Ecobank Transnational Incorporated (ETI) Earnings Call Transcript & Summary

Good day, everyone. Welcome, and thank you for joining the call to review Ecobank's 2024 audited results. I trust everyone who had the chance to review our earnings release documents. They are 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. This call is being recorded. Your lines will be muted for the duration of the call. I will first turn the call to our group Chief Executive Officer; Jeremy Awori, for some opening remarks before Ayo Adepoju, our Group Chief Financial Officer, describes our results. Before I do that, let me remind you that we may make forward-looking statements based on our best view of the world and our businesses as we see them today. More information on the forward-looking statements, please refer to the disclaimer at the back of the slide. And with that, it's my pleasure to turn the call over to Jeremy. Please go ahead.

Thank you, Alto and a very warm welcome to everyone who's joined us on the call for our full year 2024 results presentation. So a very warm welcome again, and thank you for joining. So on March 27, we released our audited results for 2024 and with strong earnings and returns, concluding what was a pivotal year for our growth transformation and return strategy. It was a year in which we established solid foundations for our businesses to grow now and into the future. Additionally, it was characterized by a resilient, disciplined execution and the continued advantage of our enduring competitive edge is the leading Pan-African banking group operating in 35 African countries. I'll briefly discuss the macro backdrop and highlight key aspects of our full year results, then I will share insights into the progress we are making with our GTR strategy, after which I will walk you through the primary drivers of our results and our guidance and outlook for 2025. The operating environment in Africa face second challenges, although we noted some positive signs of global stabilization ongoing conflicts such as involving Israel, Hamas, Russia, Ukraine and rising tensions between the U.S. and its trading partners continue to weigh on global economic output. Fortunately, Africa's growth remained relatively robust. However, high inflation and interest rates have taken a toll on households and businesses retraining and complicating efforts to meet financial obligations. Concerns regarding the sustainability of sovereign debt lingered. And on a bright note, Zambia and Ghana, recently completed successful debt restructuring agreements with debt creditors. In Nigeria, economic growth was tepid despite stabilization in the oil sector. Both inflation and interest rates stayed elevated with Central Bank of Nigeria keeping a cash reserve ratio or raising the cash reserve ratio to 50%. The [ naira ] experienced a significant depreciation of about 38% in 2024. Economic growth in our Francophone West Africa region was comparatively more substantial and inflationary pressures is some more. The -- pack of the West African CFA franc is off to the euro continued to help maintain macroeconomic stability. However, developments in the alliance of Sahel countries made of Burkina Faso, Mali and Niger, remains something that we were watching closely. Now it is important to note that despite these challenges, our business in Burkina Faso for example, saw a strong growth in profitability in 2024. Economic output grew in Ghana, Liberia and Gambia in the AWA region, which is the Anglophone West Africa region. However, the Ghana CD depreciated by about 21% and the Bank of Ghana policies on cash reserves and loan-to-deposit ratio hampered revenue growth in our operations. We are proud, however, to see that Ghana at the end of the year, returned to being the #1 bank within the country, #1 in a number of key indicators. In Central, Eastern and Southern Africa, CESA region interest rates and inflation remained high, echoing trends in other regions. A key development for us was the transition to using U.S. dollar as the functioning currency for Ecobank Zimbabwe amidst volatility in [ the zig ], which resulted in a significant drop in foreign exchange revaluation gains. Fortunately, strong growth in CESA other subsidiaries improved our performance, particularly in some of our turnaround markets. Turning to our full year results. I'm pleased to report significant progress. Profit attributable to ETI shareholders surged by 45% in constant currency, reaching USD 333 million, while profit before tax climbed 33% to USD 658 million. I highlight the growth rates at constant currency because they provide a clearer picture of our underlying performance, excluding the impact of foreign exchange fluctuations. Net revenues increased by 18% at constant currency to USD 2.1 billion. This figure reflects the strong growth of our business despite the challenges faced I've earlier mentioned. As a result, we achieved a record return on tangible equity of 32.7%, along with increases in per share earnings and tangible book value of 16% and 4%, respectively. All 3 of our core businesses showed growth in revenue and earnings at constant currency as we continue to invest, particularly in our consumer and commercial banking segments. In Corporate & Investment Banking, revenues grew by 16% in constant currency to $1.1 billion, fueled by our leadership in UEMOA and our -- and a solid performance in product areas like cash management, payments and trade. In 2024, the CIB business undertook an organizational simplification process to enhance customer and client satisfaction, foster product innovation and boost regional collaboration. In Consumer and Commercial Banking revenues increased by 15% and 12%, constant currency reaching USD 504 million and USD 566 million, respectively. The year 2024 primarily focused on building for the future, especially within consumer banking, where we invested in growth areas like wealth management and mortgage services. We also launched a new business line Payment, Remittances and Banking as a Service, which focuses on the Fintech segment, and this helps to align with our vision of becoming a payment powerhouse in Africa. In the fourth quarter of 2024, we announced significant partnerships with cross-border trade payment platforms and tech companies, including XTranfer, TransferTo & Nium. Nigeria also is set to be a pivotal market for these initiatives, and we are eager about the opportunities in the payments landscape. Our commercial banking business sees enormous potential growth in women-led businesses. To that end, we continue to invest in other Ecobank program which is an award-winning program for African women entrepreneurs working to expand it to be bigger, better and more inclusive. We reported a record cost income ratio of 53% and supported by deliberate cost saving initiatives to enhance efficiency. We are redirecting these savings to both our franchise and create a robust business that delivers long-term value. By the end of 2024, we achieved a common equity Tier 1 to 11.4% and a total capital adequacy ratio of 15.8%, with significant organic capital growth somewhat though offset by the impacts of foreign currency translation results. Strong returns on equity were generated across our regions with growth noted in UEMOA and AWA, while stability was observed in CESA. Although cost-to-income shows into the most areas, CESA saw a slight uptick due to lower revenues from foreign exchange gains. The restructuring of Nigeria is underway, and we continue to reposition the balance sheet and focus on enhancing our Consumer and Commercial Banking operations. We've made considerable progress on our GTR strategy, we are investing in our people, processes, systems and tech infrastructure to lay the foundations to grow now and in the future. For example, we're in the process of upgrading our core banking system and our SME mobile apps. Consumer Banking grew their customer base during the year by 5% to 19 million customers and active customers by 9%, while increasing the average product per customer through effective cross-selling and deepening customer relationships. An important driver of our transformation is getting a participation model right in each country, which will guide our effect -- how we effectively harness the potential in our markets capture value and inform wisely our capital allocation strategy. We also continue to simplify our organization, driving a model of 8x8, which is spans and layers, removing management layers driving simplicity, speeding decision-making and eliminating bureaucracy, allowing us to be more nimble, flexible and competitive. The focused actions on our turnaround markets are bearing fruit, and we have noticed significant growth in profits in some of these markets, for example, Equatorial Guinea and Uganda. In Nigeria, the pivot to focus on the Consumer and Commercial Banking space delivered encouraging results with their profits rising 14% and 26%, respectively. Whilst we are advancing in some areas of Nigeria's transformation, there are others where we still have a lot of work to do, particularly around optimizing its balance sheet, cost structure and revenue model. Suffice to say, we are leaving no stone unturned in this key priority market. The firm continues to generate accretive organic capital, helping deliver record returns the focus on allocating our shareholders capitalize the center stage with our passion for customer excellence. The investments we've made in our subsidiaries continue to generate strong returns with dividend payouts increasing by 21% to $217 million in 2024 based on 2023 earnings. More importantly, the growing number of subsidiaries that are returning capital to ETI that is encouraging. Ultimately, we expect our GTI strategy -- GTR strategy rather, particularly our transformation agenda to sharpen our focus in each market to win grow digital adoption, deliver customer satisfaction and operational efficiency. We want to be a bank that remains relevant in the marketplace continually supporting our customers with all their financial needs. We want to be in a way we -- a term that we use simpler, faster and better. With those remarks, I want to thank you for your attention and hand over to Ayo to take us through some of the more detailed financials. Thank you.

Thank you, Jeremy. And good afternoon, everyone. I'll walk you through our financial results. Please turn to Slide #8. As Jeremy mentioned, we achieved a record return on tangible equity of 32.7%, significantly higher than our cost of equity. Earnings per share increased by 16% or 45% in constant currency. The jaws ratio was positive and stood at 1.7%. The cost income ratio continued to improve reaching a record point of 53.0%, despite the ongoing impact of foreign currency translation reserves, total capital adequacy ratio improved 80 basis points to 15.8% compared to a regulatory minimum of 12.5%. Going to the next slide, Slide #9, which shows our summary income statement. The group achieved a record profit before tax of $658 million, representing a 33% increase in constant currency. This growth was supported by a higher net interest margin, primarily due to lower funding costs, the impact of -- in an increase in our net fee and commission income, reduced impairment charges and efficiency gains from our ongoing GTR transformation strategy. Net revenues rose by 18% constant currency to $2.1 billion driven by consistent growth in our core businesses across different regions, as shown in the table on the right side. Impairment charges amounted to $324 million up 10% at constant currency due to the need to appropriately cover our loan book. Our revenues for 2024 was negatively impacted by currency depreciation the use of U.S. dollar as functional currencies Zimbabwe, which eliminated some revaluation gains, the impact of increased cash reserve comments in Ghana and Nigeria the geopolitical instability in some of our markets amongst of the items. I'll now move on to the next slide, Slide #10. This slide shows how diversified our revenue streams are across different geographies, business sectors and most importantly, the various types of income we generated. A key takeaway is that about 25% of our revenues come from fees and commission as depicted in the pie chart on the right-hand side, these revenue streams remain stable and requires significantly less capital. Our GTR strategy focuses on boosting fee and commission income. So we anticipate growth in this area as we invest in our Payment business, broadening our customer base and develop our Banking as a Service offering. Overall, revenues for 2024 increased by 18% in constant currency which is a shy of our target of about 22%. Moving on to the next slide, #11. Net interest income increased by 19% in constant currency. The main driver of this growth was reduced funding costs which resulted from our intentional strategy to sheet the deposit mix towards more low cost and stable current and savings accounts. This success contributed a 40 basis point improvement in our net interest margin. However, as I mentioned earlier, the net interest income was negatively affected by higher cash reserve ratios in both Ghana and Nigeria. So turning on to the next slide. This slide shows the noninterest revenue and its ratio. The noninterest revenue was up 16% at constant currency, to $914 million and represented about 44% of total revenues compared to 43% in 2023. Credit-related fees card payment fees and cash management fees primarily drove the increase in our noninterest revenue. The net trading income and the foreign exchange gains were flat given substantially lower FX gains in Zimbabwe. Other income fell year-on-year due to the $20 million one-off noncash adjustment that were recognized in Ecobank Nigeria in 2023. Moving on to the next slide. The slide shows our payments revenue. The revenue from our payment business increased by 5%, reaching $265 million, mainly due to a significant rise in e-commerce and cross-border payments activities primarily driven by card services and merchants acquiring operations. In 2024, our payment revenue represented 13% of our total revenues. As Jeremy highlighted earlier, our payment business remains a key focus for the firm. We are committed to investing in our technology platforms and collaborating with essential players in the industry to enhance the -- rate payment system. This will ensure that we are well positioned to maximize partnership benefits and effectively facilitate due to payment on a large scale. Moving on to Slide #14 on operating expenses. This decreased by 0.4%, but rose by 17% in constant currency. The associated cost-to-income ratio was a record 53% better than expectations and guidance, driven by decreases in our professional and legal fees, operational expenses and fines and some other levers. We are encouraged by the efficiency gains from our international strategy, and we are reinvesting these cost saves into our businesses to drive desired employee and customer outcomes under our transformation agenda. Turning to the next slide, which is on deposits. Our deposit franchise continues to maintain a competitive advantage over the past year, we intentionally aim to alter the mix of our deposit, focusing on growing our current accounts and savings account, which we call the CASA. We successfully increased our CASA deposit by strengthening client relationships and launching deposit mobilization campaigns, and this led to the growth of our CASA ratio to about 86%. Despite facing competition from higher money market rates and a competitive deposit market, we're able to reduce our deposit cost by 10 basis points, bringing it down to 1.9%. A deposit growth of 2% or 18% when adjusted for unfavorable currency movement fell within our guidance. Turning to the next slide, Slide #16 which focuses on loans. Due to the current market conditions, we have to adjust our expectations for our lending business compared to our previous guidance. Although the higher interest rate environment presented an opportunity for [ NN shoot ], we needed to be selective and reassess our risk appetite in the lending market where borrowers' ability to meet financial commitments could be under strain. Consequently, we made a strategic decision to slow down on the loan growth. Nonetheless, we experienced growth in our Consumer and Commercial Banking segment, primarily driven by trade loans and increased use of overdraft facilities. Moving on to the next slide, Slide #18 which speaks to our business segment. Our core business lines, which is the Corporate and Investment Banking, and Commercial and Consumer, reported underlying growth in revenues and earnings. In our CIB business, revenues increased by 16% in constant currency primarily driven by margin expansion on IR fees and commission income from solid growth in our cash management, cross-border also digital payments and trade services. In Commercial Banking, net revenues increased by 12% in constant currency, reflecting increases in fees from cash management and credit offset by a significant decrease in net rated income and FX revaluation gains, mainly due to the transition to using U.S. dollars as Zimbabwe's functional currency. In Consumer Banking, net revenues increased by 15% in constant currency with strong growth in card revenue up for 10%, significantly offset by reduction in traded income and FX revaluation gains. Now I'll quickly move to regional performance starting on Slide #20. So this slide comes the Francophone West Africa region, which delivered outstanding return on equity of 29.2%, an improvement from the prior year. Profit after tax rose 12%, and revenue growth was 6% despite the challenging environment in the Sahara region. That said, our performance of our businesses in Burkina Faso Mali and Niger were resilient, just like Jeremy previously highlighted. Overall, our result benefited from net interest margin expansion, repricing of increased investment securities, higher rate and fees from trade services. Also, UEMOA's efficiency ratio improved to 46.6%, the best level in all the 6 years. Turning to the next slide, which speaks to Nigeria, we continued our efforts to turn around our business in Nigeria we have shifted our focus towards growing our consumer and Commercial Banking sectors. Therefore, it was encouraging to see some earnings growth in our Consumer and Commercial Banking businesses in Nigeria. Overall, the returns for the banking entity in Nigeria was far below our expectation at return on equity of about 1.1%. Profit after tax decreased by 64% and primarily due to the lower levels of revenue, especially in the Corporate and Investment Banking business. But just to be very clear, we see growth in our Consumer and Commercial Banking businesses in Nigeria. If I go to the next slide, which is Slide #21 on the Anglophone West Africa business that we call AWA. This region achieved impressive results, demonstrating strong performance across its member countries, particularly in Ghana and Guinea. Ghana's performance improved significantly following the government's debt restructuring exercise, which was concluded earlier in the year. The region recorded a return on equity of about 37% with profit after tax increasing by 84% in constant currency revenue growing by 34%. These results were positively influenced by the impact of higher interest rates, foreign extension gains in Ghana and increased wholesale payment volumes, despite the negative impact of increased cash reserve requirements in Ghana. Moving on to the next slide, which speaks to our Central Eastern and Southern African region, which achieved a return on equity of 32.7% after tax increase by 22% constant currency, driven by 8% growth in revenue. However, the lower levels of revenue coming from foreign exchange revaluation gain negatively impacted our revenue growth. Like earlier we mentioned, this was a decision following from adoption of the U.S. dollar as a functional currency for Ecobank Zimbabwe in line with peers in the market. As a result, the revenue headwind resulted in the efficiency ratio, mainly lower at 51%. Going on to the next slide on Slide #24. Our balance sheet remains very liquid and the data points in the slode shows client confidence in our group has increased as shown by the growth in customer deposit, as shown on this page all of our liquidity metrics have improved. 69% of our deposits are demand deposits, typically low cost. Our loan-to-deposit ratio stands at 51%, indicating an enhanced capacity for lending growth when market conditions improve. Additionally, our net interest margins will continue to benefit from record growth in noninterest bearing deposits. Going on to Slide #25, which shows an overview of our credit quality. Our nonperforming loans, the NPL rose to $703 million in 2024, are primarily coming from a Commercial Banking business segment, especially in the AWA region. We saw notable increases in NPLs in Burkina Faso Guinea and Senegal. Of course, some of these increases are tied to some of the government decisions in some of this market. As a result, we've adjusted our risk appetite especially for other regional subsidiaries. And particularly for the some of the countries, we've placed restrictions on cross-border exposures. On the bottom right-hand side of the slide, you notice our NPL ratio stands at about 6.7%, aligning within our market guidance of between 6% to 7%. The cost-of-risk is at 179 basis points, which is also within our guidance, driven by a conservative reserve strategy in response to our NPL book. If I go to the next slide, Slide #27, which speaks to our capital metrics. The group capital levels were higher than the minimum required ratios on a consolidated basis. Our CET1 ratio ended at 11.4%. Our Tier 1 ratio ended at 12.1%, and our total capital adequacy ratio ended at 15.8%. All of this ratio recorded improvement on a year-on-year basis. Our buffers over regulatory minimum now at an average of about 300 basis points. This robust capital ratio position stems from our robust earnings and also ongoing efforts to optimize risk-weighted assets. These initiatives have successfully reduced RWA density and has also helped us to grow our capital ratios. So if I go to the next slide, Slide #29, which speaks to our 2025 guidance. Starting with the balance sheet. We expect loan growth to be marginally higher than our guidance in 2025 as we built our digital lending capacity in the Consumer Banking business and also improve our trade loans and maintain selective lending within our corporate banking business. On the deposit front, we are guiding to continued growth in deposit as we continue with deals reliance on time deposit and drive CASA deposit. The NPL and coverage ratios remain unchanged from prior year. Our revenue guidance is expected to be driven by continued investments in our Consumer and Commercial Banking businesses, whilst we expect our Corporate and Investment Banking business to also grow. Operating expenses will continue to benefit from our ongoing efficiency initiatives and expense discipline. Thus, we expect will come at the lower end this year. The cost-to-income ratio is expected to be approximately 53% as a result. Finally, moving on to the final slide, Slide #30, which speaks to our 2025 outlook. For 2024, as Jeremy highlighted earlier, we marked a crucial turning point for our GTR strategy laying the foundation for our businesses to thrive both now and in the years to come. Looking ahead, 2025 promises to be a year of acceleration. I will leave you to read the other key points on this particular slide. With that, Jeremy and myself, we're prepared to address any questions that you may have. Now I will hand over to Ato. Thank you.

[Operator Instructions]. Okay. We do have some questions in the chatbox. There's a question. Will there be dividends?

Okay. If I can take that, Ato. And just spend some time discussing the dividend recommendation but just to say that the decision not to recommend dividend is not a decision that we took very, very lightly. And this is premise from a conservatism perspective, right? We achieved record levels of profit as evidenced by our return on tangible equity of 32.7%. And we also made progress on the number of subsidiaries of streaming dividend to the auditing company. Our decision not to recommend dividend at this point was based on a number of factors. Number one, we believe that due to the levels of the double leverage ratio and our commitment to written agencies, and we're very mindful of bringing on this double leverage ratio. That was number one point. Another point is the fact that we believe that we can reinvest the retained earnings to generate a superior profit for our shareholders as evidenced by the return on tangible equity of almost 33%. We are also very optimistic about the future outlook and we believe that redeploying this retained earnings to generate a much stronger profit we'll be in a better position to be able to pay dividends to our shareholders who have been understanding and patient in a not-too-distant future. It is also important to also recognize the growth that we've seen in the share price in recent years over the last 1 to 2 years, that has also seen the market capitalization of ETI grew by circa $150 million. But overall, we recognize this could be a painful decision for some of our retail shareholders. But just to say that we believe in the future which is brighter, just like Jeremy mentioned, on the back of our rootless execution on our GTR strategy, and we believe that we'll reinvest the current earnings to generate higher returns and we'll be in a better position to recommend dividend as we go further into the not-too-distant future. Thank you.

From [indiscernible] is asking any updates on the capital requirement reached by Ecobank Nigeria, our plans to restore compliance still on track? Will there be more capital injections from ETI?

Yes. Thank you very much for that question. And I'll take a couple of minutes because I know that many people would also have similar questions around Nigeria. So let me just take time to comprehensively address that, I think I'll start off by saying the capital requirement for entity in Nigeria is in 2 part. One is the absolute minimum. And the second part is related to minimum. So let me start with the first one. In terms of the absolute minimum, as you know, the Central Bank, which is a regulator last year, increased capital requirement for every bank in a Nigerian market and gave banks 2 years to remediate on or before March 31, 2026. Our subsidiary, Nigeria, which is Ecobank Nigeria, is a national bank. And by being a national bank, its capital requirements minimum was increased to NGN 200 billion. As of this time last year, we were at NGN 193 billion. So the distance regulatory minimum was just about NGN 7 billion, which is just under $5 million. We have remediated that true capital injection was done into Nigeria in September last year. So as of today, our subsidiary in Nigeria, Ecobank Nigeria has capital, which is above the NGN 200 billion minimum capital requirement. So we are ahead of the March 2026 time line. So that's the first thing I want to say. The second part is in terms of the relative minimum, which is a capital adequacy ratio itself. As a national bank, minimum requirements is about 10%. And you'll recall that last year, we made a public announcement that on the Bank of during June 2024 capital ratio. The capital ratio of Ecobank Nigeria, our subsidiary in Nigeria, was under 10% and we did lay out some plans on how to remediate that on or before September 2025. We're still on that journey. Just also mentioned that our December results for Ecobank Nigeria although has been signed up by local board signed off by the external auditors, Ecobank Nigeria, is still at the Central Bank with an approval. So we are not able to comment on the December 2024 capital ratio for Nigeria because it's still ongoing on -- is being reviewed by the Central Bank. But just to say that if you look at where we ended at June last year, we don't expect that to be much really different from where we would end in December because the risk-weighted asset for Nigeria has not materially changed and the profit levels hasn't materially changed between June and December. So we're looking towards remediating the capital ratio for Ecobank Nigeria and we are reasonably confident that will be done before the end of September 2025. The number of actions that we're working on the background, and we expect all of these actions to be concluded right in time before the September 2025 time line. The second thing I'd also like to mention is that, as you know, Ecobank Nigeria has a euro bond of $300 million, which was issued in 2021 and matures in 2026. So the subsidiary has also started building liquidity buffers towards the eventual maturity in 2026. And we are also confident in the ability of Ecobank Nigeria to meet these obligations as and when they fall due. So this is a summary of the actions that we're taking on the capital ratio for Ecobank Nigeria specifically, but of course, just to highlight that the business of Ecobank Transnational is much more bigger than just Ecobank Nigeria, where Ecobank Nigeria is an important subsidiary but relative size to the group today account for about 12% of our total asset. About 6% of revenues and just under 1% of our profit. So we derive significant revenue and profit performance is outside of the Nigeria region, and this is something that it's also important to point out. But just to say that we are reasonably confident on addressing the capital situation in Nigeria and which we expect to be remediated on before September 2025. Thank you.

Our next question, I think was on the question we missed. Will we [indiscernible] in debt capital in Nigeria?

So we are looking at a number of options, all options on the table. So we're looking at a combination of options raising capital at the local level, rightsize in our risk-weighted assets in Nigeria. We're making some progress, especially in converting some foreign currency loans into local currency loans. We have -- in the past 1 year, we've been able to convert about $80 million of FCY into local currency loans. We are also seeing some improvement in some of those loans in Nigeria. So we are on the right part. So all of the options on the table. We are addressing the asset book. We are also looking at increasing capital at Nigeria level. And we're also looking at ETI supports in Nigeria to the extent possible without deteriorating a double leverage ratio at ETI level. So whatever actions we're going to take at the ETI level, but rest assured, it would not be an action that would worsen the double-leverage ratio of ETI which we're very mindful of.

Thank you. Our next question comes from Lena. So could you provide an update on the double leverage ratio at the [ holdco ] -- liquidity at the [ holdco ]? And I guess you did answer the last question, which is Nigeria habits. A couple of upates in leverage and liquidity at [ holdco ].

Thank you. So thanks for those questions. In terms of the double leverage ratio, if you recall 2023, the double leverage ratio was about 173%. In 2024, we've been able to keep that under control. So we've not deteriorated or worsen the double leverage ratio. It has come in at close to by 173% also. I'm sure the question you would ask me as a follow-up is what is our projection going into the future. We look at this from 2 lenses. One lens is an organic standpoint. And the second lens is inorganic standpoint. From an organic standpoint, we believe that through a combination of all of our actions, we expect a double leverage ratio to improve organically on an annual basis, anywhere between 100 to 200 basis points. While we're confident around this because we've seen growth in the dividend upstream from our subsidiaries, if you recall, like 4 years ago, just above what's in countries we're paying dividends to ETI. Today, that number has grown from 14 to about 23 countries paying dividends with ETI. So we've grown from $100 million of dividend income in 2020 to $270 million of dividend income in 2024. And we're also projecting much more in 2025 and beyond. So we believe that the progressive increase in the dividend of stream income from a subsidiary would help organically improve double leverage ratio. We also have a number of countries that would also start paying dividend or resuming dividend as well going into the next 1 or 2 years. So that is also positive for us. In terms of the second lens, which is the inorganic, we are, of course, exploring raising some additional Tier 1 capital. So that process is progressing well. And hypothetically, based on simulation of our numbers, if we're able to grow AT1 at ETI level by, for example, $100 million, this has the impact of improving our double leverage ratio by 1,000 basis points, which is about 10%. And so that is the model impact of new AT1 at ETI level. Of course, if we raise on $100 million as AT1 at ETI and also downstream $100 million to our subsidiary, the benefit of 1,000 basis points reduces to a 400 basis point. Still an improvement of double leverage ratio anyway. So I just wanted to highlight that. In terms of the second question on our cash flow projection, the liquidity at the holdco. As you know, we have 2 major sources of liquidity inflows, which is the management fee that we get from our subsidiary, which is about $20 million, and our dividend income for 2025, we're projecting around $270 million. So if I had these 2 sources of inflow, we have about $290 million. Now if I go to the outflow, if I look at the operating cost, CapEx, financing cost of our debt, the total is about $180 million. So the inflow of about $290 million outweighs the outflow of $180 million. So we are in a positive net cash flow position. And as we go further in the future, whilst [indiscernible] will be in that range of $20 million, we expect that dividend income to increase at a minimum by $30 million on an annual basis as we go for the -- into the future, further expanding our net financing position. So I think I've dealt with the 2 questions of double leverage ratio and also the liquidity ratio that has been asked.

Thank you, Ayo. Our next question comes from the line of Stephen Shima. So over the last call, management had mentioned that there would be capital injection in ETI Nigeria from the group. I would like to get a confirmation if this has been done already?

Yes, we did some capital injection in Nigeria in September last year, we injected at $10 million into Nigeria, which is broken down into $5 million in the common equity and also $5 million as AT1, additional Tier 1 capital. So that $1 million was done last year. And like I mentioned, this is also part of the reasons why we're able to meet the Central Bank's new capital requirement of NGN 200 billion for National Bank in Nigeria, way ahead of the 2026 time lines here.

Thank you. we have a question from Per. What are your plans for the June '26 call on the 2031 Tier 2s? You have access to alternative sources of Tier 2 Capital?

Okay. Thank you for that question. I think just to say generally, that for us as ETI, we intend to act in line with market practice and expectation, right? Because maintaining investor trust and market access is a strategic priority for us. And we'll continue to evaluate the market conditions and our needs go forward, right? But from where we sit today, as an organization, the likelihood of calling the Tier 2 bond next day is higher than not calling the bond right. And a number of factors, right. Of course, as you know, the Basel amortization growth for Tier 2 instruments, of course, after 5 years, we start amortizing the impact gets smaller. So technically, it is in our best interest to actually call that bond because of the amortization impact. It's also important that as ETI, we can see to have market access. We've developed sustained or attracted sustained interest from market participants over the years. So our ability to come to the market to do transaction is not impaired. And so this is something that we're watching very, very, very closely. And to your question, we have other Tier 2? The Eurobond Tier 2 of $350 million is the largest chunk of the Tier2 that we have as a group. The others that we have is not material. So that's the largest chunk. And conceptually, we still like to have some portion of Tier 2 in our capital stock just from an efficiency standpoint. So again, without giving much away, it's just to say that we would have a line with market practice because we know that general expectation of the market is for a 10-year bond to be called at the first call period. And I hope that answers your question and thank you.

Yes. Thank you. Yes. Next question comes from Daniel [indiscernible] Nigeria. The cost-to-income ratio appears to be growing at the cost -- of the cost of risk. Are there concerns on this? The second one is how is the group looking to address additional capital requirements by the Central Bank of Nigeria...

So the first question, is it on cost-of-risk or cost income ratio? Just to clarify.

So it's the cost income ratio appears to be growing at the cost of the cost-of-risk...

So first of all, thanks for that question. In terms of the cost-to-income ratio for the group, you will see that we are seeing improving trends, right? In terms of the cost-to-income ratio. Like 4 years ago, cost income ratio was above 60%. Today, as a group, we are above 50%, 53%. So there's been material progress over the last couple of years. And if you decompose stock cost and conversion, you will see that actually 3 out of the 4 regions, they're showing very decent cost income ratio. I already mentioned that our Francophone West Africa region, the cost-to-income ratio is about 47%. And that is the lowest it has been in over 6 years. The Anglophone West Africa region, cost-to-income ratio is above 40%, which is also the lowest it has been in over 6 years. right? Our Central, East and Southern Africa region, the cost-to-income ratio is circa 51% which is lower than that of the average group rate. So the only region where our cost income version is higher is in Nigeria. And Nigeria is on the back of course, number one, the nonrecurrence of the one-off income that we recorded in 2023 of about $20 million and also the impact of the currency movements in Nigeria. So 3 out of the 4 regions. We have very healthy cost-to-income ratio, Nigeria is the outlier. But at the group level, our cost-to-income ratio has improved consistently over the last couple of years and will continue to go through that trajectory. I think the other question around the cost-of-risk, our cost of risk that we recorded for 2024 was actually within our market guidance. So there was no surprise in our cost-of-risk and our corporate ratio is also healthy at about 86%. So also, it was within our market gain. So our asset quality metrics for 2024 were within the market guidance that we provided. So there were no surprises in those areas here.

Thank you, Ayo. A question from Danilo, there's a call option on the ETI 2031 bonds in 2026. Will the group exercise call option given that there's a step-up coupon takes [indiscernible]

Yes, I've responded to that question here.

[indiscernible] The next question is, as everyone wants to utilize the retained earnings from the profit increase other specific investment areas being prioritized such as technology expansion or debt reduction. How does the bank view composition and it's positioning in the industry, especially with this financial momentum?

Okay. Maybe I can come in. Just repeat the second question so that I can link it in.

Yes. So I'll go over the question again. How does Ecobank plan to utilize the retained earnings of the profit increase, other specific investment areas prioritized, such as technology, expansion or debt reduction. How that the bank view competition and its positioning in the industry, especially with its financial momentum?

Thank you. I think for that. that question. As part of the GTR strategy, we've looked very clearly at our market position. And I remind you that we are a top 3 player in 15 markets, and a top 5 player in 22 of those markets. So we have material positions within 2/3 of the markets upon which we are operating. So the strategy really is as follows. We want to embed and entrench our position where we are already strong. And in those businesses, Typically, we have been stronger in the CIB part of the business, but now we are doubling down and investing in the Commercial and Consumer parts of the business, leveraging of the strong brand that we already have within those businesses. So whether that's UEMOA, whether that's AWA, we're particularly strong we intend on doubling down there. And we believe we can grow in those areas, in particular on the consumer side, where our consumer lending portfolio is relatively smaller than a number of our key peers. But we want to make sure we do this very carefully, and we do it in the right segments within risk appetite. Then we've got our growth areas which are some of our smaller, newer markets where we're also investing. We are clear about how and where we will compete in each of those markets. and are investing in a way that allows us to be able to grow profitably within our return guidelines. So that's the second part. When it comes now to how we do so, we are investing in, obviously, all our businesses, but we have a third leg, which is the Payments, Remittances and Banking as a Service for the Fintech part of our business. This is a particular opportunity that builds off our core strength of having one centralized core banking platform, which allows us to do real-time transfers across the continent as well as to make significant payments. So we've been really doubling down to make sure we are fully integrated within each country and then we can integrate with our countries and then last but not least, integrate with remittance partners and players who are bringing in currency into the country as part of the diaspora inflow, which are significant at over $60 billion, -- significantly $60 million and $80 billion per annum. So that gives us new revenue streams in terms of not just fee income. It's more capital light, plus it also gives us access to FX income and CASA deposits. So we are driving heavily on that. We're also investing significantly in our technology and our digital capability. We've been spending the last 9 months or so enhancing a number of our platforms, whether it's our agency banking platforms where our customers can transact in more remote locations. We've also upgraded a number of our mobile banking apps across the continent. We've upgraded our customer onboarding, digital onboarding apps and capabilities so that we can open accounts in a much more smooth customer experience than we have in the past, which was a bit clunky. So this way, we believe that we will give a better experience for those who want to open remotely that will support our diaspora for our inflow of business and transactional business. We've also been investing in our core infrastructure. Last year, we bought slightly under 400 ATMs to replace those, and those come with new and different functionality that will support our clients. This year, we are going to continue that investment and we will walk through that to position ourselves strongly in terms of our customers. So there is a significant investment in new tech, we've invested in our 1 trade hub, and we'll be growing that. That's a market -- digital marketplace where people can go and trade with one another, and we can provide banking services off the back of it. We're going through a process of upgrading our online banking platform to become state-of-the-art. We've invested in our AML KYC and fraud monitoring systems, putting in a new very AI-enabled transaction monitoring system across all of our countries. So there's a series of investments within technology. Then when it comes to debt reduction, that's obviously on an ongoing basis, we look at that. But when it comes to also expansion, we do remain open if we find the right suitable opportunities to go and to look to whether we would buy portfolios or whether we would selectively acquire other entities if it made sense, but that it has to go through those hurdles, and it would obviously need to be in a value-accretive position. And that those may be more attractive in markets where we're smaller and wish to gain scale, yes? So ultimately, we think, as you say, with the return levels that we've got we want to plow that back. And I would say just building off what Ayo said is we have got a very big drive around cost efficiency and effectiveness, we're looking at automating a lot of processes, take out manual process to take out costs and to reinvest that to revenue-generating initiatives. So it's not about taking costs out for the sake of taking cost out, it's taking costs out that we can know that will generate 2 or 3x the cost invested to generate more revenues and profits. And that's why sometimes there is the lag. You take cost out, you invested in these new opportunities and then you wait for the revenue to come. So we realize we have more opportunity to do more sales and our headcount should be more oriented to save than it is and has been in the past. So we're encouraged by this. We see capital-light growth opportunities. We see investments in trade finance and the ability to -- the ability to grow those income streams.

Thank you, Jeremy. We have a question here from Eric from BlackRock. If there is no CBN approval for Ecobank Nigeria as of today when they do consolidate at the group level? If the CBN insists on significant changes, especially around impairment, what happens?

So let me take the question. I think I've seen it once or twice in the chatbox. So let me spend some time to address that. So number one is the audit of Ecobank Nigeria has been done and finalized by the external auditors of Ecobank Nigeria and they've signed off to the group auditors and it is on that basis that the numbers of Ecobank Nigeria was consolidated. The second point is to clarify. The Central Bank review primarily on the prudential guidelines. So the Central Bank does not review IFRS. It is important to let you know that for ETI because we are not in Nigerian band, our GAAP is IFRS, our GAAP at ETI level is not prudential guidelines. So the IFRS financial statements of Ecobank Nigeria has been concluded, approved by the local board, signed off by the external auditors and that has been consolidated. And our practice is not different from any other international bank because I know as the U.S. international bank that operates in Nigeria and the U.S. international bank has published its group results in January. Meanwhile, the local bank in Nigeria is not. So this practice is not anywhere different from other international or even other regional banks as well. It is important to highlight that ETI is not a Nigerian bank. ETI is not regulated by the Central Bank of Nigeria. ETI's primary GAAP is IFRS. And the IFRS financial statements of Ecobank Nigeria has been finalized. The work of the Central Bank does not have any impact on the IFRS financial statements, just to clarify. The work of the Central Bank does not have any impact on the IFRS financial statement. What the CBN does is with respect to the capital ratio, determining what should be the prudential guidelines in terms of what should be the transfer between retained earnings and regulatory risk reserve for the purpose of capital liquidity and capital issue. That is exactly what Central Bank of Nigeria does. The Central Bank of Nigeria does not interfere in the IFRS financial statements of any bank in Nigeria. So just to make that extension and clarification, yes.

At this time, there's no further question, we'll proceed to bring the call to an end.

So I can see a couple of questions on Kenya. Says, can you provide an update on the Kenya units recapitalization? Just let to you know it has been done, and we released a press release. Entity in Kenya released a press release, I think it was last week. So that exercise has been done. And we're compliant with the 2025 capital requirements in Kenya, so that update has been done and we published a press release in the market -- in the Kenya market last week, yes.

Thank you, Ayo. I think that was the last question in the chat. So if there are no further questions, I think we would proceed to -- I'll just past the call to Jeremy if you have final remarks and then we'll bring the call to close. Thank you.

Thanks, Ato. I just want to thank everybody for joining on the call. Like I think we indicated in the strategy that this is a business where we are focusing on a number of things. I hope it has become evident that the 3 core pillars, whether it's growth, transformation and returns, each have their own focus areas and everybody is aligned. And that's where when you see things like dividend upstreaming going almost 2.5x within the last 2 or 3 years shows you that the focus on returns is coming through. We are focusing on those returns by affiliate that the cost of -- the return on equity or tangible equity is above the cost of equity that we are focusing on return of equity in terms of return on equity so that there is very important. The yields, the margins, all of that is vitally important. So it's what I call the getting really the basics of banking and the discipline in place for that. Just also to highlight, as we grow our business, we're also being materially careful about the risk we take the risk parameters we use and to make sure that it is dynamic based on the environment in which we are in. And we know right now, we have to be quite quick in response. Just given the complex geopolitical environment that we face. So we're quite mindful of that. And our transformation agenda is really working quite strongly. We're investing in the business. We are using technology to give us an advantage in terms of delivering better customer experience at a lower price that delivers us strong returns in the process. And we've been building out and investing in our people, bringing in strongly experienced professionals in their respective areas, in particular, in the areas which we are growing. So on the Consumer and Commercial side, bringing a lot of professionals on the risk side of bringing and investing strongly on the Payment, Remittance side, we bring in and brought in experts and are investing in the sales side. And that clear focus along with a focus on growing fee income that we believe will generate and accrete profits. We believe that we will still generate strong returns for the firm. And we're mindful of the key obligations and covenants that we have to lend us to the bank. So I thank really with those few words, I want to thank everybody again for joining us. And I guess we will, no doubt, congregate again after the middle of the year results when that time comes. So thank you very much, everyone, for your kind attention and all your questions.