Guaranty Trust Holding Company Plc (GTCO) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the Guaranty Trust Holding Company plc Full Year 2024 Conference Call. [Operator Instructions] Please note that this call is being recorded. I would now like to turn the conference over to Segun Agbaje, Group CEO. Please go ahead.

Thank you. Good afternoon, everybody. Thank you so much for joining this call. With me on the call today, I have Miriam Olusanya, who's the Managing Director of the Bank. I got the group CFO, Banji, on the line with me as well. Because we put this online the investor presentation, since Monday evening, we basically will go straight into Q&A, and there'll be no presentation before this. So thanks for joining, and I'm ready to take the first question.

[Operator Instructions] The first question we have is from Timothy Wambu of Absa.

Just a couple of questions from my end. The first one is -- first of all, congratulations on the good set of results, driven by the high interest rate environment and also a lot of support from the fair value gains on swaps. Could you give us an idea whether we should expect a change in the cross currency swap position? And maybe give us a sense of what happens given that we've seen the naira really appreciate so far in 2025. What's your outlook, you would say, for those fair value gains or swaps? My second question is the reason why you went with our phased approach to capital raising. Just give us an idea why that was the thinking behind that? And then just lastly on your HabariPay payment subsidiary. We know it's a very competitive landscape. One of the competitors happens to be an unicorn with over 1 million POS devices. I can see very strong growth so far in 2024. Just give us an idea of how exactly you're looking to grow that payments business? Is it -- I can see very strong growth from merchant acquiring. Is that the strategy as well as switching capability?

Okay. Thank you very much. Like I said, I always try and just expand on the first question. Maybe I'll make it easier for the next couple. Your first question really, for me, revolves around what I would call the quality of earnings of 2024. Yes, it was a high interest rate environment, but I really don't think you'll see anything significantly different in 2025. If you look at the total yield on assets, it was 11.7%. I think we can do 11.7% again. So even though the interest rates might not be as high, I also don't think they'll drop to the point where a yield on assets of 11.7% will be difficult to do in 2025. Swaps are pretty much gone. Fair value gains will pretty much disappear in my opinion. But I think we're very ready for that. Even if you look at the fair value gains that we made in 2024, we took provisions against them to over 100-something billion. And most of the income that came in 2024 are actually from core earnings. If you look, you will see that interest incomes up 144%. And so that is core. Non-funded income is up 27%. So when we look at that, we believe that the core business is strong enough to deliver strong profitability and that we're not that worried about fair value gains. In terms of the capital raise, the first part of the capital raise was really aimed at local and retail. I think we achieved our objective in terms of retail and local. We raised NGN 208 billion from over 200,000 people. So we checked that box. We will have the second round of capital raise as we've indicated in our forecast page. Obviously, I can't comment too much so that I don't kind of get into any trouble about giving too much information about the capital raise, but there will be a capital raise, it'll probably be around NGN 180 billion worth and then will be done. The business model for Habari is actually quite simple, and the money from Habari is coming really from like 3 or 4 verticals, very distinct. The first one, as you said, really in the highest value-added services. Value-added services is strong. It's a bread and butter of the business, doing very well. Second line is switching, again, very strong, growing very strongly. Then our third one is merchant acquiring, which again is doing okay. It's also growing. And then you talked about the POS business. POS business, we're going to go more aggressively into in 2025. I think the combination of the bank and Habari means that we have a good chance of dominating that. And we really don't worry too much about someone who has 1 million POSs. If you've been following Nigeria anyway, in terms of POS charge, Guaranty Trust Bank is charging 0 because they are on the lines of income. So really, I think between the bank and Habari, we're ready to take on the POS business, and you will see that business become a lot more important to both entities in 2025. I hope I've answered all your questions.

The next question we have is from Ngozi Odum of CardinalStone.

My first question is on your fair value gains on financial instruments. I believe previously, it was alluded that this was positively linked to the bank's considerable or substantial NGN 800 billion equity investments. I just want to know if that's actually the case, fair value gains that we saw for full year 2024, were they linked to the bank's holding of substantial entity investments? And then in Q4, it was a particularly weak quarter for GTCO. I think, aside from the expected rise in taxes and then the write-off that was booked, noninterest revenue was also particularly weak. We saw some substantial declines in net fee and commission related to credit-related fees, account maintenance and e-business income. Just wanted to provide more clarity on that. And then lastly, for your loan segments, your agri and individual loans segment, these 2 combined makes about 17% of your loans, and we saw a material uptick in NPLs. I wanted to know pretty much what's driving those NPLs, and what are the strategies that are being deployed to address those NPLs?

Okay. First one is very easy. NLP is 0, so what are the value gains you see on the P&L that are coming from the equity position? I wouldn't necessarily agree with you that quarter 4 was weak. I think quarter 4 was strong, but we did choose to take provisions on our last forbearance loan, which we did. And so we're glad we did that. And then if you wrote that back, it wasn't as weak a quarter as it might appear. So again, it was deliberate and strategic and it is tactical to take this provision. In terms of loan segments, total group NPL by the way is 5.02%. In terms of the bank in Nigeria, NPL is 3.5. This is a completely derisked balance sheet in our own opinion. And going into 2025, we think it's one of the big strengths of the bank. If you look at Stage 2 loans. Stage 2 loans are now 2.6% of total loan book, down from 16%. So when we look at where NPLs are today, we don't think we've had it much better in the last few years, and it's actually one of the positives and tailwinds that we think we're going to enjoy in 2025. So very shortly, I think NPLs are really down. If you look at Stage 2 loans, which is pretty much always a good indication of what you can expect from a loan book going into the future, we're in a great place. Thank you.

The next question we have is from [indiscernible] of Renaissance Capital Africa.

Congratulations on your results. First on numbers. So we're starting with, in your investor presentation, [indiscernible] agreement transaction, can you shed more light on that?

Sorry, you're a bit muffled. So I need you to kind of speak a bit more clearly. Having problems hearing you out.

I said, congratulations on your results, impressive results. Your profitability metrics, they are also very impressive. So my question is, firstly, the -- for your investor presentation, you highlighted that you are currently undergoing a potential transaction. Can you shed more light on that? And also, you mentioned talking about your forbearance. Is it really now over, like it's totally provided for now at this point? That's all from my side.

Thank you very much. In terms of the potential transaction, like I said, we are kind of in the middle of a potential transaction, putting it together. I obviously can't shed too much light on it, but like I said, we'll be looking at somewhere around in NGN 180 billion to NGN 200 billion transaction, having done the first one. And if we're lucky, we'll try to be done by the summer with that. So that was really around that transaction. Then forbearance, yes, like I said in an earlier question, we have 0 forbearance loans left on our books. We're taking the total provision, and we've written off the loan as well. If you've been following it, the [ CBN ] actually gave you permission in a circular which they issued, where before this you needed to provide it for 12 months before writing it off. But they allowed you to do that. So we've basically written off the loan. We've provided 100% were written off. So we have no forbearance loans left on our books. So I hope I've answered the 2 questions.

[Operator Instructions] The next question we have is from Sodiq Safiriyu of SBG Securities.

So I'll just stick to the question. I wanted to confirm, looking at your naira loan book actually grew by about 5%. Naira deposit grew about 2%. So I wanted to understand the rationale behind this strategy. Is this expected to continue in 2025? And I know you stated in the presentation, they are limited about the guidance you would give, but I just wanted to understand how you're looking at growing your loan book and deposit in 2025? Because on one hand, in the presentation, as you already said, there is going to be aggressive deposit growth. So seeing naira deposits at 2%. So I just want to get clarity about how that will shape out in 2025? I also wanted to know if you are concerned about shrinking market share for GTCO when it comes to the asset size relative to other banks? Is this a concern? Do you think going into this period, where we are now going to be seeing rates sort of moderate, could this be a key factor for GTCO to look out for? Regarding the line talking about increased impairment charge due to write off that was made on a key oil and gas, I wanted to confirm if this is relating to the IPO transaction that you mentioned in your H -- in your half year call that you would write off at full year, if there was no positive [indiscernible]? So I wanted to confirm if that is? And is it also correct to assume that the significant reduction in your Stage 2 loan is related to the sector for this IPO transaction? And how are you looking at the asset quality going into 2025. I understand that you said you see the bank at a better place going into 2025, I think it's a positive. But considering the environment with the bank looking at asset quality in 2025?

Okay. Let me start with your last question, which I have that pretty well memorized. Yes, the write-off is related to the IPO notes, is done and dusted. Asset quality, like I said, if your Stage 2 loans at 2.6% of your loan book, it means you've got a completely kind loan book. And you're allowed -- you have a very long runway as to what you can book. It will then bring me to your first question. When you look at our naira loan book for 2024, you first have to take into consideration the fact that we wrote off a major loan. And that if you put that back, you would see loan growth of about 14%. Our deposit base -- our deposit growth, I wouldn't focus just on naira because if you look, we have the dollar balance sheet as well. So if you take the dollar balance sheet in terms of deposits were 35% loan growth -- sorry, deposit growth, if you adjust for that, we're at like 5%. So every time we look at the asset side, we all always seem to concentrate on the loan book. But you must remember that when you look at the asset side of your balance sheet, depending on the strategy you've played, there are many levers you can pull, and that's what we did in 2024. While the loan book didn't grow that much, if you look at investment securities, it grew 68%. If you take money market placements, it grew 108%, which led to an interest income growth of 144%. So we don't kind of fall in love with loans. We fall in love with earning assets, and we play with that and looking at what the environment kicks up. So we're very comfortable with what happened to us in 2024. And if I were you, I'd rather focus on interest income growth, which was 144%, which means we played with the different asset classes the way we saw best. In terms of asset growth, honestly, versus competition, we really are not worried at all. What we look at the scale, and as you can see with the results and everything, the scale in the business is good enough for now. We will spend 2025 pushing more scale onto the balance sheet. We will grow the balance sheet to make sure we meet the numbers we have set for ourselves, but we really don't -- we're not into the game of one asset of the bank is bigger than the other asset. We look at the business we want to do. We make sure we have enough scale. And as the resource is showing you, there is more than enough scale to bring out the profit we need out of the balance sheet. I believe I've answered your 3 questions.

The next question we have is from Isaac Osara of WSTC Financial Services. It seems that there is no response from that line. The next question we have is from Seki Mutukwa of Ashmore Group plc.

Two questions, please. The first one is just whether the sort of net reserves from the CBN in terms of what's been announced, essentially trying to understand how relevant that is to you as a CEO of a group in Nigeria amongst other CEOs and whether anything official as far as you're concerned has come out, or what we've perhaps seen from X and the like is not enough for you to sort of take that as done and dusted? The second question is more trying to understand the mood music from the Nigerian corporates when it comes to the investment climate. Now that you've had a lot of reform, are they dusting off plans for adding capacity perhaps? Are they looking at maybe borrowing for things they've been sort of waiting for a little bit more clarity on the domestic side before we even think of what internationals think?

Okay. Thank you, again. I'll just try and articulate what I hear. Basically, we're looking at the macros in Nigeria at the moment. And when I look at the macros in Nigeria, I think we're at a great place. I think I visited Ashmore in the summer when we're going to do this transaction. And our position was always that the country had the ability to maintain a plus 5, minus 5 of 1,500, and that's what has happened. And if you're a corporate, what you really care about is stability. And if you look at the exchange rate, there's been plenty of stability. You also care about liquidity, and there's been liquidity. Interest rates are not crazy. They're around 22%, 24%. So that's good enough to do business, especially in a country like Nigeria when you look at the population and the ability to consume. So from where we sit, we think looking at the macros in terms of interest rates, exchange rates very positive. You talked about net reserves. Obviously, I didn't get an official pronouncement, but I read what you read. And so if we're talking $23 billion in net reserves, again, that just goes back to my liquidity question -- to my liquidity answer. But before that came out, we were very comfortable because we judge the reserves as well by whether the market is liquid and the market has been very liquid. You can buy what you want, you can sell what you want. So even before the net reserves figure came out, there was enough liquidity in the system where we're upbeat. So if it is $23 billion, I am upbeat. I was upbeat before that figure, gauging by the liquidity -- dollar liquidity in the system in terms of buying and selling. So yes, very positive about the macros I see today, stability in FX, liquidity and then interest rates at a level where you can do business. So yes.

Okay. My quickly, just a follow-up on that point on the mood music. From the bank in Nigeria, are your origination teams getting sort of incoming calls that they haven't had for a long time as I sort of trying to gauge -- sorry, can you hear me?

Yes. So yes. Go ahead.

It just broke off. No, sorry. I was saying, are the origination teams getting phone calls at the bank in Nigeria that they hadn't before from corporates for quite some time? Like how busy is that side of things when you get to the nitty-gritty of the call phase?

Well, I think we're very busy. And even last year, we were still busy. And that's why if you look at our loan book, 87% of it is at the corporate end. And we are getting all these requests today. Obviously, you have to manage your naira liquidity position and make sure that you keep your NIMs. But in terms of the new music, there is enough high-end deal book and transaction volume to keep your corporate loans growing. Yes.

The next question we have is from [indiscernible] Investment Management.

Congratulations on the results. If you could speak to 2 things, please. One is the trend in your deposit because I saw on a Q-on-Q basis, there was some reduction in your deposit base and particularly in the retail consumer segments, which underpins the strength of our low-cost liabilities. So if you can touch on that and the trends that we expect into 2025? And then my second question is around how do we think about dividend policy? Obviously, given the operating environment, it's been -- the payout ratio has sort of been all over the place over the last 2 years. Historically, you've paid north of 40% of your cash earnings in dividends. So going forward, what you would think about in terms of dividend policy outlook from GT?

Thank you very much. In terms of deposit trend, I think you can expect a positive trend, and it's no secret that the blip you probably saw was when we changed our core banking software. We did run into some trouble for about 3 weeks in October, when we did the transition. So we lost some of our deposits at the time. But as you can see, we're trending back, and we kind of back where we need to be. So I would say the trend is up. Retail is good. We have the blip with the core banking changeover, which thankfully for those to our customers, I hope you bear testament that things are stabilized and we're working. In terms of our dividend payout ratio, if you look at this 2024, we actually paid out 61% of allowable convincible PAT by the regulator. So I think on that basis, I would say you can continue to count on over 60% permissible amounts we're allowed to pay out. Some people do the calculation, and they give us 33%, but it's actually better than 33% because you have to dock 85% of fair value gains to arrive at what you're allowed to pay. So the simple answer is we will always pay about -- at least 60% of permissible PAT.

If I could just follow up on the balance, if you don't mind. You mentioned earlier on about being aggressive around balance sheet. Obviously, you had sort of a conservative stance in terms of balance sheet growth and focusing more on efficiency historically. When you think about balance sheet expansion, are you looking at instruments outside of just trying to mobilize your low-cost deposits? Are you thinking about the other financial instruments like Eurobonds at the moment?

Absolutely not. I think when we look at our business, we don't really take into the bank, and we don't really take other borrowings. So we try to grow our business on the liability side from customer deposits, and we deploy it into investment securities, money market placement and loans. So no, we don't feel the need to grow the balance sheet in any hurry. And we think that doing what we do, preserving the NIMs, we have NIMs to about 10.8%. Balancing the NIMs and growth is how we're going to play in 2025.

[Operator Instructions] The next question we have is from Gideon Oshadumi of Chapel Hill Denham.

[indiscernible].

Apologies, Gideon. Your line has a very bad static.

How about now?

Well, now the static is gone, but your voice is very low.

You had fixed it, but the static noise is back. No, it's not better yet. Sorry, I'm going to have to just move to the next person. I'll get someone to check your line with you. The next question we have is from [indiscernible] of CardinalStone.

First of all, I'd like to say congratulations on your very impressive results for FY 2024. And I'll just be going through a few questions, which I have. So firstly, so looking at the oil and gas space, the current companies we've been having there like with the whole [indiscernible] and the impact of the volatility of oil prices, given that the upstream oil and gas makes up about 31% of the loan book. Is this some sort of worry the bank has? Is it causing some sort of worry for the management? And how do you think this might impact your loan book going forward in FY 2025? And also your plans for profitability in FY 2025. So is that going to be anything that I must be doing differently, any new strategy for your profitability in FY '25 because looking at FY '24, I believe it was largely driven by high interest income. That's from the 364-day T-Bills and also money market placements. So is that what was supposed be expecting for FY 2025? Or is there something new on the table? That's all for me now.

Okay. Let me take your first one. Oil and gas upstream book is actually not 31%, it's 25%. And we actually are not worried about that book at all. No matter what we stress the oil price, when we give all loans, I think at $40, we're fine. So it's 25% of the loan book. We're not concerned at all. The one loan that was given us any concern, we've provided for written off. So oil and gas loan book is fine. When you talk about new strategy for 2025, I think we're very consistent in what we're doing. And if you watch us very closely, we're driving different things. And it's not just -- when you talk about interest income, which I'll come to, which is really core business for any bank, and that's what you need to maximize. And then you also try to maximize your commissions and fees line, which is your non-product income, which is what we're doing. That's how basic banking is. It's not rocket science. But when you look at Guaranty Trust, what we're doing is diversifying our earnings and keeping the risk down. So when you look at us today, if you look at the bank in Nigeria, the bank in Nigeria is contributing 77%. We're pushing, and we'll continue to push. West Africa is contributing 18%. That's another push to group profit. We need to work on East Africa. We know that. It's 1.5%. We push it. That's a long runway for us. We take U.K., we're pretty happy. It's about 1.7%. We might push it to 2% doing what we do, very efficiently scaling up, keeping the NIMs, cost optimization, it will lead to a great bottom line. The nonbanking businesses have also come good. They're 1.1% of group in absolute money, they made NGN 14.5 billion this last year. These are franchises that 3 years ago, we paid NGN 11 billion. So basically, we've diversified, and we're scaling up, and we remain very efficient in this cost optimization. That really is what we're driving. We don't need to do flip-flops or flip on our heads. We just need to run this business very efficiently, and that's what we're doing. And so we're not going to do anything drastic in 2025. We're just going to get better and better at what we do. That's the strategy for 2025. And we're reasonably confident that we will deliver these numbers. Interest income is good. It's a great thing for a bank to generate and grow its interest income by 144%. I mean, personally, if we could do that every year, then we'd be happy.

The next question we have is from [indiscernible]. We are receiving no response from that line. I'll take the next question. The next question we have is from Patrick Atuanya of MoneyCentral.

Congratulations, Segun, on the stellar results. Yes, I just have 2 quick questions. A lot of the questions have been asked. So on the investment securities, you had a new exposure to U.S. treasury notes of NGN 248 billion. And that was like 0 in 2023. So I just wanted to know some of the rationale behind that, especially with everything going on in the U.S. right now with the tariffs. And then secondly, there was additional investments of NGN 208 billion in GTB Nigeria in 2024. I don't know if this has been answered. Just wanted to know some of the breakdown and how you expect that to translate into earnings growth for the next couple of years?

Okay. The first one, U.S. treasuries, no matter what's happening in the U.S., I don't think the U.S. is about to default in any short term. And the reason that now exists in our books is, remember, we now have a funds management business. We are quite conservative rather than focus on Eurobonds, which are dangerous. We tend to put more of our dollar book into U.S. treasuries. And I hope you will agree with me that U.S. treasuries are probably safer than emerging market Eurobonds. So that's why they're on the books. It's for the funds management business. The $28 billion is what we raised. Unfortunately, I -- for those who did the offer and read the offer prospectus, what we're doing with the $2 billion, we're very transparent about. Some is working capital, some is additional branch network, some is IT. So basically, we're just going to bring more efficiency into the business. And yes, it will contribute to growth in 2025. The thing most people don't realize is that we actually didn't have that money at all in 2024. There was capital verification and everything. We kind of got it on the last day or the first day. So it really didn't add to earnings, but we are paying a dividend on it because we were given the money in August, and we believe we owe a dividend to the people who give us the money. And so yes, it will contribute to earnings in 2025 because we now have the money and we can select the equity. And the reason that now exists in our book is, remember, we now have funds management business. We are quite conservative rather than focus on Eurobonds, which is dangerous. We tend to put more of our dollar book into U.S. treasuries. And I hope you will agree with me that U.S. treasuries are probably safer than emerging market Eurobonds. So that's why they're on the books. It's for the funds management business. The NGN 208 billion is what we raised. Unfortunately, I -- for those who did the offer and read the offer prospectus, what we're doing with the NGN 208 billion we're very transparent about. Some is working capital, some of these additional branch network. Some is IT. So basically, we're just going to bring more efficiency into the business. And yes, it will contribute to growth in 2025. The thing most people don't realize is that we actually didn't have that money at all in 2024. There was capital verification and everything. We kind of got on the last day or the first day. So we really didn't add to earnings, but we are paying the dividend on it because we were given the money in August, and we believe we owe a dividend to the people who give us the money. And so yes, it will contribute to earnings in 2025 because we now have the money and we can swap the equity. I hope I've answered your 2 questions. Thank you.

The next question we have is from Ronak Gadhia of [indiscernible].

This is actually Kato Mukuru. Ronak and I are on the road together. Congratulations on a great set of results. I just wanted to talk about the potential to really leverage the balance sheet and increase your competitive positioning. I mean if I look at it, you've done an incredible job of boosting cash to an all-time high, keeping very, very low asset quality, having tremendous liquidity and capital on the balance sheet. Now as you go into the growth phase, I just want to get a sense of how much growth you can deliver on because I think it must be tremendous in terms of your ability to position the bank vis-a-vis your competition in the next 2 to 3 years. And the other question I was really keen to understand a little more on is what your thoughts are on the internalization of your business model, particularly in East Africa? Are there any thoughts now that you have this capital and liquidity and all the success you've had in Nigeria, making a real big push into East Africa?

Okay. Thank you very much. Obviously, we're going to try to leverage the capital. Nobody needs a capital adequacy ratio of 39%, which means we've got to sweat the capital. But we'll sweat it without taking undue risk. There are opportunities, and it will dovetail into the question on East Africa. First of all, I think that there are certain places that we are under branched in Nigeria. So we will deploy some of that capital, it will give us growth. There are regions in West Africa, even though West Africa is doing so well, especially West Africa, where we feel the need to put more branches. Ghana, which is a great franchise. So we will have some more branches. Of course, there's technology. We're spending a lot more on technology. I think we're underinvested in technology in the past. And so we're playing a bit of catch up now, but it's working. And so you'll see us work technology. And of course, we'll use the capital as working capital as well, so that we can sweat the capital deployed, bring down the capital adequacy. Just like you pointed out, and I said earlier on, one of our disappointments right now is East Africa, but we're going to fix it. And we're not going to fix East Africa by taking all the 4 countries at the same time. We're going to focus on Kenya and Rwanda, and we're going to try to scale up. We're going to put better IT in, we're going to put better manpower in, and we're going to increase our branch network. It is impossible to scale up when you're working with 5, 6 branches in big countries or 9 branches. So we will try to get to the optimum number, find an equilibrium in terms of branch network and support it with technology, whereby we can start to unlock the value in East Africa, starting with Rwanda and Kenya. And this really very helicopters how you're going to see us work in the capital over the next 2 to 3 years. And we don't have to worry too much because we don't have legacies in terms of the loan book.

Yes, you did. If you wouldn't mind, Ronak had a follow-on.

This is Ronak. Like you mentioned we're traveling together. Mine was just on the payment side. Could you maybe just highlight what's the competitive advantage GT has or maybe it's banking peers and its non-banking peers in terms -- and what will be the driver of growth for that business?

Okay. I think we have a couple of advantages, which people thought was a disadvantage when we first started. I used to hear that bank led fintechs or bank-owned fintechs couldn't do well. So now I'm hearing that bank-owned fintechs are the only ones that can do well. So when you come into as a bank-owned fintech, they should have a massive customer base, which you can tap into, which is an advantage that Habari has. The second thing we have is the business model we started with. We never came up with the business model of just growing volumes and then selling out the capital. So we had a business model that leads to profitability, which is why we created value-added services that paid their bills and was the bread and butter. And then we went to a switching business. Now we're connecting other banks, we're connecting other FIs, and the volumes are growing. Third thing we have is the merchant acquiring business. And then now we're going heavily into the POS business along with the bank. So these are the advantages we have, which people thought were disadvantages. This is owned by a financial holding company. We can leverage and we can cross-sell both to pension. We can cross-sell to asset management. We can cross-sell to the banks. These are great advantages to have, which people used to think were disadvantages. And really, this is a speedboat. All this is done by about 60 people. So in terms of cost efficiency, massive cost efficiency, profit was NGN 4.2 billion. I'm not sure I've seen the financials of many fintechs who have done that well. So we are very, very upbeat, and we're very positive that the ability to cross-sell, one, to other members of the group and now beginning to open the business to other FIs, means a really long runway for Habari.

Good luck with the capital market transaction.

The next question we have is from Abdulrauf Bello of Cowrywise.

Congratulations on your performance in FY 2024, being the first bank to achieve your NGN 1 trillion profit. It's not a small feat. Well done. My question is about your business model. So [indiscernible] in terms of ROE, ROE related to financial leverage is strong in my opinion. And my understanding is that the bank's low-cost strategy is the ultimate source of value. And my thought is that the hard work of the past decades are still crystallizing at the moment. However, going forward, what kind of growth can we expect? How -- what's the sustainability of the business model? What are the trends? If you could please shed some light around the trends in customer growth, especially retail customer growth over the last 5 years? What are the product innovation efforts of bank to keep it's moat strong, especially with the demographic trends [indiscernible] and thereabout. I just want to get a sense of [indiscernible] this retail strategy that has always [indiscernible] the bank's growth is still there in 7, 10 years' time. So my second question is around your loan book. I recall that in FY 2023, you were very bullish about loan book growth, and the guidance was as high as 30%. On the balance sheet, there was about 12% growth, but the net loans on the cash flow, I saw net inflow a positive figure for 2 consecutive years. I understand that there are macro dynamics, and management will make decisions based on the environment. But I'd like to get a sense of the assumptions that went into the 30% loan book growth and what you eventually experience such that it didn't later happen. So those are my 2 questions.

Okay. Sorry, I have to apologize to people if I -- because I've kind of answered these 2 questions in different ways, but also you'll have to forgive me if I try to be -- if I'm a bit concise in answering them again. Your first one is on the business model. I have explained the business model of Guaranty Trust Holding Company and the financial services company. We are extremely comfortable with our business model. In a country that has 200 million people, we don't even believe you started to scratch retail. Our business model is not only based around retail because if you look at our loans, 87% of the loan book is to corporates. So it's a very strong business. If you also look, you will see that SMEs contribute 12% of our deposit base. If you look, we started another thing called business banking, which is already at 3%, 4%. So it's very easy to look at it and not realize that it's shifting. It's very flexible. It's very agile. Also, I've taken the time to also explain that it's time to start looking at us as more than just Nigeria. And then when you look at us today, even as a bank, 18% of that profit is coming out of West Africa. So if I take the regions, you've got a business model today that 20-something percent of the profit comes from outside Nigeria. So that's a business model that's evolving. You've also got a situation today where you've got nonbanking subsidiaries, that in under 3 years are making a profit of NGN 14.5 billion. That again is a changing business model, and that you're creating a holding company where you're diversifying earnings and you can cross-sell. So business model is definitely not static. It is evolving nicely, but you have to watch it very carefully because we're not really going to announce to the world that, oh, we're changing, we're changing. You will see the change yourself as we start to cross-sell. And that's why one of the people had asked me, why do you now have U.S. treasuries on your books is because we have a funds management business that has AUM of NGN 643 billion and a profit of over NGN 9 billion. So the business models are not static. It's changing very quickly. Cost optimization remains, but we continue to tweak. Cost optimization is now technology-driven and less than human being driven. So there's a lot of optimization. There are a lot of things changing, but you have to look very carefully. In terms of loan growth, again, I answered that question. There was loan growth, but every time, because the profitability has been so strong, we've also taken the opportunity to clean up the loan book. And where we're unsure about loans, where there were forbearances, we provided for them, we've written them off. So again, that is down the loan growth. Today, where the loan book is, like I said, Stage 2 is 2.6. So we have some runway to grow the loan book. But again, we're not going to fall in love or fall into a trap that the only part of an asset side that you grow is the loan book. We're going to look for where the yields are best and where the risk is reasonable. If we find investment securities that we think are reasonable, we're going to grow it. And that's why we did 68% on investment securities last year and only 13% on loans. If we think money market placements are good and we can earn 5% on foreign deposits, then that's what we're going to grow, and that's 108%. So please don't look at our asset side as we will only grow the loan book. We're going to optimize the asset side. We're going to push what we think can give us the best money with the lowest risk. If it's a loan book, we'll grow it. If it's investment securities, we will. So please, when you look at us, focus less on the loan side of our asset side of our balance sheet and look at all the earning assets and see how we play with them. I hope I've answered your 2 questions.

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

Just a follow-up from my earlier question. Just to clarify, you said the swaps are gone? Or did you mean the fair value gain on swaps are gone, i.e., I'm thinking, given what you're seeing with Trump with the tariffs, [ ETC ], just for -- just if you assume that the naira was to fall to about 1,600, 1,700, are we simply saying that you will not be able to book those fair value gains? That's the first question. My second question is that when you discuss the net open position, you normally mentioned FX equity. I was hoping you would clarify what exactly that means when you say FX equity. And then just lastly, you mentioned that the second phase of the capital raising, you're looking at about NGN 180 billion. We've seen your share price increase significantly to about [indiscernible]. And given the trend that we've seen whereby the public offers are issued almost on par with the market price, if I work out the balance of the NGN 9 billion that you initially mentioned with the NGN 4.7 billion that's already been introduced, probably going to raise about NGN 300 billion. I don't know, are you looking at perhaps reducing the amount of shares you are looking to introduce?

Let me start from your second question. No, I was actually referring to the naira amount. That's NGN 180 billion. So that will determine -- so we're not going to start from 9 billion shares. We're going to start from -- we want to raise NGN 180 billion to NGN 200 billion, then we'll issue the amount of shares. So that's a clarification. We're not starting from an amount. In terms of fair value gains, well, you said 1.6, 1.7, I don't really see and hopefully don't see that level of devaluation. But of course, if it happens, you see fair value gains because we still have dollar equity of $824 million. But we're not putting that into our projections or our thinking for 2025 because we really do not believe you're going to see that kind of devaluation having had a correction of about 70% last year.

Yes. And maybe just defining that dollar equity, what exactly do you refer to when you say dollar equity? Is this...

It's our GDR listing. That is what our dollar equity is. It's not part of our NOV.

All right. So just to clarify, the cross-currency swaps to the CBN are no longer there.

Yes. I believe that the last one might have gone out in 2025. Forgive me if I'm not absolutely correct. I think it was about $200 million. And I think as we speak, it's gone.

[Operator Instructions] The next question we have is from Ahmad Zuaiter of Helios Seven Rivers Fund Limited.

Just a couple of questions. The cross-sell ratio internally, do you measure that? And where is that? And where would you like to see that in the next 5 years? And the second question is on the segmental returns on assets for the SME segment. I mean that's one segment that over the last decade has actually underperformed the overall group. I think it's roughly around 2.5% ROA. Where do you see that evolving? What are the big drivers for getting that return on that segment up to where retail and corporate are currently?

Okay. Let me start with the SME. Look, we're really -- at least as a person and an organization, we're really big on SMEs. So if you look at the asset side, it hasn't grown, but the deposit side is growing about 12%. My belief is that to unlock that, you need to get to a point where really when you lend to it, if there's any diversion of funds to other banks or other entities, you can pull the funds. And that once we can do that, it means you can ring-fence the cash flow of SMEs and you don't need physical assets to lend to them. So the minute we can do that and as an industry, when you lend to an SME based upon cash flows, if they open an account anywhere and take the cash flow there, you can draw it, we would have sum this up. So watching that space very closely, started with the deposit side. Once you can ring-fence the cash flows of SMEs within the banking sector or financial sector, I think that's what we'll unlock it, but we're watching closely. So the low ROA is not because of the lack of focus, it's because we need to be sure about the asset quality when we go in there. We're not really yet monitoring cross-selling ratios, but we can see because we're just 2, 3 years into a holding company structure, but we can see it happening, and we will start to monitor that when we think we have enough traction. But clearly, if you look at the businesses and the profits on a lot of the other nonbanking subsidiaries, there you will start to see what's happening in terms of cross-selling potential.

But just generally, how many of your existing corporate clients are also clients of Habari?

I don't have a percentage, but I would say probably about 30% because we do collections on the Habari platform.

The next question we have is from Oluwayemisi Sunmola of Vetiva Capital Management Company Limited.

So my major question would be, as we could see from the full year 2024 question from the full year results, right, the bank recorded stellar over NGN 1 trillion PAT growth. What would be the bank's projection for the full year 2025 earnings given the fact that interest rates would see -- interest rate moderate during the year. Are there expectations that the bank would be able to match the stellar results in 2024 or even exceed it? And secondly, from a lot of the questions I have seen that the bank would be going through a whole lot of -- a lot of loan mobilization would that be the major driver? And what would also be the impact of that would there be expectation given the increased PAT that the dividend would exceed the dividends paid this year? So that would be my major question.

Okay. Sorry, I have to be a bit vague about 2025 projections because of the transaction. But we're pretty comfortable about 2025. Hopefully, as we begin to release quarterly results, you will start to see the trend. Yes, interest rates are coming down, but we don't think where interest rates are, it will affect significantly our interest income than we did in 2024. As I mentioned earlier on, the total yield on our asset book was 11.7%. I really think we can still do 11.7% and still have the kind of NIMs we enjoyed in 2024. And when you add the fact that we will scale up the volumes to that, I think we will land it pretty safely. So while I have to be a bit vague, we do think that even on the asset side, there is still enough room to still do investment securities. Yes, the loan book growth will be better. There will also be money market placements. And so we're going to work the 3 lines. We're not going to be obsessed with just loan growth. We will grow loans, but we will also grow the other asset classes that are earning assets. And yes, we're pretty optimistic that 2025 will not look different or worse from 2024.

The next question we have is from Onome Ohwovoriole of Greentickertales.

So my first question is on your public offer. It didn't quite hit target. And when we look at other players in that space who had offers, there was some oversubscription. So why do you think the public offer didn't do so well? Two is, now that we have, I would say, a set that is a bit more accommodative of digital assets on the asset management side of things, is there a possibility that we'll have some product that would deal with either crypto or some other forms of digital assets?

Okay. Let me answer, first of all, it depends what your objectives are. So for us, our objectives for our public offer were met. So we would not say that we were not successful. We didn't want chunky investments. We wanted to diversify it. We wanted as much as possible for it to be retail, and that's what we got. We got over 200,000. We knew we were going to do this in phases, and we told everybody on the road that that's what we were going to do. Having done that, our objectives were met. We really -- I can't comment on other people's offers. I believe they also met their objectives. So objectives were met public offer for us success. We will then do the next tranche of our transaction, which will be more institutional and will not be retail. And hopefully, we would have ticked that box. No, for now, I have no plans of really doing digital assets on the asset management business. And at least for this year, we will stay with what we have.

The last question we will take is a follow-up question from Sodiq Safiriyu of SBG Securities.

I just wanted to ask regarding the windfall tax. So what was booked for FY '23 and FY '24? Was it in line with what the management had thought or made provision for prior to when the final decision was made with [ FRS ]? And then is there already a discussion or an estimate for FY '25 since that's going to be like the last chunk of the windfall levy that a bank would likely make estimate for?

Okay. Well, what I'll tell you, I won't tell you whether we were under or over. But yes, we have it all. And as you know, and if you look, it was comfortable for the banks what they took as windfall tax for 2023, 2024. So I have to thank [ FRS ]. I have to thank everybody. So it really wasn't the storm everybody had predicted, which is a shame. The banks have taken 2023, 2024 windfall tax. There really isn't any estimate yet because we'll have to see what kind of revaluation gains there will be. If there is not enough a lot of volatility in the currency, then again, it won't be much. And I don't expect that 2025 windfall tax will be material to the banks.

Ladies and gentlemen, that brings us to the end of the question-and-answer session. And I would like to hand back to Segun for any closing remarks.

Well, no, thank you very much for all your questions. Thank you for taking the time out. Thank you for continuing to be supportive. And I hope in our own way, we answered the questions to the best of your ability, and I wish everybody else a successful 2025. Thank you.

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