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

Good day, ladies and gentlemen, and welcome to the Guaranty Trust Holding Company Plc's Full Year 2025 Investor Analyst Conference Call. [Operator Instructions] Please note that this event is being recorded. I will now hand you over to Segun Agbaje. Please go ahead.

Thank you very much. Good afternoon, everybody, who's on the call. With me today, I have [indiscernible], who's the Managing Director of the bank. I have Banji, who's the CFO, and there's me. I think we've all had a couple of days. We put the investor call out -- investor presentation out, I believe, Thursday, Wednesday last week. So we will just go to questions and answers. So I'm ready to take the first question.

[Operator Instructions] Our first question comes from Nabila Mohammed of Chapel Hill Denham.

I have a couple of questions. The first one is just the capital that was raised. I just want to know how the money has been deployed so far? And then my second question, I see that your loan guidance for 2026 is 20% to 25%. I'm just trying to understand out of your top 5 sectors...

Sorry, your sound is not coming through all that clear. Can you please repeat your question, please.

Can you hear me clearly now?

Yes. It's better.

Okay. Apologies for that. My first question is with regards to the capital that was raised. I'm just trying to understand how it has been deployed so far. And then my second question is just to your loan guidance of 25%. I want to understand the top 3 sectors that will drive that particular growth in 2026. Then I noticed that the effective tax rate for 2025 was up by almost 10 percentage points to 29% in 2025. I'm just trying to understand if this is a new norm going forward and what we should expect in terms of effective tax rate. And the next question I have is on dividend payout ratio. I noticed that based on the reported EPS, they are now at 50.2% [indiscernible] began. I want to know if we are also reverting back to historic levels of above [ 50% ] given that that's how the bank has always been prior to 2023 and 2024. And my final question is on the growth strategy for the bank or for the financial institution. I just want to know over the next 5 to 10 years, should we still expect largely organic growth or there will be some level of inorganic growth as we go on through the year?

I will -- thank you very much. Lots of questions. Some require a whole day like strategy. So forgive me if I'll be very short when I get to that, but I'll try my best. I will also try to expand I'm hoping most people are on the call already. So I will try and expand on each one because I'm sure there are people on this call who have very good questions, by the way. So I'm sure the people would want to know. In terms of capital raised you so far, as we said, we would be deploying this capital as it comes in. So some of the capital has already gone into -- sorry, can you hear me?

Yes, I can hear you.

Okay. All right. Great. Okay. Great. So some of the capital, a lot of the ones we said we'll use for technology have gone into technology already. There's branch expansion that is going on. the branch expansions, very advanced stages in Ghana. We've also done some in Nigeria. We haven't started the ones in East Africa and Côte d'Ivoire yet. And obviously, working capital, which were the real 3 reasons we went out to raise the capital. So if you ask me what have we deployed, we probably deployed about 60% of what has been what we raised, and we will -- sorry, deploy the rest over the course of probably this year. You said 2026 loan guidance. You wanted to know the top 3 sectors. If you look at our loan book today, you would see that 85% of it is in the corporate space. So we would probably not be doing a lot of oil and gas, but you would see that we would do manufacturing, we would try to do retail, we will try to do SMEs. I think those are the 3 places we'd go. And if you push on what manufacturing, and I think we would always have a preference for food and beverage. Tax rate. I'm going to spend some time here because I think a lot of people want to know what happened to the tax rate if I take 2024 versus 2025. If I take 2024, you must remember that about [ 465 ] of our income in 2024 was fair value gains, and you don't pay any tax on fair value gains. The other thing is you used to be able to deduct interest income on treasury bills, which you cannot do again. So come 2025, there are no fair value gains. The quality of earnings is a lot stronger than 2024, which is why you've been able to pay a higher dividend. You also are not able to deduct interest on treasury bills. So that's again why the tax rate is higher. If I look at where we are today, there are only like really 2 items that you can deduct the interest of bonds and interest in foreign income. Therefore, to answer your question, you would be hard-pressed if your quality of earnings is good not to have an effective rate of about 27% to 28%. So while we're at 29%, 30%, I think we can do some work to bring it down to about 27%. I never like to use the word normal because every year, you hopefully get better at what you do. If we change some of the mix of our investment securities and put some bonds into it, hopefully, we can bring it down to about 27%. And that may be the kind of tax rate we would like to hit for 2025. Look, in terms of strategy, I mean, I could go on 10 years is a long time. We will continue doing what we're doing. The banking business will continue to grow both in Nigeria and outside Nigeria. We've shown you how we think the income distribution will be for this year, about 65% Nigeria, 35% outside, about 3% non-banking subsidiaries. So we'll continue to grow that way. Most of our growth will be organic. Obviously, out of respect for the regulators in the country which I'm looking at. We're hoping that by the end of this quarter, we will have another country opening Francophone West Africa, then we might look again. But I think it will be more important for us outside of Nigeria to gain market share and become stronger in the countries which we are, try to be #1, #2 or #3 in profit in those countries. And very broadly, that's our strategy going forward. I hope I've answered your questions adequately.

[Operator Instructions] Our next question comes from [indiscernible] of [indiscernible].

Congratulations on the very high quality of numbers put out in 2025 and obviously, the dividend. With that being said, I have maybe 2 or 3 questions. The first 2 questions maybe would be a bit of a follow-up. So you mentioned loan growth of 25%. You mentioned the sectors. Given where monetary policy rates are, where interest rates are, could you talk about the underlying asset quality risk of growing by 25% in an environment where interest rates seem to be in the high 20s. What kind of risk are you taking from an asset quality perspective? The second question, again, somewhat related to loan growth. So when I look at the guidance, loan growth guidance is 25%, deposit growth guidance is 40%, but we're also seeing the loan-to-deposit ratio guidance increase from 24% to 35%. Could you just help us understand how that comes about because it seems deposits will continue to outgrow loans and so LDR should be dropping, if anything? And then the -- I guess the final point, again, related to the guidance, capital adequacy ratio declining from 43% to 35%. If I look at your ROE guidance is 30% loan growth guidance is 25%. So if anything, just based on those numbers, the capital adequacy ratio should be dropping -- should be relatively steady, just looking at your ROE and loan growth guidance. So just trying to understand what's driving that significant drop in CAR ratio. Is it -- are you seeing some significant increase in risk-weighted asset intensity? Or is it a higher payout ratio that we should expect going forward?

Thank you very much. I'll try to take each one. When you look at loan growth, and again, I'm going to spend a bit of time, so please forgive me. One thing about us, if you watch us historically, we're not obsessed with loan growth. Our obsession is really more portfolio yield on the asset side and the NIM. So in our guidance, we will give you 25% loan growth because we hope that will happen. But we're not going to sacrifice our conservative posture and take on high risk just because we want to grow loans. We take the asset side of our balance sheet, and we see 3 items. We see placements, we see investment securities, we see loans. We're going to play those 3 things together and maximize the portfolio yield and maximize the NIM. So even though we think we will try and grow 25%, if the risk is too high, we're not going to, if the interest rates remain elevated and we can make our money off placements, investment securities, then we're going to put more there. And that is why this is a guidance. And for us, our guidance, we stay very, very agile. So in terms of loan-to-deposit ratio, part of what you must always remember when you look at our loan-to-deposit ratio is that the CRR. So you're not going to be able to put all your deposits and loans. So you've got to take our CRR and put some loans and then you balance it. And hopefully, if you do that, you will arrive somewhere about where we are in the loan-to-deposit ratio. Capital adequacy, we will continue to pay dividends. I think the dividends --I'm sorry, I forgot to address the other person's comment. This is the kind of dividend payout ratio you're going to start to see. We're going back to the 50%. At this kind of high capital adequacy ratios, we think we're comfortable the type of risk we're taking, how derisked the balance sheet is. We think we can pay more. We will try to work the capital more slowly. So I think, yes, you will see a high dividend payout ratio for as long as we can continue to make the money and the quality of earnings are high. But please, we try to guide what we believe is our minimum expectation, so we don't come in and have to start to explain ourselves. Sayings that we've given you an ROE of 30%, hopefully, we'll do better than that. And then some of those ratios will readjust.

Okay. Understood. Just maybe one final one. And also some recovery on NPLs last year with some pretty decent recoveries. Can we expect that momentum continues, especially there was that one big write-off in 2024? Any prospect of recovery on that?

Well, just like we had promised at the time, so thank you very much. That recovery was -- well, the one you might be referring to is Aiteo because we have provided for Aiteo at the end of 2024, any money that comes in goes to the bottom line. So yes, I think that is the one big one left. There was another one we took in 2025. That's one-off, and that's done, and we've kind of shake hands with the debtor and he's gone his own way. So -- but I believe for as long as Aiteo continues to perform in this banking industry, then every year, I think the restructure is a 13-year loan. So the restructure works, it means that for the next 13 years, we'll have loan recoveries on Aiteo, yes.

Our next question comes from Stephen Chima of CardinalStone.

So my question -- my first question is on the bank's FCY equity instruments, right? We've seen the passthrough impact of the appreciating Naira on this instrument. And what thinking -- how is the bank looking at managing this? Are there plans to liquidate its positions and realize the gains or losses as the case may be? Secondly, we looked at the performance across geographical segments. And we like good [indiscernible] we saw from the rest of West Africa, the contributions from the rest of West Africa to total gross earnings. However, we noticed a decline in contributions from East Africa and Europe. I don't know, could you speak to the drivers of this decline? And lastly, on loan growth again, right, given the deviation -- significant deviation from the actual versus guide -- from the actual loan growth versus guidance that was given for 2025. I was wondering, are there -- could there be some high-level macro signals that probably limiting credit growth for the bank? Just to help us think through what to expect for 2026.

Okay. Thank you very much. No, we're not going to change our position. I think when you're an organization in your long term, you don't make short-term decisions. So yes, we're in an appreciation scenario today, but it's too early to tell that, that's what will happen over the next 5 years. So no, we're not going to get out of that position. Any losses that arise during an appreciation situation will take it. And hopefully, loan growth or what we deployed into -- in terms of loans will help cushion some of that. Now you talked about -- thank you very much, Chima. We too wish East Africa and U.K. could grow like West Africa. But we're going to focus. We're going to focus on those 2 regions. We now own 100% of our East Africa franchise. So we think we're more empowered to start to derive the potential of the region. It's 0.9% today. I think you will see it will do better in 2026. We'll do the same with the U.K. So we're going to pull all the levers. We are happy with West Africa, not as happy with East Africa and U.K. for -- there's nothing sinister happening there. Sometimes the business and the macro is if you're in the U.K., interest rates dropped in 2025 over 2024. So some of the yields were lower. In East Africa, like I said, we're rebalancing. So nothing -- there's nothing out of the ordinary going on there other than interest rates movements. And also, if you're very familiar with East Africa, also the yields in fixed income securities dropped. So it's a change in interest environment. The only way to deal with it is to scale up the business. And once you scale up the business, hopefully, what you will make will outweigh what you lost in the yields on both the loans and the fixed income. In terms of loan growth, like I said to one of the earlier speakers, we would like to grow the loan book 25%. We think that there is runway to do it. The corporate space has it, retail has it, SME has it. The thing that can stop us from doing that is that we are not going to be emotional or irrational. If the corporates want to lend -- sorry, borrow between 400 basis points below the SDF rate and the T-bill rate, then we are not going to grow the corporate book aggressively because then that dampens the portfolio yield, reduces the NIM and reduces the profitability. So there's nothing wrong with the macros. We can grow the corporate loan book but we got to make sure it's appropriately priced when we compare it to our other asset classes where we can deploy our funds. So honestly, if the 25% is there, we will. The 2 segments we're comfortable growing right now when we look at the pricing is retail, SME. When we balance the risk versus the yield, we think those are 2 areas we'll try to grow. Corporate, if it can be priced appropriately, we will. But again, we are not going to grow the loan book just because we want it to be 25% if the pricing is not correct. So no, we don't see any macro headwinds in terms of risk, but we want to be very mindful of the pricing of the corporate loans we go into. I don't know if that's answered your questions.

The next question comes from Olumide Sole of Renaissance Capital Africa.

Congratulations on your results. obviously, kind of, the dividend payout is quite impressive. So my first question is I was looking at the deposit growth guidance of 40%. And given the historical deposit growth levels and your philosophy around not taking on time deposits so as to ensure that the cost of funds remain low. I'm trying to wrap around that number. It seems a bit aggressive. Can you just shed more light on that? And also for capital adequacy ratio at around 43%. My view has always been that it's kind of at that level, the bank is carrying excess capital. So I wanted to ask regarding that, like what was your view regarding excess capital for banks? Do you think it is ideal? And my final question regarding the POS terminal, I think sometime last year, February last year, GT announced that new processing fee for POS terminal. So I wanted to ask how is that going? Is the strategy working? And where is that development? Where is it at now?

Thank you very much. On the first one, you're right. The deposit growth based upon our philosophy is aggressive, but we're going to go for it. We did 25% anyway in 2025. So you will always try to do better. One of the things that is going to drive our deposit growth, you've already hinted, so maybe I should just answer the question now. One of the things we're going to use to drive our deposit growth without taking time deposits is our POS strategy. And it's working very well for us. When we announced this in February, we were doing about NGN 22 billion collections a month. Right now, we're about NGN 250 billion. So from our perspective, on a monthly basis is working. And some of that will stay in the system and will drive deposit growth. So we have different things that we're doing. Also, the regions are getting bigger. One of the first question that personally ask me actually what we're doing with the capital we raised. Some of the capital is going into additional branch network. Additional branch network will bring additional deposits. So if we didn't have those branches in 2025 and we have them in 2026, we think that's going to bring some deposit growth. The POS strategy is also going to bring some deposit growth. So yes, while it is aggressive, we have things in place, which we didn't have in 2025, where we did 25%. So what -- so the only guess we will both have to get is these new things, will they give us the 15% and only time will tell. So POS strategy is working. Look, capital adequacy, it is what it is. I don't think we can ask that question again, whether it's good for banks or not good for banks. It has happened. We have the capital. We all need to deploy it sensibly. We must not get into the temptation to try to bring an ROE that's very high too quickly because if you do that, the easiest way to do it is a loan book and you're going to pick up NPLs. So we just have to be patient. The capital adequacy is now what it is because we've all raised the capital, and we'll try to deploy it over the next 2, 3 years in a nice way without destroying the capital we raised. So that's kind of where we are. We're not in a rush. For as long as if you look at it, we raised the capital just last year, we still did 28% post-tax ROE, 40% pretax. So we're pretty comfortable that at that level of ROE, we can deploy the capital and not over worry about whether it's too high, too low. And that over time, it will get back to the levels we're comfortable with, which is around 23% to 24%. And that's kind of where we get comfortable based upon current volatility. But we're fine. It's there, so we have to deal with it.

The next question comes from Muyiwa Oni of SBG Securities.

Congratulations on the results. [indiscernible]

Sorry. You are bit muted. I can't hear you very clearly.

Can you hear me now?

Yes. It's very well.

Congrats on the results. First question is, I suppose your overall view on the interest rate environment, suppose given the geopolitics, and I suppose how the -- how you think monetary policy decisions go given likely change in direction for inflation [indiscernible]. And secondly, also on the regulatory environment, I think there was a recent stress test being conducted by the Central Bank. I want to get your sense of where you think systemic risk is and where suppose the sector could be lagging from that point of view. And the other question is on your -- looking at your slide, and we saw a big jump in natural gas, your credit exposure to natural gas. Just trying to understand what's happening there and how you think things evolve over the next year from that adequate exposure? I think I'll pause here and then maybe come back to a few more questions, please.

All right. No problem. Let me take the first one. Look, interest rates got the geopolitics is moving so fast that even I'm struggling to keep up. But going into the year, and we try to do our worst-case scenario, and I'm not sure it's changed much. Let me tell you, I think the Central Bank is doing a great job with monetary policy because you and I were both here when we lived in negative interest rates. And today, at least we're in positive interest rates, which is why you see the inflows into the country. And I still think that at the very worst or best, depending on which side of the divide you are, we will have a year of 2 halves, which means in the first half of the year, we'll have elevated interest rates. We're already in April. So we only have May and June to go. And 138 [ automobiles ] last week came out 21.9%. Elevated interest rates, positive above inflation. So I think you will see that until at least June. If interest rates start to temper, I think it will be in the second half of the year, and we'll deal with it then. So if you held me to a prediction now, I would tell you that the interest rate environment we see now will continue until June and that we should reassess in July. This stress test, I think, is worth it. You're derisking the banking environment, forbearances have gone. You still have maybe some forwards that people have to deal with. Just better to stress the balance sheet to banks now, especially since the capital has just come in. The capital allows you to do this now. So as Guaranty Trust Bank, we've done our stress test in the bank. And yes, so we're prepared for it, and I think most banks should be. Natural gas, maybe call it luck, with what has happened in Iran and Iraq, you've seen what's happened to the price of gas. So it even means that most of the loans we booked are looking much better. Even when we did the stress test, it wasn't as good. So we were trying to diversify away from just crude and PMS in the downstream, but it seems to work because we see natural gas as a growth area in the oil and gas sector. The one thing I will say before anybody asked that question is that if these elevated prices remain, we will not fall into the trap of letting the monies go. We will actually accelerate repayment of these loans. So from a natural gas perspective, it looks like we made a great bet. The current prices of natural gas are very good. And that if we look at the book in the oil and gas sector, it is probably the best and the lowest risk at the moment of all the sectors.

Our next question comes from Habeeb Oladehinde of WSTC Financial Services.

My name is Habeeb from WSTC Financial Services. Congratulation on your financial results. So on a quick one, my question is on technology adoption. What is the plan or what is your projection on to get the larger customer market using technology? Then second question is if you plan to grow the loan book about 25%. What strategy are you looking -- putting in place to minimize bad loans? Then the last question, despite the low EPS, you maintain a dividend payout ratio of about 54%. Should we expect this to continue, or the onetime thing that will happen? That's my question.

Okay. Sorry, I missed the second one, but you'll tell me again. Look, I already mentioned it, dividend payout 54%. We're going to continue. The reason we couldn't reach these levels in the last 2 years was because of the quality of earnings. A lot of those earnings were revaluation gains, fair value through P&L, which the Central Bank rightly does not allow you to pay dividends on because it has no cash flow implications. Come 2025, we don't have that kind. So we then have the high quality of earnings that allows us to pay that kind of dividend at that sort of level. So yes, the intention is to continue. I think it was 54% of the payout is to continue that. Technology adoption, if you look at the presentation, going very well, 3.1 million users of GTWorld. If you're a customer, hopefully, you will tell us you like it. It's working well. The cards are doing well. You have to when you look at what's happening in our card business today, do it with like instant transfers because people are changing behavior, people on POSs today use cards and they transfer. So our technology bets, which made in 2024, where we went through a bit of hell, seems to have paid off. Technology has stabilized, is working for us. Technology for us is not only going to be used also for what you see as a customer. Technology for us is going to give us cost optimization because we're going to be able to optimize our processes and create cost efficiencies. So 2025, we started, we'll continue to optimize the use of technology going forward, and it's going to allow us to serve a much larger customer base without throwing bodies at a lot of the processes. I think your second question was on loan growth. I think I've really said to everybody who's asked me about this, 25% loan growth, we're going to aspire for it. But we're not going to do it if it's going to sacrifice the quality of the loan book. The good thing is when we sit, we play with 3 different asset classes on the asset side, and they're all learning. We take our placements, we take our investment securities, we take our loans. And we play with those 3 to optimize the portfolio yield. So we do not feel any crazy pressure to grow this loan book. If it is safe, properly priced, then we'll hit the 25%. I hope that answered your questions.

Yes, you did answered my question. [indiscernible] rightly priced, you have a benchmark for [indiscernible] for the interest [indiscernible] rightly priced?

Sorry?

Do I have the benchmark? Personally, but then -- well, personally, but my personal opinions are not what [indiscernible] on the phone, [indiscernible] is on the phone. In my personal views, you shouldn't be doing any loans below the SDF rate of [ 22% ] today. So that's my personal view.

[Operator Instructions] Our next question comes from Samson Esemuede of Zrosk Investment Management.

Can you guys hear me?

Yes.

Congratulations on the results. My questions are sort of an extension of 3 topics that have been discussed earlier. Firstly, is the NIM, especially around the liability structure. There's been a 3% growth in your term loans over 2025, which also [indiscernible] then -- also your [indiscernible] sequential growth [indiscernible] liability interest in Q4 increased quite significantly. How should we think about term loan growth going into 2026? And is there any sort of change in [indiscernible] deposit ratio that we should be for 2026 and 2027 going forward? The second question is around asset quality. There seems to be a divergence between your corporate book and your retail book. The Stage 2 portion of your retail book saw almost a sixfold increase. I would like some context around that. Is that product specific? Is that broad-based stresses or just conservatism? And is there any evidence of migration over what you've seen in Q1 in the retail category? And my final question is around Ghana. Ghana has become quite significant for the group. I'm trying to unpack to what extent the growth is driven by underlying franchise value, [ currency gains] and high interest rate environment. And in a normalized environment, what should Ghana be for the group?

Okay. Let me start with Ghana since you just answered that. We're very, very happy with Ghana. And if you drill down, and we tend to be very transparent, Ghana is growing. It's not currency. Ghana today is 23%. I believe, of loans, 30% of deposits -- sorry, West Africa is -- Ghana's loan growth was 54%. That is real growth. West Africa's contribution to the group from a profit perspective is 28%. We are also investing more in Ghana in terms of the branch network. I think we're in '25, we opened like 6 branches. In Ghana, we're open about 42 branches. We're going to start to do in Ghana more of what we do in Nigeria, which is a retail play. It will up the deposit base. It will up the loan book. So it's not benefiting really from an exchange rate, it's benefiting from real growth. I'm trying to understand your question on NIMs, but I will try to make an attempt to my understanding. Our NIM is 12.3%. Portfolio asset yields 14.6%. You talk about term loan growth. Honestly, -- for me, I really don't see the relevance of why I should be concerned about term loan growth because anyway, even when you grow term loans, very few of them are fixed. So there's no interest rate risk. So I'm going to --as I was growing my term loans, I can reprice the customer can reprice. So I don't have a focus on term loans or ODs or IFFs, loans or loans, most of our loans in Nigeria, 90-some percent are flexible. The place where I would be worried about term loan growth is if there was no fixed interest rate environment, I was going out 5 years when there's interest rate risk. So that can have very adverse effects or positive on my NIM because of my portfolio yield. But in Nigeria, everything is floating, doesn't really make a difference. Whatever grows. So I don't really have a fixation whether it's term loans overdrafts or IFFs. on that one. In terms of segmentation, yes, the retail book is growing. And I've mentioned earlier on that we are very comfortable with the pricing of retail and SME loans where we can control the risk. And that what we would like to see is take more from where we're 85% corporate and put more in retail and SME and reduce the corporate. So in 2025, we've 6, we've started that, and you'll see some reallocation of the loan book between corporate, retail and SME, and we're doing this very mindful of not putting more risk on the loan book. I hope I answered the questions because that's how I kind of understood them.

Just 2 clarifications. The first question on the NIM was forecasted around the liability side. So the 73% growth in term deposits. And then there was -- I think the NIM -- I think the interest expense for Q4 was about NGN 114 billion. And I think Shire was about run rate was around [ 19% ] a step-up there. So I'm trying to understand if we should annualize the Q4 numbers or if there are any underlying trends that are driving your CASA ratios lower? So that's the first question. [indiscernible] Then the second is around the asset quality on the retail because it was about 6x increase in your Stage 2 loans on the retail portfolio. So I wanted some clarity if that was product specific, if that's broad-based retail spreads or just a reflection to the fact that, that book has grown relative to the other portions of the loan book?

Actually -- okay, let me answer the first one. The term deposit growth you're seeing is not in the bank, that's the asset management company. It's now 6.7% of total deposits. So what is growing is not the bank. The bank's low-cost deposit is still 90-something percent. So the growth you're seeing is not bank, it's asset management company, which as you can see, AUM is about NGN 1.5 trillion, growing very well. So that's where that is coming from. In terms of what you see that went to the retail, it was historical as you're cleaning up charges. One of the risk of retail is sometimes people abandon on the accounts or you have disputes and charges. So we went back and basically wrote off and provided for charges that had been in the system that the customers had not paid, certain agreements were made in certain cases for full and finals. So it wasn't the core loan book facing any other significant risk.

The next question comes from Wilson Temitope of PAL Pensions.

So I wanted to know just some current exposure to cocoa industry. I mean how has the recent downturn cocoa price and [indiscernible] industry like how has it affected your outlook?

No, we actually don't. We're very bad at things like cocoa. So no -- the place that we have cocoa is not in Nigeria. It's in Côte d'Ivoire. And the cocoa season and cocoa trade is very different in Côte d'Ivoire. It's a major crop for them. And so far, we haven't picked up any NPLs. So the cocoa exposure is not Nigeria. It's Côte d'Ivoire.

The next question comes from [indiscernible] of [indiscernible].

Can you speak up? can you speak up please?

Can you hear me?

Yes. Now I can.

Okay. So my question is on your view of the fintech space. Recently, I heard comments on how the fintech is doing and also what you think the market is seeing the competition that is arising from other financial technology companies?

Oh God. We like the fintech space. And if you look at our investor presentation, Habari is doing very well. TPV, NGN 1 trillion, profit, NGN 9.7 billion. It's growing at over 100%, which means we positioned our own speedboat fintech against whatever fintech threat we see. It has become a bit of a -- for us, our innovation hub on our speedboat. Yes, the fintechs are here to stay. I mean I don't know why anybody thinks they're not here to stay. They're here to stay. They're going to compete with the banks. They're going to make sure the banks are agile. They're going to make sure the banks are efficient. And so my simple advice for every bank would be to have a competitive strategy to compete with fintechs and not focus on only competing with banks. I don't know if that's answered your question, sir.

Our next question comes from Mubarak Ajenipa of Zrosk Investment Management.

Congratulations on your results. So my question is more like a follow-up on what you have said and your answer to that. You mentioned that going into the second half of the year, you expect interest rates to basically like go down. I mean, it's not significantly, right? But if I look at your current balance structure, I mean, limits [indiscernible] accounts for about 1% of your total assets, right? So how quickly does the blended assets basically change, as the interest rate environment basically unwind. I'm just thinking around the fact that you have a lot of exposure on these investment securities. So how quickly can you basically deploy these assets in other more using instruments [indiscernible] maintain your NIM?

Well, first of all, a couple of things. I'm not sure. I said in the best case scenario, I think we will remain elevated and we might drop in the second half. But very -- another simple thing is you've assumed that all our investment securities are 90 days. Our investment securities could be 365 days, which will take us almost to the end of the year. If that asset class, we don't like as much we might pivot into loans. Loans might not be dropping as fast. And that is why I keep emphasizing that for us, the agility and the ability to go between the 3 asset classes I keep mentioning is what is going to help us preserve the portfolio yield and the NIMs. But if you look at our guidance, we have built in the fact that the portfolio yields might come down. And that is why even though in 2025, we closed with a NIM of 12.3%, we have actually advised a NIM of 11% for 2026. So we have taken that risk into our guidance for '26.

So what is the average tenure, like, of your current book? Is it substantially [indiscernible] model.

Look, let me be honest with you. I'm not sure it's really relevant because I've already dropped the NIM by 130 basis points, which means I've already modeled for you a drop in interest rates.

[Operator Instructions] Our next question comes from [indiscernible] of [indiscernible] Capital Management.

Can you hear me?

Yes. good afternoon.

Congratulations on the excellent results. So just looking 3, 5 years out from now, can you just please speak to just the overall country mix and how you're thinking about this? Is the overall strategy to diversify significantly outside of Nigeria? And which of the existing markets that you're in are prioritized for growth? And just attached to that question, are there any other new markets that the group is considering entering over the next couple of years? And if you can just speak to the strategy with regards to that.

Okay. First of all, Nigeria must remain very relevant, no matter what we do. I'm also hoping that Nigeria is not going to give into the other regions as quickly. So we would like 3 regions to continue to grow. We would like Nigeria to remain extremely relevant. Even if the contribution drops, I don't believe Nigeria should ever drop below 55%. West Africa must continue to grow. Because we haven't done as well in East Africa, we think there's a long runway to take it from 0.9% and have it go up. I had mentioned -- sorry, the reason I don't mention countries is because sometimes the regulators are not very happy when you're mentioning their countries and they have been given you a license. So yes, we do have some growth plans. And I had said earlier in this call, hopefully, by the end of -- by half year, we would be open in another Francophone West African country. We might then look at some other countries in West Africa. But the balance still has to be -- Nigeria still has to be 55% of this business. And whatever we pick up outside Nigeria should be no more than 45% or maybe 40% and then the non-banking subsidiaries, which are also doing well should be around 5%.

Our next question comes from Stephen Chima of CardinalStone.

So I would like if you could speak on the nonbanking businesses, right, the pension business as well as the asset management business. We noticed the bank is guiding for nonbanking business contribution to PBT at 3%. I just like to get a sense of the strategy around the pension business and asset management business for 2026.

Well, I don't know why you only think we have those 2. Everybody forgets Habari. Habari was actually our most profitable nonbanking business last year. Habari did NGN 9.7 billion profit. Asset Management did NGN 9 billion. Pension did about NGN 1.7 billion. So our strategy is, those 3 will continue to grow. Habari is growing very well, payment business. Asset management is growing extremely well. This was a business we bought 4 years ago. It had asset management assets under management of NGN 22 billion. Today, it's -- well, at the end of the year, I can't tell you what it is today because it's not yet public, we were close to NGN 1.5 trillion. So it's going to continue to grow. The pension business, which we bought at 40-something billion, which was all AES is now NGN 150 billion, all RSAs. So everything we did outside the nonbanking subsidiaries has worked and it's working. And then apart from the numbers you see, one of the benefits you cannot quantify is the ecosystem play gives us. It allows... [Audio Gap]

Ladies and gentlemen, apologies. We seem to have lost connection with our speakers. Please remain on line and call will resume shortly. Thank you. Ladies and gentlemen, apologies for delay. The call will resume shortly. Thank you.

Are we back?

Thank you, sir. Yes, you are.

Sorry, I'm really sorry, Apparently, we lost the operator. So just like I was saying, I'll have to summarize and not going through too much. The 3 -- you asked about 2, but when we look at non-banking subsidiaries, like I started to tell you, we look at 3. We look at the payment business, we look at PFA and we look at asset management. Last year, the payment business was actually the most profitable at NGN 9.7 billion. Asset management was NGN 9 billion. PFA was about NGN 1.7 billion. So they'll go from 1.7% of group to 3% of group. They are growing very, very well, very, very fast. When we bought the asset management business, it was NGN 22 billion assets on management. As of end of last year, it was about NGN 1.5 trillion, barring this complete start-up. Volumes last year was 81 trillion. Even the PFA, we're very happy with because we are growing the PFA from the RSA side, not the AES side. So honestly, do we think 3% is doable at the current growth rates? Absolutely. And they give us a total ecosystem play. Well, I -- I think I finished with that question.

The next question comes from [ Felix ] of BSI.

Can you hear me?

Yes.

I think you made -- you gave a bit of clarity on the market expansion. I wanted to know if along the line of expansion, there will be a need for extra capital, especially on the debt side and if you become into the Eurobond market.

Not at all. If you remember, one of the callers even said I should sell my long position. So no, we will not be coming to the Eurobond market because we will not be selling our equity position. So I think we have enough. If you look at our placement line in our financial statements, we have enough dollars not to have to come back into the Eurobond market.

[Operator Instructions] We do have a follow-up question from Muyiwa Oni of SBG Securities.

Okay. So I just wanted to get your own sense from your customer interaction of what's happening in the downstream oil and gas sector, particularly the disruptions that the Dangote refinery has created in that sector and if there's any asset quality concerns you'll be having. So if you think about all the movements that has happened particularly with the importers and the marketers and how -- I think there's some concerns that there could be asset quality issues that could come up in the future.

Well, selfishly, we don't have to worry about that because if you see it, it's only 1% of our loan book. We've always been very gun shy about the downstream sector because of the volatility. Even before the Dangote refinery, it is a sector where the volatility is so high. And when you look at the capital of the players, it has always been an area of oil and gas that is high risk. It will remain that. The Dangote refinery will bring it because it's a commodity and it's susceptible to movements like any other commodity. And when you look at the size of the cargoes and the profit margin, it will always be a high-risk area. So I'm not sure whether we have the Dangote refinery or not, the downstream sector is a high-risk sector because of the volatility of the pricing of the commodity.

Our next question is a follow-up from Wilson Temitope of PAL Pensions.

I wanted to know if maybe 2026, I mean, if maybe going into 2027 [indiscernible] some guidance.

No, I wouldn't. I think I would rather say 2026 and even deliver that. And then when we get to the end of '26, we'll talk about 2027. If not, we're in a complete strategic planning as opposed to an investor call. So no, the polite answer is we put 2026 guidance out, and that's what we're going to put out.

Ladies and gentlemen, with no further questions, that brings us to the end of the question-and-answer session. I will now hand back to Mr. Agbaje for closing remarks.

Well, for everybody who came on the call, thank you very much. For all those who are shareholders and investors, thank you very much for all your support. And I guess we'll try and go back to work and make sure we deliver the 2026 numbers. Thank you. Have a good day.

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