Ecobank Transnational Incorporated (ETI) Earnings Call Transcript & Summary

Good day, everyone. Welcome, and thank you for joining the call to review our 2023 audited results. I trust everyone has had the chance to review our earnings release documents. They're available on the Investor Relations section of the Ecobank.com website, and include the earnings presentation that we will be referring to during the call. The call is being recorded. [Operator Instructions]. I'll first turn the call to our Group CEO, Jeremy Awori, for some opening remarks before Ayo Adepoju, our CFO; and Chinedu Ikwudinma, our CRO discuss our results. Before I do that, let me remind you that we may make some forward-looking statements based on our best view of the world 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. So with that, it's my pleasure to turn the call over to Jeremy. Please go ahead.

Thank you, Ato. Good afternoon, ladies and gentlemen. Firstly, a warm welcome, and thank you for joining our call today. It's been a little over a year since I joined Ecobank. And over this period, I've interacted with many stakeholders. And a common theme among all is the enormous untapped potential in our position, heritage, culture and our markets. Ecobank has a lot going for its presence in 35 countries a unified single banking and payments platform as well as talented and dedicated staff. And to unlock this potential, we must take on a task of significant scale, one, the Board and executive team and Echo bankers are really fully committed to this ambition. I will briefly just touch on the macroeconomic factors on the next slide that shaped our results and provide an overview of those results and essential elements of the bank's growth transformation and return strategy before I pass the presentation on to Ayo to discuss our financial performance in some more detail and Chinedu to discuss our asset quality metrics. You are all obviously quite familiar with a number of these macros. So I won't spend a huge amount of time on it, and the slide deck will be made available so that you can read it in details. But fundamentally, the economic conditions in Africa were challenging in 2023. High inflation has been a persistent problem in most markets leading to reduced purchasing power and savings for consumers and businesses. Our businesses implemented strict cost control measures in response to these inflationary pressures. On the other hand, Central Banks continued with their rate tightening cycle, which benefited our net interest margin and increased borrowing costs for some clients. And these impacts -- the impact of these changes was felt across the board, affecting governments, large and small corporations and consumers alike. For a significant proportion of the year, African sovereigns could not access international debt markets to raise funds for new projects and refinance existing debt leading to increased pressure on sovereign ratings. Thankfully, markets are now starting to open up. The strong U.S. dollar inflation and internal monetary policy challenges weakened African currencies. In 2023, the Central Bank of Nigeria devalued the Naira by almost 50%. The Ghana Cedi fell by 28% and the Kenya Shilling by 21%, just to name a few. However the euro-linked CFA franc appreciated, which lessened the impact of foreign currency translation reserves on our balance sheet when African currencies weakened. It's important to note that our diversified pan-African business model offered some benefits in this challenging environment. A week ago, we published our audited financial results for 2023. Our return on tangible shareholders' equity for the year was 24.9%, surpassing the consensus cost of equity. Our earnings per share increased by 0.4% to USD 0.117, while our book value rose by 24% to USD 4.26. We're happy to report that our revenues for the year reached $2.1 billion, surpassing the $2 billion mark for the first time since 2015. This growth was due to various factors such as rates, robust client activity within client-driven foreign currency sales and payments, and quick win initiatives we took to improve the deposit mix, and net interest margin, and optimized risk-weighted assets. Our Consumer and Commercial Banking businesses grew revenues more strongly than the CIB business during this period. Despite facing strong inflation and currency depreciation challenges, we have remained disciplined in managing our cost base, avoiding unnecessary expenses and redirecting the savings into ongoing transformation initiatives. As a result, our cost-to-income ratio improved to 53.9%, which is the first for Ecobank group. We recognize that further opportunities exist to streamline costs particular in some of our Central Eastern and Southern African subsidiaries where our cost to income ratios are above 70%. Our credit quality remained healthy and our regulatory capital ratios exceeded the regulatory minimums. We ended the year with USD 581 million in profits before tax and attributable profit to ETI shareholders of USD 288 million. Before we turn to our growth transformation and return strategy, it is important to mention that we have repaid the $500 million Euro bond due on 18th April 2024. This is testament to investors' confidence in the company's leadership, fundamentals and outlook. Now I'd like to take a moment to focus on our growth transformation and return strategy, which, in short, we call our GTR strategy. In March and July 2023, I shared my thoughts on a strategy still being worked on. We have now finished the 2024 to 2028 growth transformation and return strategy, which our Board approved in November of 2023. We're excited about its possibilities for growing and adding value for our shareholders. Our strategy revolves around our customers who are the driving force behind our success and shareholder returns. We are committed to enhancing the value of our offerings, delivering exceptional customer experience at every interaction and fostering their loyalty as our trusted banking partner. Our growth pillar is poised to accelerate revenues across various sectors and geographies, capitalizing on significant growth opportunities in consumer, commercial banking and payments. By prioritizing product innovation, enhancing sales and marketing effectiveness and elevating the customer experience, we aim to surpass the 1% compound annual growth rate in U.S. dollar nominal terms or in our revenue since 2016. As already shown, we are seeing the trajectory of growth improving significantly in 2023, and there are more exciting opportunities ahead for us. We're also streamlining our business models to ensure they are fit for purpose, particularly in some of our subscale subsidiaries in the CESA region. Our transformation pillar involves establishing a transformation office to ensure the efficient execution of our growth transformation and return strategy at the operational network. Martin Miruka who has led a successful international transformation at Equity Bank is our group executive for transformation, enablement and customer experience and will drive many of these transformation initiatives along with other executives and the leadership team. Technology is crucial to our transformation. So we are investing in growing our technology and data capabilities. We're bringing in new talent to build on our existing Ecobanker's skills and enhance our execution and transformation efforts, and we will introduce you to important new hires later on in my commentary. At the end of the day, our primary objective is to continually meet our customers' financial needs, which should enable us to consistently generate return on our shareholders' capital. To that end, we take our capital stewardship responsibility seriously investing in projects that provide risk-adjusted returns exceeding the cost of capital. We're committed to nurturing sustainability across Africa and growing through the opportunities it creates. So sustainability, therefore, will be an uncompromising aspect of our GTR strategy. Let me briefly explain how we approach our business lines and geographical markets. If we can go back to the previous slide, I think we were talking about yes, that one, there, thank you. Starting with Corporate & Investment Banking. Before discussing Corporate and Investment Banking -- our Corporate and Investment Banking business, I want to take this opportunity, firstly, to thank Eric Odhiambo who was the group executive for CIB for a number of years, and he recently retired. Eric has contributed to what the business is today, and we are happy for the impact he has made since he joined the group in 2017. We thank Eric for his contribution to the growth of Ecobank's CIB business. Michael Larbie has joined us as the group executive of the CIB business bringing with him over 25 years of invaluable investment banking and corporate banking experience across the continent and 4 other countries in terms of growing their CIB business. CIB has historically been the company's stalwart and has a leading franchise in most of our markets, accounting for 49% and 44% of group-wide revenues and profits, respectively. In 2023, CIB revenues surpassed $1 billion, a testimony to some of the quick win initiatives we actioned and we aim to maintain CIB's leadership position by investing in technology, people, risk and controls as well as diversifying across business sectors and customer segments. For example, in our lending business, we will be diversifying into Africa's core economic drivers like manufacturing, services, telecommunications and agriculture. We will deepen our client engagement capabilities in our FICC business. The launch of our Trade Hub facilitated marketing various solutions to our customers and open new trade opportunities in our market. Also, our cash management and payments businesses are poised to benefit from the Africa Continental Free Trade area. We are placing a renewed focus on EDC, which houses our investment banking and asset and wealth management businesses. Our Consumer and Commercial Banking businesses and our newly created payments, remittances and FinTech business lines offer us new growth opportunities. As part of our efforts to streamline our operating model to utilize economies of scale and serve our customers better, we have brought the consumer and commercial banking businesses under one leadership. Anup Suri joined us in March as the group executive of the combined businesses and reports to me directly. Anup has led sales and distribution regionally and globally for some of the world's most recognized banks. We plan to expand and deepen our customer base, focusing on supporting customers with their transactional and saving needs which will also help drive fee income and generating business for us. We will also invest and enhance our credit scoring capabilities, and that will enable us to grow our consumer and SME lending businesses effectively while managing risk. Equally to support this, we are already investing in our data analytics systems and capabilities. We have also started developing and expanding our sales capabilities and channels. For example, we are establishing a larger direct sales agent program where direct sales agents complement our sales efforts by opening new customer accounts, cross-selling digital products, loans and in a number of markets, third-party products such as insurance. At the end of April -- the end of April 2024, we had over 1,000 trained and active DSAs across our network of whom over 400 are in Nigeria and Kenya alone. We have the payment infrastructure and scale to do this effectively. We will scale this significantly in the key markets we see the biggest opportunities and where the infrastructure supports it. In Commercial Banking, we are developing financial solutions for small and medium enterprises. We have already launched the SME starter pack, which is a bundle of financial and nonfinancial solutions for MSMEs focusing on digital channels. And so far, this is growing well and has been well received. We are piloting a number of other business banking solutions we will launch shortly, and you'll hear about that during the course of this year. We are doing this as we believe the SME sector is underserved across multiple product lines, and also because SMEs are the fastest-growing segment in Africa, and -- but they do face an estimated funding shortfall of about USD 300 billion. Our purpose of deepening financial services and integration across the continent will make a difference as we develop financial solutions that meet the varied needs of our SME customers. We are working extremely hard to push this agenda for both the shorter-term commercial and longer-term African prosperity perspectives. Payments represents another significant growth opportunity with significant revenue potential for online and offline merchant acquiring cross-border trade payments, remittances and agency banking. We are excited about the potential benefits of the Pan African payments and settlement system, also known as PAPS for our business. In June, we entered into a memorandum of understanding to enable the settlement of cross border transactions for all our subsidiaries via PAPS. This will involve Ecobank acting as an interbank settlement agent on behalf of central banks that are yet to be onboarded to PAPS in these countries where we operate. We are proud to provide payment rails for PAPS, which aligns with our goal of expanding financial services and contributing to Africa's prosperity. Remittance flows to sub-Saharan Africa were estimated at about USD 53 billion in 2022. This gives us immense opportunities to position ourselves to offer remittances as a service or RaaS or while partnering with international money transfer organizations to assist them with connecting with our customers across our network of 35 countries on the continent. Finally, we will offer banking as a service capabilities to fintechs across Africa to help them scale and grow their business across the continent. Our reach, single payment system gateway combined with deep local relationships and capabilities makes Ecobank a great partner of choice as they grow and expand their businesses across the continent. We operate in 35 banking markets and have a leading position in 2 of the 9 big markets and 13 of the smaller 25 markets. Now over the past year, we've increased the number of subsidiaries that generate return on equity above their cost of equity from 19 to 24, slightly more than half of all subsidiaries are now paying dividends to ETI, and we have increased this number during the year through very specific engagement of authorities and regulators during this period. Our strategy for geographical markets is straightforward. For the subsidiaries with leading market positions, we focus on solidifying these positions and investing in core growth. We are rethinking our approach to winning in the marketplace for subsidiaries that require more scale. Our approach will include aggressively addressing subsidiaries with the higher cost-to-income ratios usually in the 70% to 80% range, driving more fee-based income and building solid partnerships. Although Nigeria's performance shifting gears slightly has been less than we would like, will continue to focus on turning it around within the context of macroeconomic and policy developments. It remains a vital subsidiary and market for Ecobank. We are already at an advanced stage with our strategic agenda and we'll take the necessary actions to revise its growth, earnings, return trajectory and address its capital efficiencies. I've discussed our plans to revise our operating and business model overseas and deliver transformation and focus on the customer to succeed in our chosen businesses and markets. These efforts will be supported by investing management time and resources in core capabilities, including people, culture, brand, technology, strategic partnerships and sustainability. Our people are the backbone of Ecobank's success and will continue to drive our future growth. In the last quarter, we have taken some calculated and decisive steps to reinforce the talent in our group executive team and prepare ourselves for success. We have hired exceptional individuals with unique skill sets that I will share slightly later in the presentation. And they will play a critical role in accomplishing our strategic agenda. These include, as I've mentioned, Martin Miruka in transformation, Michael Larbie, who is covering our CIB business and Anup Suri covering consumer and commercial, Abena Osei-Poku who is the new Managing Director for Ghana and Regional Executive for the Anglophone West Africa region and Thierry Mbimi as Group Executive Internal Audit and management. Abena brings decades of banking and board experience from several international banks and corporates, Thierry has significant audit and advisory experience in digital solutions, risk markets and financial services from leading banks and consultancies, not just in Africa, but globally, and I'm confident that they will bring immense value to our team. We continue to invest in a culture of performance and accountability by having a specific work stream on our human capital and culture. This enables us to focus and align with our core agenda and with shareholder returns. Moving on, our brand and reputation are the cornerstones of the trust people have in us. We are working on raising our brand awareness and shifting perceptions of our brand. To achieve this, we have recently unveiled our new brand campaign A BETTER WAY A BETTER AFRICA during the football TotalEnergies Cup, Africa Cup of Nations in Cote d'Ivoire. It communicates the 3 brand pillars of our bank, our Pan-African purpose, our platform and our people as well as our different banking divisions and the value of our banking solutions. To respond to emerging market risks, we are already investing in upgrading our technology infrastructure and strengthening our risk management systems and capabilities. For example, we are building credit risk models and scorecards, automating risk-adjusted returns and digitized credit processes, which will not only help us manage risk more effectively but will also allow us to better price for risk in our different markets and deliver much smoother and simpler customer experiences. As I come to the conclusion, I'm very proud to lead such a significant institution, and I'm very confident in its future. Our leadership team is committed to creating a better bank for better Africa by serving our customers well, taking care of our employees and the communities in which we work and then ultimately delivering sustainable returns to our shareholders. I think with that, I just want to take this opportunity to thank you for your attention. and take a moment to hand over to Ayo, who will take you through the financials in more depth. Thank you.

Thank you, Jeremy, and good afternoon to everyone. I will walk you through our financial results, providing further insight into the drivers behind our earnings. Let's turn to Slide #8, where we've shown the key performance indicators. In this slide, I'd like to discuss a few of the KPIs just to give an overview of the company's performance for 2023 despite the challenging macro environment. Like Jeremy mentioned, we achieved a return on tangible equity of about 24.9%, which is significantly higher than our cost of equity. Earnings per share increased by 0.4%. Revenue growth was higher than cost growth, which led to positive operating leverage and a Jaws ratio of 4.9% compared to 4.5% in 2022. This resulted in an improved cost-to-income ratio of 53.9%, the best ratio that we've seen in over a decade. Although our noninterest revenue ratio of 43.4% was slightly lower than the previous year, primarily due to the increased net interest margin in the high interest rate environment, it continues to show the strength of our diversification, the broad-based capital light revenue streams and our ability to generate fee-based income. Despite foreign currency translation impact, our total capital adequacy ratio of 15% was more than the regulatory threshold by 250 basis points. Please turn to the next slide where we've shown a summary of our income statement. We encourage you to pay attention to the constant currency growth rates as they depict the underlying power of our franchise. For instance, during the period, most African currencies weakened against the U.S. dollars due to the U.S. Fed retightening cycle. The Ghana Cedi and Kenya Shillings depreciated by 28% and 21%, respectively. The Central Bank of Nigeria devalued Naira in June of last year, and by year-end, it had lost about 50% of its value. Profit before tax grew by 8%, but excluding the effect of the currency -- foreign currency translation, it increased by 34%. Our net revenues were up by 11% or 31% in constant currency driven by solid net interest and also the noninterest revenue growth despite inflationary and currency depreciation headwinds the cost to income ratio came in at a record 53.9%, reflecting not only decent revenue growth, but also actions we took to manage the cost base carefully. The cost of risk of 128 basis points was higher than the previous year, reflecting the weak market fundamentals. To conclude on this particular slide, let me briefly touch on regional performance. On a constant currency basis, our revenues and profits were across the board in all of our regions demonstrating solid underlying fundamentals and the benefit of diversification. Let's turn to the next slide, which speaks to our net interest income and also our net interest margin. Our net interest income for the year was about $1.2 billion, a 15% growth or a growth of 26% in constant currency due to the net impact of higher rates. The increase in interest income was due to rising rates in most of our markets, especially in Anglophone West Africa and Nigeria and also an increase in average volume of our earnings asset across board. It is important to note that the net interest income that we recognized for 2023 excludes $39 million, which relates to interest income accrued on the Government of Ghana Eurobond portfolio. It is also important to mention that our performance for 2023 was also negatively affected by the lower yields on the new domestic bonds that we received as part of Ghana's Domestic Debt Exchange Program in February 2023. On the other end, in terms of interest expense, our cost grew by 16% due to higher rates and a competitive deposit market as customers set for higher yields, especially in money market instruments. As a result, our funding costs rose by 26 basis points to 2.9%. Let's turn to the next slide, which speaks to our noninterest revenue. Our NIR as we call it, has experienced a notable increase, growing by 6% or 24% at constant currency. The growth is actually attributed to the fee generation in our fixed income, currencies and commodities business, which serves as a key income source for us. Our ability to generate higher levels of nonfunded income which tends to be less volatile and recurring is demonstrated by our noninterest revenue ratio of 43.4%. Examining the key lines of our noninterest revenue. We see that net fees and commission income rose by 1% driven by payments. Our net trading income increased by 18% due to robust client opportunity across the FICC business. It is important to note that our noninterest revenue includes a one-off noncash gain of circa $20 million due to adjustment on the loans that Ecobank Nigeria previously sold to AMCON. Moving to the next slide, 12, on payments. This slide shows the revenues related to our payment business, which we have been tracking since 2020. As Jeremy mentioned in his earlier remarks, the payment business will be a key focus for us in our GTR strategy to allow management focus, given its enormous opportunity and also group potential. In 2023, the Payment business generated revenues of $252 million which is an increase of 11% and our payment revenue accounts for 12% of our total group net revenues. Payment volumes were dominated by customer activity on our omni platforms, which both our corporate and commercial banking customers use. Additionally, we saw solid volumes for SMS banking and mobile money transaction. Card payment volumes increased driven by increased card issuance and transaction count. However, we did see a decline in income from merchant solutions, primarily due to some of our merchant's noncompliance with payments network rules. Moving on to the next slide on Slide 13, which speaks about digital channels. Here, we provide a snapshot of volume growth on our digital and physical channels. We saw double-digit growth driven by digital momentum across channels, reflecting strong customer engagement. Moving on to Slide #14 on operating expenses. Our cost grew by 6% during the period. But when adjusted for currency effect, that represented growth of 22%. We face significant challenges in terms of inflation on currency weaknesses. So we adopted a disciplined approach to managing our costs. Despite making cost savings, we direct discount into improving customer service and driving growth initiatives to achieve our transformation agenda. Care for cost management and increased revenues, improved our cost-to-income ratio to 53.9%. However, the total cost of total asset ratio deteriorated slightly due to a lower total asset base on account of currency depreciation. Our operating margin was positive at 4.9% compared to 4.5% in the prior year. Let's turn to the next slide, #15, which speaks to our customer deposit. Our funding base is comprised of 73% of customer deposits, which are highly diversified across types, regions and businesses. A significant 83% of these deposits are current and savings accounts, which are sticky, low-cost deposits. These types of deposits play a crucial role in supporting our net interest margin and profitability through the cycle, especially in the current competitive deposit markets where depositors are seeking higher yields. In 2023, we focused on quick wins and drove CASA deposit generation through aggressive deposit normalization campaigns. This contains net positive results boosting our customer deposit growth by 18% in constant currency. However, the cost of funding or the average rate we paid for our deposits and other funding sources increased to 2.9% compared to 2.6% in 2022, reflecting the intense competition and also the higher interest rate environment. Turning quickly to the next slide, which speaks to our loan book. Customer loans fell by 4%, but when accounted for in terms of constant currencies, increased by 15%. We've been cautious with lending practices, emphasizing on self-revolving loans. We saw broad-based growth in constant currency across the 4 regions and also across our businesses. Moving now to the next slide on our businesses. We have observed strong performance across all our business lines, the pre-provision and pretax operating profits have increased across the board, which positively indicates operating efficiency. This slide provides a quick overview of our analysts performance across the business line. CIB's revenue grew by $48 million or 5%, surpassing the $1 billion mark. Despite the sterilization of Ghana government of Ghana Eurobond interest income and also the effect of lower yield on the exchange Ghana domestic bonds. Higher rates, cash management, and FICC primarily drove the revenue growth in our CIB business. The profit before tax for this business decreased by $24 million, mainly due to the increased impairment charges that we had to book on both the Ghana's domestic and also the Eurobond securities. In Commercial Banking, a significant increase in FICC and cash management fees drove revenue growth by $102 million or 22%. Profit rose by $78 million or 58%, the most significant contributor to our group-wide growth primarily due to efficiency gains and also the lower impairment charges that we saw. In the Consumer business, revenues have grown by $53 million or 11% on higher deposit margins, cash managements and caps on the [indiscernible] by robust clients activity. Profits have also risen by $48 million or 35% on efficiency gains and also lower repayment charges. The subsequent 4 slides of this deck provides key performance highlights for each region. Starting on Slide #20, which is our Francophone West Africa region. The return on equity increased to 28.1% from 21.6% in the previous period. Revenues grew by $95 million or $76 million after adjusting for the impact of foreign currency translation. Higher rates, modest volume growth, foreign currency sales and also digital payments drove the increase. Profit rose by $80 million or $72 million at constant currency due to profitable operating leverage, efficiency gains and lower impairment charges. Turning to the next slide, which is on Nigeria, Nigeria we mentioned, the Nigerian operating environment was quite challenging due to higher inflation, the weakening of Naira by about 52% in 2023, and a significant drop in economic output following a series of reforms on the administration. This reforms include the foreign currency reforms and the removal of the 4 subsidies. This challenges the cyclical and structure obstacles to the Nigerian business, but we also see significant opportunities as we go on into the future. On the GTR strategy, we will aggressively address the challenges and take advantage of the opportunities that I imagine in the current climate to improve on our revenue growth and also improve on our capital efficiency. In 2023, Nigeria delivered a return on equity of 4.5%, slightly higher than what we recorded in 2022, albeit it's still lower than our cost of equity. Net revenues fell by $5 million, but increased by $67 million in constant currency. Revenues benefited from the high rate environment and also the higher client-driven foreign currency and fixed income sales by the market liquidity. Profits were down by $5 million, but our constant currency increased by $5 million. A high cost-to-income ratio and an increased impairment charges adversely impact Nigeria's performance. Next is Anglophone West Africa business, business performance in this region improved during the period, mainly due to better macroeconomic conditions in Ghana, the successful domestic debt restructuring talks and also, of course, ongoing discussions with international creditors on the Eurobond. AWA achieved an impressive return on equity of 26.3%, significantly higher than the 14.2% recorded in the previous year. The revenues increased by $80 million or $130 million, if adjusted for foreign currency translation impact. However, due to ongoing restructuring decisions with bond orders, this figure excludes the $26 million of earned interest income on the government of Ghana's Eurobond. As of the end of the year, December 2023, the group collectively are taking approximately $1 million to $3 million in impairment charges against the Government of Ghana Eurobond. Higher net interest margins and strong performance in the consumer business in Ghana drove revenue growth. Continued efficiency gains also helped to increase profit by $99 million or $132 million at constant currency. Finally, moving on to our Central East and Southern Africa region. On the next slide, this region achieved a return on equity of about 32.8%, an improvement from the 22.3% we recorded in 2022. Net revenues increased by $100 million or $224 million due to the expansion of net interest margin and also FICC related fees. Profit also rose by $93 million, reflecting positive operating leverage, efficiency gains and also decrease in impairment charges. Moving on to Slide # 24, where we highlight our capital metrics. We closed the year with a CET1 Tier 1 and total capital adequacy ratio of 10.4%, 11.1% and 15%, respectively. We generated capital organically, which had positive impact. However, the significant currency weakness moderated earnings growth. Additionally, the final tranche of $75 of the IFRS 9 Day One amortization was reflected in January 2023. On the other hand, our aggressive RWA optimization program helped to reduce risk-weighted asset density and also the RWA deflation positively impacted our capital. Despite the uncertainty in the regulatory environment, we'll continue to allocate capital diligently while reducing our risk-weighted asset. Our goal remains to improve our organic capital generation through disciplined capital allocation strategies across our businesses and regions. In terms of the movement in capital ratios, if you go to the next slide, this basically shows both the positive and also the negative impact on our capital ratios from factors such as the earnings, the FCCR and also the next movements in our risk weighted assets. And finally, let's turn to how we track against our 2023 guidance and our initial outlook for 2024 on Slide #30. I provide an overview of the company's performance against the 2023 guidance. Despite foreign currency translation affecting growth rates on the balance sheet and inflationary headwinds and patent costs the cost-to-income ratio has improved significantly due to strong revenue generation in commercial and consumer bank. The cost of risk was in line and disciplined credit underwriting has kept the NPL ratio within guidance. Moving on to the guidance for 2024 on Slide #31. We expect to grow the balance sheet modestly. We anticipate loans to remain flat to at most increase by 2% due to credit underwriting pudency and right-sizing actions on our risk-weighted assets. We expect customer deposits to come in at the upper end of the range, primarily due to aggressively growing CASA deposits, especially in the consumer business through initiatives like the introduction of the direct sales agents and deposit mobilization efforts. In constant currency terms, we expect both loans and customer deposits to grow by circa 15% to 20%. As Jeremy noted in his remarks on our GTR strategy, we would take actions to accelerate revenue growth, particularly in new growth businesses, which should result in revenue growth in the range of about 5% but much stronger at circa 22% in constant currency terms. Inflation will continue to negatively impact expenses but will be disciplined in expense management. However, we will continue investing in growth and transformation initiatives in the long term and costs are expected to increase modestly. Positive operating leverage is expected to impact the cost-to-income ratio positively. Market fundamentals still remain challenging. So we expect credit loss buffers to increase, which could result in an uptake in the cost of risk and also increase in our NPL ratio. Finally, we expect our NPL coverage ratio to come in within the circa 80% to 90% range. At this point, I'd like to hand over to Chinedu to walk you through the group's asset quality metrics and also the related drivers. Thank you. Over to you, Chinedu.

Thank you. And thank you all for joining today's call, I am covering the performance indices for risk and credit portfolios and also the market and liquidity risks. On Slide 26. I think the key thing to highlight here and this been covered to some extent by both Ayo and the CEO, is that despite the slight decline in the volume of deposits, $20 billion odd, the level of growth on a constant currency basis is actually 18%, and this reflects the reality of what we saw in our markets last year where we had, Nigerian Naira, for example, devaluing by about 50% the Ghana Cedi by about 30%. So these are some of the major markets we're dealing. So despite all of that, we just had a marginal reduction in our volume of deposits in dollar terms, and that speaks to the strength of our business momentum on an intrinsic basis. If you look at the demand deposits to total, you see that continuing to tick up. It just highlights the quality of the deposits that we're originating is now at 6.4%. That's the highest it's been in the past 7 years, and that's a trend which just reflects our opportunity in that respect and the fact that we'll continue to be a destination for deposits in the markets that we operate in. Loan-to-deposit ratio at 55.4%. Consistent trend reflects the fact that we have remained largely conservative is also the reality that we had other higher assets in the course of 2023, paid more attention to our risk-weighted assets, in terms of origination, and the impact on capital in the face of significant devaluation in many of our markets. So a bit of caution there, but it also reflects the dry powder we have in case should we desire and seek to expand our lending, it highlights the scope we have in that respect. Also, the volume of net interest behind deposits of our total loans hovering above 100% around 10.7%, again, speaks to the quality of our deposits, what I say the steady state engagement we have relating to our origination of loans and the opportunity that we have also in terms of advancing that into the future. Next slide. On Slide 27, I think the key thing to illustrate or highlight there is the pattern of the graph over an extended period. So if you look from 2018 to 2023 in the top left chart, this is the NPL ratio. There has been a steady continued improvement in that respect. Remember, this is across the period of COVID-19, inflation impacts in several markets across last year, we still turned up with 5.4% NPL versus 5.2% for the previous year. Actually, if you consider that if we had hit the level of lending that we had indicated in our guidance from last year of about $11.8 billion, this is under 5%. So it speaks again to the continuing quality of our portfolio and the management of the overall asset portfolio in the bank to make sure that it remains healthy and moves in the right direction. On the top right, you have the graph for the NPL coverage, which I have spoken to. As you have seen, there has been a step change in terms of recovery that we have. And as was indicated to you, our prognosis for that, for this year is to stay above 80% in the 80% to 90% range and we expect to achieve that. If you look at the gross loans that came in at $11.1 billion versus $11.5 billion for the previous year, actually embedded in that is a growth of 15% in constant currency terms. So despite the fact that was about [ 86.5% ] reduction in that figure, again, because a lot of our loans in markets like Nigeria, the value decline in dollar terms by like 50% and all that. So again, it speaks to the fact that we continue to engage in our markets to support the businesses and governments there so it doesn't reflect any kind of step back. It's the reality of the markets that we are dealing in and all that. And we intend to continue to grow our business in a prudent manner, taking and being conscious of the capital consumption for [ causing ] an asset-light origination and other transactions of that nature. Net impairment, the cost of risk at 1.28% is actually more consistent with the trend. It is consistent with our guidance. And we -- it's also consistent with the guidance we are giving for this year. The previous year of 2022 was an outlier because we had some release of provisions in that year, which is why it was low at 0.09%. Next slide. I think next slide highlights the substantial diversification of our portfolio. But we are in 33 countries, so it's not a surprise that government is a major counterpart for us in terms of lending, accounting for 19%. But again, you can see the diversity here in terms of manufacturing and retail 12%, 11%, 10% and all that. So we have a very well-diversified portfolio across our countries, across our businesses, across our sectors. These are multiple layers of diversification, and that's where all the strength of the franchise. If you look at it on a regional basis, again, UEMOA accounts for 46% of our loan book. This also highlights the reality that in the course of 2023, the XOF actually revalued vessels, the devaluing currencies of Naira and CD and all that, so that increases weight in the portfolio. So you're seeing that at 46%. And then you have the Nigerian region at 18%, CESA at 16% and AWA at 13%. If you look at on a business segment basis, the CIB continues to be the dominant in terms of the loan book at 73%, followed by the Commercial Bank at 16% and the Consumer Bank at 11%. On a currency basis, there has been an accretion to the impact of the CFA, and this is the combination of most of the lending that you'll see within the UEMOA and the CEMAC regions. Recall that in these markets, almost all of the lending is in local currency, in XOF and XAF. So that, again, because these currencies revalued the vessels, other currencies devalued in the course of 2023. You see that the CFA now accounts for 55% of our portfolio. This is a likely stable, what I'll say, currency in the context of comparison to dollar and all that over the past several years. So that, again, reflects in our portfolio. And that amount in the USD at 26%. There has been a decline regarding the proportion that is Naira at 6% and the Ghanaian CD at 5%. If you go to the next slide, please. This causes basically the movements in the staging of our portfolio. I think one thing that I would highlight, our portfolio really is intrinsically short term. There are at least half of the portfolio. So there you see that in Stage 1, you've seen $5.9 billion in terms of reduction, $5.2 billion in terms of additions. Those are mostly revolving lines, which get paid and are booked back. And it reflects the essential health and an amazing portfolio to also highlight our opportunity to change the direction of our loan book should we choose to, which speaks to us what I've spoken to in terms of our capital management. You saw some accretion in terms of Stage 2 loans, primarily originating from Nigeria, Ghana, again, the markets that have seen substantial stresses in the past few years. That's to be expected. These are well-controlled money, and we expect to keep that contained going into the future. In Stage 3. Stage 3 was slightly stable. We had some movements in terms of collections and write-offs and some incomings. But the closure at $600 million was very consistent with the level we had as at the end of 2022. Ayo have already spoken to the guidance. And I think what I should just speak to a bit further is the guidance regarding the NPL ratio. If you recall, our guidance for the prior year was 5% to 6%, this year, 6% to 7%, primarily because one of the [ containment ] that we are adopting regarding growth of our [indiscernible] business in terms of the efficiency of that and return on capital, and that's the focus. So we are more focused on asset-light transactions. It's also a reality of the fact that the core component of our NPL is in foreign currency. So you have a scenario where that has an somewhat outsized effect. So it's not necessarily a market deterioration in the portfolio. It's the reality of the devaluations that we've seen, which has impacted our overall loan book. And as I said, the reality of also the gross loans, the [ strain ] has been likely in foreign currency, at least [ 2/3 ] of that. So that -- those are the key things to highlight to you. I think the critical points to make is that asset quality numbers remain very robust in the face of very challenging market conditions across a number of years. It reflects the systematic and effective [ embodiment ] of these indices across the period. So with that, I will hand over to Ato to open the Q&A session. Thank you very much.

Thank you, Chinedu. And ladies and gentlemen, we would proceed into the Q&A now. [Operator Instructions]

That would be a couple of answers, at least. Do you want to take them one after the other?

Yes. I'd just quickly organize so I can see that. One second, please. All right. Our first call question is coming from the line of Konstantin.

Yes. Thank you very much for the presentation. This is Konstantin Rozantsev from JPMorgan Research. So I had a few questions related to the bank's Nigerian subsidiary. The first question, could you please speak about the overall strategy for that subsidiary that you see at the moment? You mentioned that you see significant opportunities in Nigeria going forward. So should we expect this subsidiary to start growing? And is it a near-term plan? Or it's still a very distant plan from current situation? Second question is about the capital position at that subsidiary. So what's the capital situation in that Nigerian unit? Is there any capital shortage? Or do you expect any capital shortage to open -- material shortage to open in the near term? And if yes, how this is going to be resolved? And the last question is about the situation with deposit flows at that Nigerian unit. So is there any sense of instability with deposit flows, deposit outflows from that Nigerian unit at the moment? If you could please comment on these 3 questions.

What do you want us to do? Do you want to go ahead and take more questions? And then we can...

No, I think we would just answer -- deal with each question and then we'll move to the next.

Okay. Just as a question. I couldn't hear -- when there was reference to a subsidiary. I don't -- it is a strategy to do it a subsidiary, but I didn't hear the subsidiary.

Konstantin, can you please repeat your question?

Just with regards to which subsidiary you are talking about.

Sure. This was about Nigerian subsidiary. All of the questions were related to that subsidiary. So first on the strategy, second, on the capital, and third, on the deposits flows.

So was the question about the broader strategy in Nigeria?

Yes. So the first question -- yes, so the first question is about the strategy for that Nigerian unit. Do you expect it to grow -- to start growing at some point? Or is the plan to keep managing the NPLs and to keep resolving those NPLs for some time and simply to create opportunity for now? And the second is about the capital situation there, if there is any capital shortage, if you expect any capital shortage to open in that subsidiary? And if yes, how this is going to be resolved? And third is about the deposit flows. Do you see at the moment any instability with deposits there?

And maybe then I can answer -- I'll talk a little bit about the strategy, and then I can pass on to Ayo, who can talk more about the capital. Within the Nigerian subsidiary, what we are focusing on is diversifying out our business and more. Historically, it's been very corporate-oriented, and with focus on the corporate lending and more so, also, I guess, on foreign currency lending within the market. Now just given the changes we've seen politically and the policy changes that have been in place and the corresponding impact also on the exchange rate, there are a number of measures that we are focusing in on. First, we see lots of opportunities to grow in the commercial and consumer businesses. We still have room there. And I think there's -- even within the banking sector, there's room for new propositions to be able to drive that. And payments is also quite core here for this. Because we've got the largest payments, revenue pools on the continent. And that's both remittances into Nigeria as well as remittances out. So the fact that there was a more sort of open foreign exchange regime has actually started, meaning that we can actually see outward remittance flows out of Nigeria and to other parts of the continent as well as other parts of the continent. And so we see upside there. With regards to the Corporate and Investment Banking business, we're very focused on just really managing, obviously, the names which are more -- have historically been having challenges that continues. And a number of them are starting to come around, which, I think, is positive. And we'll just wait to see how that process works, but we're working closely with those clients. And then we're also really thinking about just how do we optimize the risk-weighted assets within this entity. So we can -- you can probably expect to see more local currency assets being grown because of the uncertainty around the exchange rate. But we really think that we can tighten up and optimize this balance sheet not just to drive returns, but also to free up capital for the other businesses. So the focus will be more on capital-light -- sort of capital light, more fee income-generating businesses. Obviously, trade is in their Wealth and Asset Management, among others. And then to boost all of that, there's obviously a focus on driving efficiency and driving productivity to higher levels. So we've got specific programs that we are focusing in on automation of processes that are very manual and expensive to run, very thorough processing will give us a stronger control handle as well. So it's really to focus on both sides to bring down the cost/income ratio by driving revenues up and cost down. And then we've got the last part, which is really to focus on continuing to drive our margins up, but also continuing to focus on growing our CASA ratio, which is lower than it should be. So those would be the core things that we would expect. And in the future, yes, I mean, obviously, subject to the macros, the exchange rate. In Naira terms, yes, we're growing our business even in dollar terms, but obviously, that's subject to conversion back into dollars. But yes, we do want to see this business growing in the coming years, and that's the thesis upon which we are working. Maybe I can invite Ayo to come in.

Yes. Thank you, Jeremy. And Konstantin, with respect to your second question, on the capital position of the Nigerian entity. Like you've heard recently, the Central Bank has introduced a new capital requirement for Nigerian banks. For U.S., specifically, Ecobank Nigeria, being a national bank in that market comes with a new capital requirement of about NGN 200 billion. Currently, we're at about NGN 193 billion, so just a gap of about NGN 7 billion, that's about $5 million. And if we benchmark this with other banks in the market that have material gaps a few, you would agree with me that this $5 million, it's largely insignificant. So we have so many options of addressing this $5 million gap in terms of the absolute threshold of capital. Don't also forget that the Central Bank has provided a 2-year window for compliance. So it's basically between now and the end of March 2026. We don't expect that to be a problem. But I can imagine that your question is also focusing on what is the capital adequacy ratio. Like you know, every regulatory entity has to go through a process to get its local statutory financials approved by the regulator. So Ecobank Nigeria is still in the process of finalizing that. So without the approval yet, we cannot authoritatively confirm what the capital ratio of a subsidiary is, but we do expect the capital ratio should be 10% as of December, which is a regulatory minimum. I must say that pressure is continuing to exist in terms of the capital ratio, and that is why you would have heard Jeremy in his opening remarks speak to a number of actions around optimizing capital, driving how the efficiency -- and not just in Nigeria, across the group as well. Our focus, especially when the Consumer and Commercial business, is not to say we are neglecting Corporate businesses, but we believe that the Consumer Commercial Banking businesses are where we can easily have the short-term revolving facilities. And also, particularly for Nigeria, addressing the S3 and the S2 loan bucket as well, but we have a number of actions that in both the local management team and also the group team are working towards. I hope that answers the question on the capital. And the last question on the deposits, whether there's a sense of deposit attrition. Globally, we're seeing the deposit grow in the Nigerian book in local currency terms. Of course, we're seeing a close view of our quarter 1 results. But generally, we're seeing an increase in deposit book in local currency terms. But of course, if you're looking at just U.S. dollar terms because of the depreciation in the currency, the nominal might look like a decline, but in terms of the actual currency, which is Naira, the customer deposit book is actually growing in Nigeria. I hope that answers your question, yes. Thanks.

Thank you, Ayo. Just a reminder, please keep questions to a maximum of 2, and then there will be a follow-up question. [Operator Instructions]. Next question coming is from the line of [ Ifeanyi Osela ].

Good day, everyone. Thanks for your presentation. And so my 2 questions would be basically on -- so for the year 2024, what do you say are management's important drivers for earnings, which you are going to focus on? And also, my second question is going to be, given the limited rate environment, how would you assess the upside for credits from customers? Has this already been factored into the guidance provided?

Okay. Maybe again, I can come in and I can speak through the important drivers for earnings. I was trying to cover that through the strategic house that you saw there, which are just the core pillars. We continue to focus on managing what I call the basics of banking well, which is the sort of managing margins, managing NIMs, managing pricing and price elasticity based on price elasticity of customers, focusing really on the right returns. We run quite a diversified model, and we see opportunities across the continent and across businesses. So our core CIB franchise still has a lot of room for future growth as we indicated. So we expect CIB coming to the table with faster growth and we expect more growth in commercial and then obviously followed by consumer. The payments business continues to push along, so you can expect to see growth there. I think we'll be looking to try and see if we can accelerate the nonfunded income growth streams faster and the capital light-growth streams faster really to keep the returns moving up, and we'll be addressing those markets which we are growing from a position of strength, the bigger markets, where we're well placed and brand is strong as well as focusing in the longer term around turning around the underperforming markets. The focus in the short term will be in the larger markets because it takes a bit of time to obviously do the transformation in the smaller subscale markets. And their total number contributions is a bit tighter. So it's a fairly diversified game. We think we have more room in getting more money on deposit growth and CASA growth rather than taking just incremental risk. In terms of the interest rate environment. We're obviously very mindful that high interest rates to create pressure on our clients. So we have to make sure we're careful about how we price for risk the sectors and segments that we're actually participating in and the customer's ability to be able to do this. We don't have a huge consumer portfolio as at now. So obviously, that means that at least we've got less to worry about from a just through the cycle delinquency perspective. And but yes, there's obviously pressure on clients. But hopefully, if we start seeing rates coming down and the tread bringing down rates, then we'll start seeing more inflows, which will improve FX rates, which will improve cost of goods that are imported. And we'll also see hopefully easing on inflation to importation. And interest rates hopefully coming down also as a result. I'm not sure if you want to add anything on the rate environment and the implications for Chinedu.

Thank you. And our next question would come from the line of Solena.

I've got 3 questions. So the first one is on the HoldCo, if you could remind us the double leverage at year-end and what are your targets going forward? It would be also quite useful to have a bit of color on liquidity and notably in terms of dividend upstream for '24, what's your expectations there? My second question is on capital ratios at consolidated levels. So you've put your target for '23. What are there for '24? And given that your CAR ratio is actually above your initial target, does it have any implication for your outstanding Tier 2? And my last question is whether that you plan to come anytime soon with [indiscernible] replace the last [indiscernible]?

Ayo, can you take this?

Thanks, Jeremy. Solena, thanks for attending the call and thanks for your questions. Let me start with the HoldCo question. In terms of the double leverage ratio ended December 2023 at about 173%, not the place that would want to be. Of course, it's due to a combination of factors. One of the major factor was the significant currency depreciation that we've seen in 2023. In terms of target, our target still remains, we want to bring down that ratio as much as we can. We are very mindful that the written agencies corridor is about 120%. We feel that the major factors were getting towards that threshold is true, of course, the dividend upstream from our subsidiaries, further increasing that and also looking at any actions around whether we could raise 81 or do a rights issue. But of course, we all know the current operating environment, which makes the right issue very difficult to execute in this market condition, especially for Ross as a U.S. dollar issuer. So we're focusing on what is within our control, which is primarily accelerating dividend income from our subsidiaries and also recent opportunities for form 81 issuance. In terms of the liquidity of the HoldCo, just the flavor of dividend. You realized that 3 years ago, dividend income from our subsidiaries was about $128 million thereabout. Last year, we grew that by circa 40%. So that grew to about $178 million. We expect this year, we should be getting dividend in excess of $200 million and most of the growth mostly coming from our [indiscernible] West Africa subsidiaries and also our international business, the EBI in France and also with sales on growth in [indiscernible] business as well. But overall, this is also tied to the fact that the business is growing from a profitability standpoint. So the more profit our countries are able to make, of course, better the upstreams they can also pass on to the HoldCo. Like Jeremy already mentioned, we're beginning to see increase in the number of subsidiaries that are upstreaming dividend also the HoldCo from last year, we had about 20 out of 34 subsidiaries, that's about 59%. We expect that to grow to about 22, 23 subsidiaries this year, and we expect that momentum to continue as we go into the future. Overall, in terms of liquidity, our major inflow outside of the dividend is also in terms of a management fee, which continues to be circa, the $25 on an annual basis. The 2 major sources of outflow, which -- like you know, number one is the funding cost for the HoldCo which is Circa 140 to Circa 150. and also the operating cost, which is Circa 30. So overall, our inflow still continues to be better than the outflow and respect that, that differential would also be used in kind of deleveraging and some of our debt portfolio. Your second question in terms of the capital ratios, what the target is. I think what we've shown on that particular slide is our board approved target for Tier 1 is 12%. And in terms of the total capital adequacy ratio is about 14%. So today, we have 15%. So we're more than the Board approved target from a total capital adequacy ratio point of view. But in terms of the Tier 1, as of December, we are at about 11%. Our Board target is 12%. So we still have some room to cover for mid-Tier 1 ratio standpoint. In terms of implication, what it has implication for Tier 2, I don't think there's any implication for our current outstanding Tier 2 Eurobond in the market. We still believe that we need that instrument to continue to help this capital ratio as a group. And your last question, whether we plan on coming to the market for issuance any time soon. Yes, there is a plan to actually come to the market as soon as market access becomes very much favorable for a type of issue. If you recall, just like Jeremy said in his opening remarks, we are able to successfully repay the $500 million of the senior facility in April. We've used the combination of funding long term and short term. We expect that we will need to also repay those short-term facilities sometime next year. So we believe that between this time this year and next year, we should be coming to the market as subject to, of course, favorable market condition to be able to issue new instruments and to take out the bridge funding facility that we've got. I hope that answers your question. Thank you.

Our next question will be coming from the line of Sumbo.

My question is actually just a follow-on to the question that was just asked on the capital ratio. I was wondering because you gave us the numbers for December. I was wondering if you had any estimates for the capital ratio post February after the devaluation in the Naira. And then apart from that, Could you also speak a bit about your plans to improve the capital ratios in the Nigerian subsidiary specifically?

Yes, thanks, Sumbo for your question. In terms of our group capital ratio, of course, mindful that we are still in a close period in terms of our quarter 1 results. Well, I'll just say, in general, yes, we're seeing some pressures in terms of the currency this year. Like you know, we've seen the depreciation of Naira. We're seeing for the deposition of Ghana CDs. But on the positive side, we've seen appreciation on the Kenya Shellings. If I remember, Kenya Chellings was about 157 as of the end of the year. As of date about 131 to $1. So we're seeing both negatives and positives, right? But on the balance of probability, looking at our capital ratio growth for 2024. So we expect some pressure, but the ability of the firm to continue to generate earnings to cover this pressure. I think it's robust. I don't expect any material. Very material changes in the capital ratio. I'm able to provide any point estimates as of now because I'm mindful that we are in a close period. In terms of your second question, plans to improve on the capital ratio for the Nigeria subsidiary. I think I might have answered it when Konstantin asked this question earlier. I think generally, we've said the gap in terms of meeting the new minimum capital requirement in Nigeria is about NGN 7 billion, which is about $5 billion. We said that is not a big number. So that can be easily fueled up. Don't forget also that either ETI owns current ENG 100%. So there's still opportunity to bring in very supportive minority shareholder from the Nigerian market also helped improve its capital stack. We are also exploring also opportunities to further grow the capital stack to other instruments in the market. So that process is also ongoing, and I'm sure we'll be able to come back to you with an update as we go further along into this year. But outside of those inorganic incremental growth in capital, we are focusing also on what is within our control in terms of rightsizing our risk-weighted asset portfolio, focusing on short term because we believe that Capital ratio is a function of both the capital stack which is a capital supply and also the capital demand in terms of risk-weighted assets. So a number of actions are ongoing. We continue to track them. And we're optimistic that we'll be able to further improve on the capital ratios for Nigeria [indiscernible].

And your next question coming from the line of Ngozi Odum.

So my question is really on the Nigerian subsidiary. In terms of the assets quality in that region are you still seeing some pressures? What's the outlook for asset quality in that region, What the [indiscernible] NPLs as high as 9%. We still saw a considerable growth in impairments on loans. Are there any moves to write-off notes? And what's the general outlook in terms of asset quality? And then also, a lot has been said on the strategy and the [indiscernible] transformation, especially in the Nigerian business. I just want to get a sense of the expectations in terms of near to medium outlook for contributions from the Nigerian business. Where do you see return on equity, [indiscernible] double digit similar to other subsidiaries? And what's your outlook in terms of PBT contribution this year and maybe next year, just like some medium-term outlook on your business expectations for this business.

Thank you. I think I don't know whether we want -- Chinedu, if you want to just give some answers on the asset quality.

Sure. Thank you very much, Ngozi. I think in prognosis for the would I say the challenge book in Nigeria is actually more positive. And I'll give an output context on that. A lot of these challenges are in the [indiscernible] and the oil and gas sector of Nigeria. And we are well aware of the challenges that that's a threat faced [indiscernible] in the previous 4, 5 years, related to would I say, vitalization of infrastructure, leakage and challenges of some of the key operators being able to evacuate products that they produce actually be able to operate openly and without hindrance. Also, you may recall that there was a challenge in terms of the petroleum industry Act and the governing laws, which, again, in that investment. I think the new government has come in quite decisively has acted to bring clarity. And you already have seen substantial increase in terms of the production of crude in Nigeria. You have more clarity and more predictability. We are beginning to see increased interest in terms of investors on the taking transactions in the market. There are 1 or 2 that are in process. And some of these assets, the pathway to resolution is to new investors ,investing in those activities or bimistake then. So the prognosis for that with this new government in Nigeria and the policies that they are adopted and they increased clarity regarding investment is certainly better. So in that context, we certainly expect this to improve going into the future. So that would be our response in that respect. Thank you.

Ayo, do you want to cover the other one? Or do you want me to cover it?

Yes, thanks for the second time. So in terms of the expectation going forward, medium, long-term outlook. I think generally, we expect with -- on the back of all the transformation work and the work has to be done on Nigeria. The outlook is actually positive. We expect to see the ROE, which has been in the 4%, 5% for the past 2 years to get to double digits in the medium term. Of course, like Jeremy mentioned that Ecobank Nigeria previously has historically focused on the corporate banking business. I expect, of course, to be able turn the strategy, not neglecting corporate, but actually focusing on the retail side of the business and respect to be able to demonstrate growth across the major product clients in Nigeria. So that will be supportive of the revenue growth and also all of the actions that we're undertaking from an operating efficiency standpoint right size and in terms of how we distribute in the market will also be positive for Ross. As the impairments, like Chinedu mentioned, because of the outlook, which is positive, we spent that being moderated, and that will be supportive of as the improvement in the ROE as we go into the future. I think just like you said, there's lots of work to be done and the local [indiscernible] team is fully focused on that. And also with the support of the group, we are all focused on turning around because it's a key aspect of the GTR strategy. Thank you.

I think there was one question on the ROE expectation. I don't know if Ayo touched on that.

Yes, I've mentioned that we expect the ROE to be in double digits in the medium term.

And our Final question would come from the line of Alexandre [indiscernible].

My question is about geographical expansion. As you are the Pan African bank, do you consider that you could expand in the next year in other countries?

Okay, I can take that. Right now, what I would say our focus is really doubling down on the markets that we're in rather than necessarily expanding out. We have a good diversified set of countries given we're in 35 markets already. It doesn't mean that we will close that door for good. But I think in the course of the next 12 months, the focus is really on cementing our position driving market share within the markets where we already exist and turning around those other businesses. I think we need to really focus on that and make sure that they're pulling their weights, that will hopefully drive down the cost/income ratio closer to 50%, drive up our returns and just sort of increase the trajectory of PBT growth and dividend payouts. So in the next year, it's not a core priority for us.

And I will be squeezing in one more question from Ngozi.

Just lastly, I just wanted to have an update on your exposures to Ghana debt. Do you see any significant downside risk on your exposures to the Ghana Debt?

If I can take that. For your question, just to answer it in 2 parts. In terms of the domestic bond, like we mentioned, that has been concluded. The new bonds have been received. We don't expect any further impairment on that domestic bond. In terms of the Eurobond like you've also seen in the news, their ongoing positive talks between the government representative and also the representative of the orders. That is progressing well. We expect those conversations to be concluded in the next couple of months [indiscernible]. But from our side, proactively, we've taken what we consider to be our broad expectation in terms of impairment. We don't expect any for that downside risk from an impairment standpoint because what we've assessed and what we booked like I mentioned, we've booked about $183 million in terms of impairment on Eurobond. We don't expect any further negative downside risk coming from that at a group level.

I think we might have just to be flexible and allow Konstantin to ask this question, and then that will be the final one. A final question will come from Konstantin.

So the questions that I had are about the Eurobonds. So what is the group's current plan for -- around the [indiscernible] and refinancing of the Eurobond that you have at the [indiscernible] unit. So that unit has a senior bond maturing in early 2026. What are the group's plans and if the market is closed for that unit, you need to issue a new bond. Which any entity within the group provides that funds and how do you think about this? And in terms of the plans for the Tier 2, which is sitting at the HoldCo level for Tier 2 or Tier 1s. I acknowledge it's still quite some time left until they quoted, but can you guide us in terms of your potential behavior then is the plan to replace it with another Tier 2 ends. If the market is closed, but when you issue is there a chance to see an extension of that bond.

Okay. If I can take that. Yes, thanks Konstantin for the follow-up question. In terms of the first one on Nigeria, the currency of the bond matures I think in February 2026. So that's still quite some time. 21 months or so thereabout. So there's still plenty of time. Of course, it is very difficult to say what will be the market condition next year or early 2026. But the only thing that we can tell you is that as a group, like we've always illustrated over time, we've always met our obligations even when market conditions have not been favorable, like we've just recently demonstrated with our senior Eurobond, which matured in April. And we took out using private transaction. So I think for the Nigerian [indiscernible] long time away. It's difficult to predict what the market conditions would be at that point in time. But we have several options, and we'll continue to monitor all those options as we go along. In terms of the plans for the ETI Tier 2 Eurobond, like you also know, the first call date, I think is in June 2026. That is the like 25 months away. But one thing I would say is that, yes, still need the Tier 2 capital in our stock. I think that is the only major Tier 2 that we have today, and we want to keep it in our stack. In terms of actions that we'll take whether to call or not or to replace or not, that would be entirely dependent on what we see when we are approaching the 2026 corridor. So it's very difficult for me to say what is the plan as of today or keep all the options in view. What our plan is still. That we still need some [indiscernible] Tier 2 in our capital stock to optimize our capital ratios. And I hope that answers the question.

Thank you all. At this point, there are no further questions. So we would be bringing the call to an end, and we would like to thank everyone for joining. I would allow Jeremy to say a few words that he has to close the call, otherwise... Jeremy?

Yes. Thank you. I just once again thank everyone for joining our earnings call today. Like I reiterated, we still remain optimistic about our business with the growth opportunities, and we're leveraging our core capabilities while building new ones to really drive our competitive agenda. And it's really an agenda which is focused on driving execution, delivering on what we say we will and the results following through there. And I'm glad we've seen some early shoots in 2023 and look forward to building momentum. So again, just to thank everyone for joining the call. And wishing you a good rest of the afternoon or morning wherever you are dialing in from. Thank you very much.