Zenith Bank Plc (ZENITHBANK) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the Zenith Bank Half Year 2022 Conference Call. [Operator Instructions] To remind you, this conference call is being recorded. Today, I'm pleased to present Mr. Ebenezer Onyeagwu, Group CEO. Please go ahead, sir.

Good afternoon, ladies and gentlemen. It's my pleasure to welcome everyone to this conference call where we'll be showing more lights regarding the detailed financial statement for half year 2022. Before we proceed, I'd like to introduce my colleagues who are on this call with me. I have Dennis Olisa, Executive Director; Adobi Nwapa, Executive Director; Tope Fasoranti, Executive Director; Henry Oroh, Executive Director; Akindele Ogunranti, Executive Director; Felix Egbon, the Chief Risk Officer; we have [indiscernible] AGM Risk Group; we have Mukhtar Adam, our CFO -- the Group CFO; we have [indiscernible] from our Financial Control unit; we also have [indiscernible] also from our Financial Control and Strategic department; we have Mike [indiscernible] also from Financial Control team the Investor Relations Manager; and lastly, we have [indiscernible] also of Investor Relations Group. Ladies and gentlemen, it's been a very, very difficult period globally. The kind of headwinds we've seen at the global scene is unprecedented in the last so many years. And this has brought about a lot of movement with respect to inflation, high inflationary trend, and we have also witnessed increasing review of rates of interest. With respect to our local economy, we have also seen that our reserve as a nation continue to hover between $38 billion and $39 billion. And within the period, Q1 GDP printed at 3.1%, and crude price has continued to hostilate above $100 per barrel. This has also been a miss blessing for Nigeria because it has also brought about huge exposure with respect to subsidy payments. Indeed, the amount of subsidy payment has become so huge beyond what was budgeted at the beginning of the year. Inflation in Nigeria has also hit an all-time high of 19.6% as of July. And this is being driven by high energy costs and high food costs as well as foreign exchange rates. Within the period, the Central Bank of Nigeria has also responded to the high inflationary trend by reviewing the monetary policy rates twice. And as we speak, monetary policy rates stand at 14%. Additionally, CBN has adjusted the interest rate on intervention loan that had been at 15% since the emergence of COVID. Rate has now been reverted to 9% per annum, which effect from 1st of September 2022. Additionally, there's been a revision of interest rate on savings, which has now moved to -- it used to be 10% of NPR. Now it has been reviewed by MPC to 30% of NPR effective 1st of September 2022. Within this half year, CBN introduced the RT200-FS program, which is a program intended to raise $200 billion in foreign exchange repatriation for non-oil exports. So far, we have recorded in the economy a repatriation of about $2.3 billion between Q1 and Q2. Q1, foreign exchange -- non-oil foreign exchange repatriation was about $670 million. But Q2, we rose to 1.7. This is coming on the back of the rebate of NGN 65 per dollar CBN. Our expectation is that for as long as this rebate is sustained, we will continue to see incremental accretion to repatriation of foreign exchange proceeds of non-oil exports. Within the period, we are happy to announce that Zenith Bank recorded double-digit growth in gross earning from, i.e., 17% from NGN 346 billion to NGN 405 billion. And profit before tax also increased by 11%, coming from NGN 107 billion to NGN 130 billion. Our balance sheet figures and highlights remain very strong and robust. All our ratios are clearly above the minimum regulatory threshold. Also important to note that our retail and digital banking initiatives continue to deliver very strong and positive results. So I'd like to welcome the CFO, who will throw more light and give deeper insights regarding the figures around our performance for half year. Mukhtar, over to you.

Thank you very much, sir. Good afternoon, ladies and gentlemen. We are looking at our performance for half year 2022. We have a very strong top line growth, 17%, NGN 404 billion. We also have -- the contribution for the top line growth is coming from 19% growth in interest income and 18% growth in noninterest income. So the 2 income components have experienced growth. Interest income grew largely from increase of growth in the interest income from loans and advances, over the period. Indeed, our loan book has grown by 5% within the period. Noninterest income grew by 18% because most of our noninterest income lines, fees and commission lines have grown within the period. The major one among them is the growth, 45% growth in our fees on electronic products, which is confirming the fact that our retail business is growing stronger. Then we have our PBT bottom line, also grew by 11%, NGN 130 billion within that period. Then we look at interest expense. Within the period, our interest expense has increased by 30%, largely due to the increasing yield environment and then also movement of NPR within the period. Also within that period, we have seen 11% growth in our deposits. So the combination of growth in interest income and then elevation in interest expense had a NIMs impact of 11% growth. So our net interest income, net interest margin grew from 6.4% to 7.1%, representing 11% growth. Indeed, our cost of funds moderated at 1.4%. Impairment charge during the period grew by about 24.7%, largely due to the growth in our loan book and our continuous effort to properly account for the elevated risk environment. Our cost of risk within the period moderated at 1.37%. On our noninterest income, we also want to mention the strong outing of our treasury book, both trading income on treasury bills and all our treasury activities contributed to strong growth of 43.7% in those income lines. Operating expenses grew by 19%, largely in line with the rate of inflation during the period. Out of the operating expense growth, we have about 30% of our operating expense accounting for regulatory costs and NDIC charges. Aside that, most of our operating expense grew below the growth of inflation. On our balance sheet, we are happy to note that the total asset of the group closed at NGN 10 trillion, while our shareholders fund grew or closed at NGN 1.2 trillion. Our liquidity ratio closed at 60%, while our capital adequacy ratio closed at 21%. So if you look at the strength of the balance sheet, both in terms of shareholder's funds, total assets, deposit size, there is a clear indication that the group has a very strong and liquid balance sheet that will give us the opportunity to expand and take advantage of business opportunities within the year and beyond. So in conclusion, the P&L, that's the income statement and the balance sheet clearly shows that Zenith Bank has had a very, very strong outtake up to June 2022 financial year. We are going to continue with this trajectory till the end of the year to continue to deliver good results to our shareholders and our other stakeholders. Thank you very much.

Okay. Thank you very much, Mukhtar. So ladies and gentlemen, the session is open for questions and answer.

[Operator Instructions] Our first question is from Babatunde Ogunleye of SBG Securities. .

Please can you confirm me if you can hear me?

Yes, we can hear you.

Okay. My first question, I have a couple of questions. But the first question is related to margins. On margins, I want to know what is driving the interest income on your loans? Do you reprice your loan book during the period? And by how much do you reprice your loan during the period? And are we expecting additional increase on your loan rates given the rising rates environment? The second is to know what is responsible for the growth we saw in your interest expense, particularly the double digit and the double-digit growth we saw on the current account deposit? What is responsible for that increase? And given the fact that CBN has recently raised a negotiable minimum on savings deposit, how should we be looking at your funding costs towards the next half of the year? Your fees on electronic products was up 45% year-on-year. Are we expecting -- what is driving that growth? And are we expecting that trend to also continue, given the competition in the retail banking space? On trading gains, I want you to speak on what is driving the gains that you book on your treasury view at fair value and profit and loss instrument? What is driving that significant increase? And also if you could shed more light on your FX evaluation loss. You add NGN 6.2 billion FX evaluation loss coming from a positive of NGN 12.4 billion in previous year. I want to know what is driving that decline. And if you could also share your outlook on assets. In terms of the asset quality, your impairment charge was up 27% year-on-year and was very significant on a quarter-on-quarter basis. If you could shed more light on what is driving that quarter-on-quarter increase? I also noticed that your loan exposure in the power sector increased by 55% year-to-date. If you could also shed more light on what is driving that? And I would like to know what percentage of your loan book are current intervention loans given the increase in intervention given the increase in rates on interventional loans, how do we expect this to impact your NIM? My final question is on your mature bonds. You currently paid your outstanding balance in May 2020. And are there any indications of you coming to the market to lease another eurobond? I pause here for now just to be able to allow other participants ask their questions.

Tunde, you've asked the questions for everybody. I will start from -- I will take on the last one, the mature bond. Yes, we paid it out, and there are no indications that we are going to tap back into the market. Of course, you know that market condition right now don't appear favorable for anybody to tap into the Eurobond. The other one, margin you talked about interest income on loan. I think what I would say is that we are just effective with respect to how we price our loan deposits. That's basically what you see that is driving us. Of course, rising interest expense, there are so many write-offs to that, too. We have to contend with the continued arbitrary CRR regime. And we have also seen a spike in terms of upward movement in interest rates, which even started from the time the NPL was reviewed upwards. What do we expect to see going into the second half of the year with interest rates -- interest on segments going up, we understand that there will be an increase in interest rates. But however, the response we have is that, accordingly, we will adjust our interest rates. I mean, interest on loan effectively to ensure that we don't lose in terms of our margin gain and our guidance with respect to margin. Fees on electronic products, I think it essentially speaks for the intensity where people are driving our digital and retail banking initiatives. And what we have the environment or that segment may be competitive, but what we like to tell the market is that we run our own race. We maintain our lead and we think we'll continue to assert ourselves. When we started retail and digital banking initiative about 2018, you'll recall, we had like about 3.8 million account. But right now, as we speak, the number of accounts we have, they are over 20 million. And at that time, we ranked #8 in terms of number of accounts in the industry. Today, we rank a very close #3. So there are so many ideas. There are so many initiatives, so many strategies we have employed and that will continue to drive our business. ForEx revaluation game is simple because I think I'll leave Mukhtar, the CFO, to throw more light on it, is just we have standard movement. At the end of the year, we translated the balance sheet. I think it was about 424. And at half year, we translated at, I think, about 421. Mukhtar will give you the exact figure. Asset quality impairments, given where we are, the elevated risk environment, it's only natural that we show conservatism and prudence in increasing our impairment charge. That's basically what we've done. How assets are increased, I'm not sure what we do you mean by that because we don't have any incremental exposure maybe what we are looking at. I'll let Dennis to speak more to that. Maybe you are looking at slight movement and changes and the size of the exposure. But in absolute terms, the loans remain the same. There are 2 primary obligor. And the one is certainly up to date. One is fully converted to Naira. The other one is in dollar. We have in Naira. We're just taking our time to source the dollar to repeat. So I think I'll leave Dennis to speak more on the power sector loan, then Mukhtar will through more light regarding the trading gains and the FX revaluation loss.

On the power sector -- good afternoon, everybody, and thank you for attending our investors conference. On the power position, nothing really has changed, like the GMD pointed out. We have been a little bit more aggressive in taking care of loans that are not doing well. However, for power sector directly, we really don't see any change whatsoever either in terms of the volume of loan in that sector or in terms of nonperformance. What you see this slight division you see basically it just deliberate by the bank to ensure that we take care of anything before the go back. Thank you.

All right. Mukhtar?

Okay. Thank you very much, Babatunde. So you are talking of the trading book, our treasury bills measured at fair value through profit and loss the income we have made on you see the breakdown on 11, Page 135. If you go to the other pages where we have the disclosure of our treasury bills, Page 139, Note 16, you realize that our treasury bills value to -- a fair value through profit and loss has increased. So the volume has increased. That's number one. Number two, this half year has also seen rate volatility. So when you have rates moving up and down, the trading book does very well, depending on how your treasury team has taken position. So that's what accounts for the growth in that income line. And then we're also talking of our impairment. The MD has already explained, the impairment is just to account for the elevated risk environment. Revaluation loss, as explained by the MD again, the exchange rate actually the Naira strengthen -- official Naira rate strengthened against the dollar within the first 6 months of this year. So that's what is giving us a revaluation loss. I hope we answered all the questions.

May I request, as much as possible, if we can limit the question to 2 or 3, so that I'd give room for others to ask questions. Maybe we can come back subsequently if there are follow-up items.

Then we move on to the next question from Ronak Gadhia of EFG Hermes.

My first one is on your capital. Could you just share what your capital adequacy ratio would be under Basel III? My second question, just to maybe as a follow-up on all of today's questions on NIMs, it seems like there's various moving parts. NPI is going up, intervention rate loans are going up, savings deposit rate is going up. So could you just maybe share what the outlook for what your NIMs would be in -- through the rest of the year and going into next year? Just those two questions.

Okay. Thank you very much, Ronak. For NIMs, I think we guided 7.5%, and we are sticking to that. What we see, the banking business is a margin business. For as long as we refer to when you see movement in interest rates, and effectively, you can contend with that with some adjustment upward movement in your lending rate, your NIMs is not going to shrink. So it's a tough call because nobody gives you a congratulatory message when you communicate to them that you are increasing their lending rate. So -- which is the hard thing we need to lease. But however, we just -- what is real is what is real with the environment we have where inflation is at 19.6%, and again, the regulators on their own have also moved the concession given to intervention loan from 5 to 9, it goes without saying that market we expect that rates on lending will go up. So we'll be effective as we do that. So we think the guidance we gave on the NIMs is still valid. We are not changing it. On capital adequacy, I will invite Felix Egbon to answer that.

Thank you, GMD, Good afternoon, everyone for attending this call. Your question with respect to depository forecast, depository essential requires us to hold about 17% in with the federal capital. Our current capital adequacy ratio [indiscernible] is at about 21%, we saw a very robust gap of about 4%. Given our growth trajectory to the end of the year and our plan on retentions, our retentions are highly robust coming in at about 40%, 45% of our profit, we think that we'll be able to handle any growth projections that we have. So our guidance for capital at the end of year is about 21%. We think we'll be able to achieve that. And given the depository requires about 70%, we'll see how we should be able to maintain that 4% gap that we think -- And that's buffer should be able to handle any shot or any growth projections we may have. Thank you. .

Just if you don't mind, just one quick question as well on your NPL side. Given the uncertain environment, I'm not sure the bank has carried out any sensitivities on NPLs to the exchange rate into interest rates. So what will happen to your NPLs, if interest rates were to go to 20% and let's say the exchange rate goes to 500 or 550, I'm not sure if there's any sensitivities you can share on that subject?

Okay. Exchange rates and price on NPL, I think first and foremost like is to also remind you that we are in Naira balance sheet. Predominantly, the loans we have and even those in NPL, they are Naira denominator loan. So the implication of exchange rate movement, upward movement or adjustment in rates affecting the NPL will be as it concerns the dollar-denominated NPL. So that proportion is probably like about 20%, 25% of the loan book and the very good thing is that we have also for the dollar loans that are -- within that bucket, we are beginning to see improvement. The bulk of them are actually E&P assets, the indigineous asset, but that have so far from cooped up. But as we speak, a good number of them have almost they have tried of concluding the alternative [indiscernible] of mitigate the various sensitive line losses they have. So we are spread up from Q4, not massive with return. And at the levels we have food prices are once they start production and given the fact that even as a country, our quota is still not fully utilized. So we think we're in a good place to begin to experience recoveries and effective performance of those that will threaten the NPL should we have an exchange rate movement to 500. We don't think our prognosis is that it will not be impactful. Thank you.

The next question is from [indiscernible] of United Capital Plc.

My question is on your IOC and your valuation growth that you recorded of the AFC. We saw that -- I mean the account, given that interest rates were relatively higher showing that affected cost of equity and also the fact that a lot of kind of emerging markets is a way that AFC plays also kind of had the reduced growth like the [indiscernible] good focus. We want to know how you were able to achieve such a higher increase valuation essentially and also the exchange rate and uncertainty in your valuation, how come it looks like those weren't like plugged in to this valuation. I just want to know your thoughts on basically how the increase value was computed.

unfortunately, you are not that audible. We're struggling to hear you here.

Hello, can you hear me better?

Yes, it sounds a bit better.

Okay. I was saying that my own question is on your valuation of AFC. So essentially, what I was saying was that we noticed that your valuation was over NGN 7 billion. But considering the fact that interest rates are higher, and there was a revised growth rate for a lot of the emerging markets. So your terminal growth ratio actually also been lower as well, and I want to know how your valuation decreased, like the competitions and also exchange rates, all those 3 factors should reduce the valuation at least, but I want to know how come the valuation is up NGN 7 billion.

Okay. You want to know about the valuation of AFC. Mukhtar, do you want to take that one?

Yes. Thank you very much, sir. So we have indeed provided some scenarios. And if you look at Page 123 of the financial statement, you would see all the assumptions that we have used to do the valuation. And we have provided different scenarios. If exchange rate, interest rate moves by 1% by 2.5%, we have given the scenario and how it will affect our profits. We don't expect that it will affect the value significantly. We are looking at just a loss of minus NGN 5 billion, which is not significant compared to the total value of about NGN 80 billion that we have there. So if you look at that, you can understand the basis, the rationale and the scenarios that we have created to have the comfort that is not going to be significantly impaired or affect our numbers. Thank you.

The next question is from Abdulrauf Bello of WSTC Financial Services. .

My question is probably related to strategic initiatives of the business. Okay. So among the 5 biggest banks in Nigeria, about 3 of them have adopted the holdco structure. Just 2, Zenith is among 2 banks that do not operate a holdco structure. So I just want to -- I just wanted to ask if the group has any interest in sourcing growth in other industries like fintech, PFA, even asset management? Basically, if the group has any interest in adopting that structure in the near to medium term.

Okay. Thank you very much, Abdul. Let me try to clear that we have aspiration to continue to grow and to get bigger, we run our risk. We keep to our limb. And we are not distracted by what others are doing, but rather we concentrate on what's our vision and what our aspirations reasons are. This issue is always coming up. The fact is that we keep an open mind. If we find it compelling, if we find value accretive to do holdco, we will do holdco. But, so far, we are growing organically and options are open. And what happens today or what we are doing today is not an assurance of what we will do tomorrow. So when we change perspective, we think we'll let the market know. But for now, as we speak to you today, we are growing organically, we are getting deeper in all these segments where we play, we are setting ourselves in everywhere. And of course, you know that whatever we do, we do it with a lot of energy, we do with a lot of focus. And we don't really set out to compete with people. We set out to compete with ourselves. Getting better than the best level is achieved. And if in the process, we're determined to [indiscernible], that is secondary. What's important is that we'll continue to grow and the options are open. Thank you.

[Operator Instructions] The next question is from Timothy Wambu of Absa.

My first question is with regards to the strong customer number growth, exceeds up by about 76%. Maybe if you could give us some more insights as to what segment of the market you've been targeting? And tied to that, I've noticed that your share of retail deposits is lower year-on-year compared to last year. So I'm just curious because I'm assuming perhaps these are mostly retail clients. Why is that high in terms of a deposit contribution point of view we've seen a reduction? Second question is, it was asked earlier by Tunde, I believe. I want to understand from your current accounts, the significant increase that we saw in your interest expenses on current accounts? And can you explain to me what is the cost of funds for those current accounts? And also maybe just tied to that is, when you look at the types of accounts, CASA, for instance, and term deposits, are you able to provide a breakdown of what percentage of total deposits is current accounts, savings accounts and term deposits?

Okay. Thank you, Timothy. I will leave Tope Fasoranti be take on the question on customer growth and share of retail deposit.

Thank you very much, Timothy. From the beginning of our retail journey, our emphasis has always been one major thing that is customer onboarding. We are focused on customer onboarding. And we have used a lot of strategies in that regard from vendor partnerships to organizational partnerships, to schemes, and a lot of other channels. Now if you look at the challenge we have to onboard about 10, we moved off from about 4 to about 10 channels of onboarding customers. And then we've also been very innovative in kind of products and features we offer these customers. So it's been a lot of customers coming about to us. We moved down market also. Agency banking is another major, major avenue for us to open accounts. So we're bringing in a lot of those that also financially excluded. So across board, we'll try to stay very effective, stay very efficient and offer them efficient platforms and products to make them excited. And we are very customer-centric in this regard. Thank you.

asked about share of retail deposits. Mukhtar, do you want to address that?

Okay. Yes, sir. Thank you. Our retail deposits did not actually drop, it grew. What happened is the total deposit book grew significantly and then you have retail deposits also growing. Our retail deposits as at June 2022 stood at NGN 2.1 trillion compared to NGN 1.8 trillion in December 2021. So you can see that there is actually a growth -- about 17% growth in that line. But if we are looking at it relative to other, others would have grown faster than that. That is a different, but our retail group actually grew. Thank you.

The next question is from [indiscernible] of CardinalStone Partners.

Please, can you hear me?

Yes, we can hear you [indiscernible] go ahead.

Speaking to the elevated risk environment, can you please touch on the specific areas that you are worried on the impact on your loan book? And then also, we see that in terms of your guidance for cost of risk at 1.4%, your full year guidance at 2%, leaving you room for additional impairment charges. Do we see growth in -- do you foresee growth in impairment or provisionings for the rest of the year? And then on your OpEx charges, we saw elevated costs coming from your fuel and maintenance. That's to be expected given the conditions in Nigeria, for your full year expectation, what is your outlook for full year? And then also, I wanted to know in terms of the increases in OpEx or your information on technology, should we be seeing additional products and services coming out because we saw a spike in your OpEx on information and technology costs. And then can you please speak to the PCR growth in terms of your term deposits compared to your CASA ratio?

Okay. I'm not sure we've got the last question, but I'll start from the IT costs. It's important to say that we are engaging in a lot of very, very massive IT transformational projects. And indeed, the growth you see in our EBIDTA and retail banking commission and fees that are being driven by the very intelligent automation we are carrying out. And we'll continue to develop products, use IT to build new, unique and proprietary capabilities. And these are helping us to identify new revenue pools and new business verticals. So we will continue to do a lot of consumption of IT for those IP deployment of new digital application because we are using that to really not only be effective and improve our service delivery but we are using it to grow the business and identify new revenue pools like I mentioned. So IT cost is likely to remain at the same level that we've seen it. But however, on the whole in terms of the value we are getting from we are getting multiple times [indiscernible] or whatever is. That has been closely watched. OpEx charges, well, our maintenance, it's difficult to tell. At the beginning of the year, nobody knew what was going to happen. We didn't know that the Russia and Ukrainian crisis was going to happen and lead us to where we are now. We don't know where that will be. We can -- there is no visibility to what will happen. And all of us know that the high energy cost is fallout of one of those impact or adverse consequences of the Ukrainian-Russia crisis. Cost of risk, 1.4%, would it to go higher? There's no one who would like to get worse. We are not thinking we got worse, but we'll manage it Zenith typically is a cautious bank, we are cautious and we are not being reckless. We will not be reckless when it comes to booking loan. We will continue to choose and pick the loan. So we think the efficiency of the loan book will not be compromised. Therefore, we don't see further deterioration in terms of what we are seeing. Specific risk elements in the environment. That's like asking me to speak about the global environment really. And the risk elements are quite obvious for us to see. We can see that COVID hasn't completely disappeared. We are also seeing relatively that there seems to be some very -- maybe the impact of the vaccine is working and we can see how COVID also had China on lockdown, which also had impact on supply chain. The global supply chain hasn't recovered. The energy cost is also increasing costs globally. Then back home, we've also seen that the higher energy cost has imposed huge subsidy payment on government. Inflation is biting hard. Inflation will mean weak purchasing power. And it has -- inflation doesn't do anybody any good. So we have these various elements in the environment that are driving risk. But you know, we will continue to monitor these elements. We check the direction of travel, and we adapt our models and responses accordingly. Once again, I can assure you that, Zenith, we are big when it comes to scenario planning. And whatever happens, our response is not going to be an immediate response. Our response would have been well thought out, well ahead of time. We have scenarios for each of these elements. But somehow, it's not something that will come and share openly, but be rest assured that, in our risk mitigation and risk management agenda, these issues have been very well addressed.

The next question is from Josh [indiscernible] of [indiscernible].

My question is on taxes. And apologies if it has been addressed during the course of this phone call, the link has been quite bad. So I just wanted updates on the corporate tax. Should we expect that ratio of corporate tax profit to be stable going forward? So that's the first question. And then the second question, again, is still on taxes. Can we just get more color on what following taxes mean to national fiscal stabilization levy, national agency for science, engineering, infrastructure levies that taxes that would also appear going forward as well?

All right. Thank you very much. Mukhtar will take that question or those questions.

Okay. Thank you very much. So you're talking of the corporate tax, of course, you would realize that the tax numbers are beginning to increase to grow. And effective tax rate is going to go up because the tax exemption on the Nigerian operation on treasury bills and the government bonds, the exemption doesn't apply again. So effective tax rate is going to move up. Corporate tax is going to move up. The other taxes that you mentioned are special taxes that are coming from some of the jurisdictions that we are operating. For example, in Ghana, they have a special tax that they levy to for the economy to recover. So that's what you probably are seeing there. And then the other one, national agency for science and engineering and infrastructure, those are also taxes that are Nigerian-based that are being levied, yes. So it will continue. National fiscal stabilization is coming from Ghana. It will also continue. Thank you.

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

Can you hear me?

We can hear you.

So I have just 2 questions. My first question is, how do you track the trends in the industry? And most importantly, how do you think you maintain or surpass this current performance in the next coming quarters?

Thank you. How do we track the trend in the industry? I think I'll probably have to recruit you to comment so that you know how we track it. But be rest assured that, we track trend effectively. And in Zenith, we have the best talent you can think of globally. And people own their process. They are self-driven, self-motivated. So that's -- with that, half of the job is done. So we are not asking -- sitting at the back of someone asking him to give you a trend. So individually, you have -- there's a high sense of responsibility and discipline that drives the macros from our value system. And certain teams are uniquely Zenith, I will say so. Will we -- how will we continue to surpass this? I said and I'd like to repeat you that, we are our biggest competitor. We don't see ourselves as competing with the market. Our key driver, our key discipline, the value system in Zenith, thanks to our Chairman and Founder, is that we should get better than we were the last time. The best of what we've achieved is the standard for the next level of achievement. Therefore, what we expect to see is that we will work whatever it takes, we have people who are very courageous who are bold, they are bachelors ready to break all records. And even though we offer homogeneous service in the market, but Zenith has a pragmatic way of offering services that is uniquely us. And our relationship management skills is second to none. So whatever it takes, yes, it's a tough environment. We will do all it will take to ensure that. We don't -- I mean, we sustain the performance. That is the big goal we have. It's a huge one. It's quite big, but is part of us being at Zenith. That's what we have in our DNA. The rest assured that we will keep up with the pace. The run rates will not be weakened. Thank you very much.

The next question is a follow-up questions from Babatunde Ogunleye.

So on the power sector loan that I was referring to is on your Page 76 of your financials. As at FY 2021, you had NGN 67 billion in power sector. But in first half of 2022, it has moved to NGN 104 billion. So that was why I was asking what led to that increase we saw in your gross loan in power sector. I noticed that one of my question on intervention loans as a percentage of your loan book wasn't answered. If you could talk on -- if you could touch on that. And my final question is just to know your current U.S. deposition. By my calculation, you are short NGN 374 billion in Naira terms. I may be wrong. Maybe just to see some clarity around that? And what's your U.S. deposition in dollar terms, basically?

Okay. The power sector loan you referred to, the increase there, primarily the -- in terms of the legacy asset, there are 2 items there. The new exposure, you see that these are self-liquidity and short-term exposures that are properly readvanced. Then you talked about the question of, is it the U.S. deposition, Mukhtar? You want to take? Yes. Percentage of our intervention loan, I think, is just something around about 15% or so, it's not significant. It's not significant, about 10%, 15%.

Okay. Thank you very much, Sir. On deposition, yes, if you look at Page 103, you will see our FX balance sheet. And you also have to read the note beneath it that shows that we have a U.S. dollar receivable of $1.6 billion. So if you factor that in your expectation of our position, you realize that we have a dollar -- long dollar position of up to $1 billion or more than a $1 billion. Then if you want to go back to our revaluation loss that we reported in notes -- if we check our revaluation loss that we reported, you realize that we had a revaluation loss. If you check the exchange rate movement on that revaluation loss, you would arrive at the expected long dollar position that we have. So they are tied together. If you just take your time to look at them, you will appreciate where we are coming from. There are notes on our revaluation losses on Page 125. I hope that is clear. Thank you.

The next question is from Wale Okunrinboye of Sigma Pensions Limited.

Also congratulations on your half year numbers. I have a question on your -- on Zenith's Board and management levels. So looking through your Board, I see the -- you only have 2 or 3 women, if I'm correct, out of roughly 16, 17 or [indiscernible] individuals. And looking at it's also a very low number as well.

Wale, we can't hear you, not audible.

Hello? Can you hear me? Hello?

Yes.

Okay. Okay. I was talking about the gender diversity I'm seeing on your Board and management levels. Looking at those -- at both the Board and management of Zenith, the number of women that are on your Board is quite low. What initiatives are you doing? Is this something you're okay with? Are there any initiatives you're going to try and raise the number of women you have at management and at Board levels? Yes, that will be my question.

Thank you, Wale. I was expecting, you won't recognize the fact that we are moving the women because at the time, 2 years ago, it was just 1. Today, we have 3 women on the Board. We have Adaora Umeoji as Executive Manager Director. We have Adobi Nwapa Executive Director. We have Dr. Omobola who is also an Independent Non-Executive Director. But beyond that, it's also important for us to -- if you look at the staff, you see that there is gender balance when it comes to staff. But beyond that big group, the Chair of the Board, we have in Ghana is a lady. And in Ghana, we have about 1, 2, 3 -- about 3 ladies on the Board. Then in Sunyani, the Chair of the Board is a lady. So when you look at that, yes, we are conscious of the fact that, yes, we need to promote gender diversity, and we are increasingly working to make sure that we get to that level of, call it, a balance, but we are conscious of that. Thank you.

The next question is a follow-up from Abdul Bello of WSTC.

My question is a follow-up to the Holdco question I asked previously.

Please, can you speak loud? It's not audible.

My question is a follow-up question to the answer you gave to the decision on whether to maintain a Holdco structure or not. So based on your response, if it seems content or if the group seems content with our current operations in the banking industry, I'd like to please ask, what do you see in terms of the prospect of the banking industry in the near to medium term? In terms of growth, especially if we consider the current macroeconomic challenges, the current situation and what the difference means in the future?

The outlook is that banking industry will continue to be relevant. No matter what happens, no matter how had, no matter how bad the adversity we see in the market may be. There is always intermediation. So banking industry is going to be relevant. And what we see is that the mode of engagement, the mode of -- the state of play may change. The state of play will change. We are going to be seeing a lot more innovation. We are going to be seeing a lot more collaboration as we have nonbanking industry coming to the field of play. So will it continue to be relevant? Yes, it will be relevant. And traditional revenue and sources may be challenged. So our responsibility will be to find new ways of making money and creating value. So the industry will continue to retain its relevance.

Then the final question is from Ronak Gadhia of EFG Hermes.

Sorry, just a quick follow-up. What's your exposure to ITO. And what's the status of this loan? And have you made any provisions at all, if any on this loan?

All right. Thank you, Ronak. Let me say that I chose a syndicated loan as an industry or syndicate. We are at the verge of concluding the process of the restructure. And there've also been some very good initiatives that ITO has initiated in having to develop an alternative evacuation route. So you know that ITO has the old infrastructure the discovery of oil in the country does the different communities. So you dare not produce apart anything through those complying. And in terms of reserve, we continue to hold massive reserve in gas and oil. So once the issue of alternative of acquisition is dealt with and given where the oil price is, I think we are looking forward to an improvement in ITO and effective performance. And in terms of [indiscernible] exposure, top of my head, I think, is in the ITO. I can't really have a guess, but it's just not significant. It doesn't constitute a very single significant exposure in our loan book.

Thank you very much, sir. So we have no further questions on the conference call. And I would like now to hand back to the Group CEO for closing remarks.

Okay. Thank you, ladies and gentlemen. We would like to assure you that as we go into the second half and closing for the year, we'll continue to drive our business more intensely. We'll continue to exercise our right of play in the retail and digital space. We are quite encouraged and inspired by what we've been able to achieve in the digital and retail space years. And we also continue to embrace automation, we'll drive it more intensely. And as the environment is changing, we'll continue to adapt to changes in the environment. So we can assure you that Zenith will continue to deliver very strong and respectable performance. And we show that we also continue to improve our risk mitigation and risk minimization agenda. So I thank you all, and we hope that, by the end of the year, we will be able to post a result that is consistent with what we've achieved in the first half. Thank you.

Thank you very much, sir. Ladies and gentlemen, that then concludes our conference call. Thank you for attending, and you may now disconnect your lines. Ladies and gentlemen, please note this conference call has concluded. You may disconnect.