, right? So depending on the exchange side, the coins Asim just applied on the $425 million of Canale of the Eurobond. I think those are all your questions. I hope I've covered everything.

Thank you. Your next question would be coming from [ Indosat Ingo ], please yourself?

It appears that there is a 1% on the collateralization of your credit impaired loans. I would have a figure of -- for your credit in [indiscernible] how does -- what is the potential impact? And is there a possibility to increase the [ part? ]

Thank you, no. Is that the only question you are asking long is that the only question you were asking?

Yes, please.

I think the thing is that it's -- if you look historically, you'll find that we have been increasing the level of NPL coverage in the bank, okay? So it's not an under-characterization, per se, in terms of description. And if you also look at peer banks. And if I just mentioned the not published necessary probably 2022 financials. But if you look at our peer banks, you find that we have, we're actually superior to most of the banks. So the fact that we have chosen to take this level through our central [ Obami ] over 100% over the past 2 years, does not indicate that if it was on the hundred, it was under [ contrition ]. I think it was on, as I said, to not collect the portfolio in terms of the performance of -- given the markets that we have. and to, in the context of the [ vannawe ] had at overlay and the Central over the year. We didn't see any substantiation in our portfolio. I think we felt comfortable. Again, as Awori shared, having gone through the assessment of collateral for some of our major [ trading ] we had substantially more adequate collateral than we needed. That allowed us to release some of these provisions at that level. But as I said earlier, if you do check the number of our peers in the market, whether Nigeria in Eastern Africa, you'll find that actually that 86% that you're seeing there is veto what you have for those entities.

And with no next question. I'll pass the call to Jeremy for a brief closing remarks.

Thank you, too. So for me, it's really to say thank you to everyone for joining the call. As you've seen, we -- I think we have done well in 2022. It's been a difficult environment as we look forward. There's still a number of uncertainties, but we'll continue to focus on making sure we run our business well. We take cognizance of the market conditions as we do so because that is obviously critical, and our strategies will be adapted accordingly based on those scenarios, we see opportunities for growth in the future, opportunities to transform our business and opportunity to focus on driving further returns for our shareholders, and that will remain part of our focus. And we will, as I mentioned earlier, put together this in a way that we can share with you probably later on in the year so that you have a clearer sense. And by that time, I think even the market conditions might have also cleared up and we will be in a different space. This month, this world is evolving. We play a week and month by month. So for me, it is just to say thank you. Thank you for the welcome, and I look forward to meeting and interacting with you in the coming weeks, months and years. I think with that, I would just like to say thanks to everyone. Thank you to the team for their performance last year and for conducting this call.