Zenith Bank Plc (ZENITHBANK) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. My name is Ebenezer Onyeagwu, the Group Managing Director and CEO of Zenith Bank. I'd like to introduce my colleagues who are on this call with me today. First on the list is Dr. Adaora Umeoji, our incoming CEO and group MD. We have Henry Oroh, Executive Director; Adobi Nwapa, Executive Director; Akindele Ogunranti, Executive Director; [indiscernible], General Manager; Louis Odom, General Manager; Felix Egbon, the Chief Risk Officer of the bank; [indiscernible], Chief Inspector of the bank. [indiscernible], Group Head of Investor Relations and Corporate Development. We have Mukhtar Adam, Group CFO. Then we also have our colleague here Joshua Uwedinisu, the Deputy Chief Risk Officer of the bank. I have Alex Tobi, Deputy CFO of the bank, Olukayode Akinbinu, the AGM and Head of Strategy. We have Nsikan Umoren, Financial Control and Strategic Planning Department; Eugene Ewubor, also from Financial Planning and Strategy; Michael Adesanoye, in our financial control and strategic planning. [indiscernible] in the call, in our Investor Relations department, and we have Emmanuel Gomina from our Financial Control department. Ladies and gentlemen, it is our pleasure to present you detailed analysis of our performance in 2023. But before we go in, it is important for us to have a refresh in terms of the overall economic landscape where we operated right from the global aspects. Because in 2023, the global economy though showed signs of recovery from the pandemic in due time onwards, we witnessed a varying decrease of volatility across different regions in the world. Many countries continue to grapple with inflationary pressure, supply chain disruption, impacting consumer prices and business operations generally. Government across different regions are continuing to implement different form of [indiscernible] and other measures to support and spur economic growth. While central banks across the globe had to adjust monetary policy to address the issues around the high inflationary trend. And one agenda is also key that technology and digitalization continue to be the key drivers of economic activities with sectors like e-commerce, remote work and digital services experiencing significant growth. However, we also witnessed heavy headwinds coming from geopolitical tension, environmental challenges that continue to elevate the risk in the global operation environment. Overall, one will say that 2023 was one of a cautious optimism in terms of how the global economy should and going into 2024, the headwinds that were experienced in 2023 still appear to be there. And of recent is the latest Iranian attack on Israel and it's just the expectation of everyone is that the tension should not escalate any further. Otherwise, it will worsen the already challenged supply chain and other macroeconomic disruption globally. In terms of our local environment, we recall that first half of last year, we witnessed very strong challenge arising from the Naira design and is advancing part and consequences on business. And that's also continue for a while. On to the emergence of the President, President Bola Ahmed Tinubu, who hit the ground running that came up with very broad and audacious reform. Key among these reforms where the unification of the exchange rates as well as the removal of subsidy on petroleum products in particular. These reforms appear quite audacious, like I said. But however, we are beginning to see that the reforms are gaining grounds. As difficult as they were one of the things -- the development we saw with the unification of the assembly was a high volatility in exchange rate to the extent that exchange rate and the cost of this year rising to as much as NGN 1,800 per dollar. But interestingly, as the reforms continue to hold grounds, we've seen a moderation and improvement in the exchange rate that at the moment, exchange rates in sovereign are around the region of NGN 1,200 demonstrating the resilience of the economy and also the very important reforms and the overall program of the government to see that economic growth is pursued throughout the country. We've also seen the commencement of production of the Dangote Refinery as well as the completion of the rehabilitation of the Port Harcourt Refinery. These 2 developments are supposed to bring about improvements in the availability of refined petroleum products in the country. And hopefully, this should also culturally demand for foreign exchange [indiscernible] importation of petroleum products. And we've also seen improvement in terms of production capacity of the indigenous oil and gas producers, who for the past 4 years, have not had any production at all. And most of them have also been able to come up with alternative of [indiscernible] route, and who are beginning to see improvement coming from the production on. So by extension, some of the loans granted to this set because we expect to see improvement in performance going forward. The Central Bank has had to grapple with quite a lot of challenges. One of them is the -- on abating inflationary trend, and this has led the monetary policy committee to high interest rate, the NPR to the level of 24.75%. And we've also seen that Central Bank lift the ban on the [indiscernible] bank items, making them eligible to assess foreign exchange in the market. And the unification of the exchange rate is also boosting confidence in the market and was seen incremental FPI and FDI flows coming into the country and when compared on a relative period on period what we witnessed so far in the year, far at least what had come in and the cost of last year. We've also seen Central Bank in attempt to reigning inflation increase the CRR to the level of 45%. Albeit, we've also seen the yield on government instruments -- government risk-free instrument going as fast the level of 21%. We believe that all these are happening to drive confidence in the market and also help to reigning inflation as we raise towards really pursuing the audacious plan of government to have a $1 trillion economy. The latest of what we've also seen is the current increase in the authorized minimum share capital of bank and the bank's authorization, which international authorization, expected to maintain minimum equity payoff of NGN 500 billion. At the bank, Zenith Bank remains a brand that has the least amount that is required to be raised to achieve the minimum. The intention is that we continue to retain our international authorization. Therefore, we are putting plans in place to ensure that we raise the required minimum of NGN 230 billion annually in a very organic manner that continue to ensure growth and continued prosperity of our institution. On the back of this, I'm happy to report that Zenith Bank reported a very stellar performance, recorded triple-digit growth in top lines, despite all the challenges in the economy. And this has come on the back of proactive and very outstanding treasury and robust treasury management, diligent and disciplined approach to creation of risk assets as well as the fact that we continue to keep our eyes on the key performance indicators and all of them recorded very significant outstanding performance. Against this performance, we are declaring the dividend to top pay our dividend of NGN 4 per share, the highest in the banking industry and the highest among paid by any bank so far in the history of this country. We believe that having done well is important for us to reward shareholders. It's also important for us to underscore that the dividend we are paying is coming out of organic profit. And out of the very significant improvement we had in our top line, we will make sure that create reasonable buffer and improving our cyclical buffer. So our equity remains very strong. Our total equity, as this stands at NGN 2.32 trillion, which still remains the highest capitalized banking institution in Nigeria and also the top -- one of the top most capitalized banks in Africa. So I'll leave the CFO to throw more highlights in terms of the performance before we go into the Q&A. Thank you very much.

Thank you very much, MD, CEO. Good afternoon. As the MD has explained, we have very good financial year 2023 with the key performance measures growing significantly. Our gross earnings moved from less than NGN 1 trillion to NGN 2.1 trillion within the financial year. A 125% increase. This came as a result of increment in interest income, noninterest income, almost all revenue lines showed signs of -- showed growth within the period. Interest income grew by about 112% from NGN 540 billion to NGN 1.1 trillion. This is largely due to the increase in the rate environment, which we all know. We also have expansion in our risk assets without reducing the quality of our risk assets. We have significant liquidity that helped us to invest in treasury bills and other securities. Within the period, we also saw an increase in interest expense because of the rate environment. The increase in interest expense was, however, moderated by we ranging in on operating expense. Cost of funds increased within the period from 1.9% in the previous year to 3% in the current period, which is because of the general rate environment that we are in. On all this, our net interest income was very strong, positively by 101%, increasing from NGN 367 billion to NGN 736 billion. We finished the period with a net interest margin of 7.3%. Impairment charge was very significant for us up to NGN 410 billion because of our approach to making the best impairment charge of provision on our loans as possible. As we all know, the exchange rate movement within the period increase the risk assets, especially the dollar denominated loans. So we also matched it with a corresponding increase in impairment charge, so as to protect our balance sheet and ensure that we have adequate buffer to deal with potential loan challenges if they ever arise. So we have cost of risk increasing from 3.2% to 7.2%. As I said earlier, non-interest income also increased. The trading book did extremely well because our trading book in various instruments, both derivatives, we have bond trading, treasury bills trading all recorded significant growth. We also had revaluation gain as a result of the depreciation of the naira within the financial year 2023, which also added to our noninterest income. Operating expense increased by 31% within the period. So as I explained earlier, the revenue line view by over 100%, but expense was significantly moderated within the period. That saw our cost-to-income ratio reducing from 54% to 36%. It is important to note that the regulatory costs within our operating expense alone contributed to 30% of our overall cost. All these cumulated to profit before tax of NGN 796 billion, that is 180% growth from that period. Our balance sheet also experienced significant growth, gross loans growing by about 71%. If you isolate the exchange rate impact on our loans, we have about 26% growth in the loan book. The customer deposits also grew by about 69% within that period. If you isolate the revaluation impact on our deposit. The deposit also grew by 30%. So we have our total asset growing to NGN 20.4 trillion within the financial year. We have a liquidity reserve of about NGN 70.9 trillion at the close of the financial year. Our shareholders fund stood at NGN 2.3 trillion at the close of the financial year. This clearly shows that as about we have a very strong and liquid balance sheet to be able to explore growth opportunities and able to also explore expansion to be able to generate more revenue, make more profit and be able to reward our stakeholders. Thank you very much. I hand over back to the MD, CEO.

Okay. Thank you very much, CFO. So we are now open for questions and answers.

Thank you very much. [Operator Instructions]. Our first question is from Timothy Wambu of Absa.

Thank you very much. I trust that you can hear me. Good afternoon, Ebenezer, Mukhtar and the team. Thank you very much for the presentation, and for taking time to answer our questions. My first question is on the net open position compliance. Could you kindly just indicate to us whether you're not compliant, and what it took for you to be compliant. And from your interpretation, are you longevities even on your balance sheet? That's the first question. The second question is that according to your AGM notice, indicated that you look to introduce almost up to double your shares in issue, but we indicate that you're looking raise way in excess of what you require to meet the minimum recapitalize requirements when you introduce -- when you double your shares in issue. So can you just explain how you -- how you intend to go about it? And do you intend to carry out a rights issue and the modalities of that rights issue. And then the third question and last one is on the loan to funds ratio. I can see you're guiding loan growth and deposit growth of 20%. But somehow, your loan-to-deposit ratio is increasing from 46% to about 60%. And maybe while you're at it, can you just indicate whether the Central Bank is still clamping down on banks for not compliant with the launch of minimum requirement.

Thank you very much, Timothy. So start with our net open position, we comply within the required time frame. Recall that it was 10% and in line with our compliance with [indiscernible] regulation, it wasn't a problem for also compliant fast. The day, the policy came out in as we complied immediately. I think I can say that we are one of the first banks who have complied. And the reports have been reviewed, and we are quite in line with that regulation. The capital raise, yes , you are right. When you see -- when you hear, we are going to raise, we are doubling. But if you go on to read the notice further, there is a condition that says, after the capital, if there is any order on issued capital that the Board considered is just an empowerment to give the Board the opportunity to raise as much capital. Bear in mind that the requirement for also to comply with the regulation is to raise NGN 230 billion. But typically, for example, we like to keep things above the regulatory minimum, so that we have some buffer. So the whole idea is, put it there, let's see to what extent it will raise above the required minimum. After that, in keeping with the CSE regulation, any portion of the -- on issued share capital that remains will be considered. So that takes care of that. The issue of the loan-to-deposit ratio where, to the best of our knowledge, CBN has relapsed our policy arising from the increase in the CRR to 5% and maintaining a more refined and straightforward methodology because if you begin to compute it and do the arithmetic with CRR of 5% and the liquidity ratio of 30%. Therefore, means that for you, as a bank, I think your loan growth should not be more than 25%, otherwise, you are entering to our shareholders' home. So that has been done, and we have not seen any penalty coming from CBN with respect to that, so. In terms of loan growth, I think I'll leave the CFO to throw more light with respect to the guidance.

Thank you. We guided loan growth of, I think, 20%. So the guidance we have given in this presentation are all based on organic growth. We are guiding that. We will grow organically. We want to isolate the impact of any revaluation because we have seen the naira [indiscernible] up recently. So if the naira continue to strengthen, we'll be able to still grow our loan book by that 20%, same for deposits. If naira begins to weaken, we will not -- still grow organically 20% without the revaluation impact, which is why I explained that within the period, our deposit grew by 69%, but the actual growth was around 26%. So that's what guided -- that's what informed this guidance.

Well, there's also the question around the modalities for the capital raise. Since it's essentially equity raise and [indiscernible] capital is not going to come, especially, we'll be looking at doing a combination of maybe rights, public offer as the case may be. So if there is a need for us to think of private placement, it depends. But we [indiscernible] that our approach is to achieve this target organically and achieve it pretty much soon. Next question?

[Operator Instructions]. Our next question is from Ngozi Odum of CardinalStone.

Yes. Good afternoon, everyone. Thank you for the call and for taking questions. So I wanted to get a brief view on your expectations for dividend payments going forward. Noting that the CBN has excluded retained earnings, do you foresee dividend payments or dividend payout ratio matching your historical payout ratio, which was around circa 40% going forward. And then on your capital raise. Do you foresee the time line within the next 6 to 9 months. So I'm assuming that you're hoping to raise your NGN 230 billion. Am I hoping to conclude that this year? And then lastly, just briefly on your expectations for -- or your views per se, on the AMCON given that institution of AMCON and then lifespan has exceeded for above is intended or regional bids. I wanted to know on the expectations for the unwinding of this structure.

Okay. Thank you very much, Ngozi. Your first question is on expectation for dividend payout. For as long as we continue to do well, we will continue to reward shareholders. That is basic. As can be seen from the performance of 2023, we are making the payout that's never been seen before in the industry. So the payout ratio will be determined by how well we do, and I'm pretty sure we will continue to do excellently well, which means we'll continue to reward shareholders excellently. The capital raise, the time frame, first is bear in mind that banks have been giving 2 years. And we are working our plan to ensure that we complete it as quickly as possible. We may not be able to give you a specific timeline, but just know that if there's going to be one institution that will be achieving it and achieving it very soon. I think it's going to be Zenith before as confluent because we have the pedigree, we have the name, we have the brand. I mean, you see how well the stock has performed. So we have everything that will drive investor's confidence. So we are very, very certain that existing shareholders will be subscribing to both the rights and if need be any public [indiscernible] will be there. Expectation on AMCON, very interesting question. Well, first is, bear in mind that AMCON really come to end of life. What we have is an extension of almost like getting it back again on life support. And what's also important is that for an institution like Zenith, what we have contributed or paid to AMCON, more than double the legible banking asset will had it over to AMCON. So if we are going to be looking at the debit and credit, you will see that we are in credit. So institutions like us appear to be certain by the continued implementation of AMCON. And if you are looking for our expectation, we expect that AMCON be brought to an end immediately. So maybe other institutions that haven't fully -- where AMCON haven't fully recovered from them maybe a different kind of scheme can be worked out for them to have a continuous payment or deduction for the AMCON. So our own position is, we think it should be rested. Because, if you look at our regulatory costs, i.e., AMCON and the NDIC overheads, they account for 30%, 1/3. That is quite heavy. So imagine if we are releasing that 1/3 into profit, that will tell you the level of performance that the bank has and the resourcefulness of this bank to really start value for shareholders.

The next question is from Nick Padgett from Frontaura Capital.

This is actually Timothy Raschuk from Frontaura. Just a couple of questions. On the unwinding of the FX position, does that entail any extraordinary gains or losses? And then could you just talk about what your expectation is, given the naira moves for revaluation gains or losses in Q1? And then maybe just around the capital raise. I know it's -- you following a rule of the Central Bank has made. But on a capital adequacy or other capital spaces, Zenith Bank and many of the other larger banks are well capitalized. So the Central Bank informing banks to raise a lot of capital out of big -- when all of the share prices are trading at a big discount to book. It's not the most logical thing to do. So maybe if you could just talk about that and what you think the Central Bank's thinking is around that? And then my last question is just on guidance and whether the guidance within the capital raise or not. So the PBT and PAT numbers, do those assume something for capital raising?

Thank you very much, [indiscernible]. I think first on the FX position on the expectation, I guess you want us to give an indication of where we expect raise to close, that's [indiscernible] because of the obvious implication of higher exchange rate or the general price levels. And you look at it, this is one of the elements feeding into the inflationary trends to see. So it makes a lot of sense for us to witness an appreciation and the stronger naira. And record that the Central Bank set is about twice that the naira is on the value. So I believe what we have witnessed before is more speculative attack, and it seems like the market is coming to be realized on that. Yes, Naira should be allowed to find it's true value. And naira finding its true value drives confidence and naira finding its true value, we enhance processing power of the average consumer, life will be a lot more better. So to that extend, we will subscribe to strengthening of the naira. The issue of a capitalized bank arising from the new CBN regulation. I guess you don't want us to even comment on that because we are in a regulated business, whatever the rules are, we obey. We don't own the license we used, issued so far us longer, that's what the regulation is. Our first level is comply. So we need to comply with it, after that we start putting the other puzzles together. One time is setting, we think it will position us to be able to do a lot more. I mean, we have a lot more capital to deploy. We will be able to address the various growth areas we see in the economy than we have a deeper pocket to do bigger deals as well. So I think, again, when you align that against the target or the President to achieve a $1 trillion economy. You realize that you needed to have stronger and bigger banks to be able to achieve that. So to that extent, we think is a requirement that we have to follow and adhere strictly to. Guidance on the capital raise, Mukhtar, did you get that question?

I think there was a question whether we expect exceptional gain or loss from the FX. That's what I wanted to answer. Okay. I think you've handled the capital one. So yes, we actually were expecting exceptional gain or loss. We do not because we have also structured our balance sheet to -- in the sense that we did not expect a significant revaluation gain will continue forever. So if you look at our notes on net income, that is on Page 163, you will see that our trading gain, the gain on the trading book increased significantly. Trading -- although trading book increased significantly, trading on treasury books also increased. But if you go to Page 164, you will see that our revaluation gain also grew, but not as much as the growth on the trading book. So even if we are fully complied with the FX position, the net working position is not going to significantly affect our trading book. The revaluation gain that we're going to see would reduce significantly. But overall, the impact on our profit will be manageable. That's how I want to answer. But you are not also going to see one big gain or one big loss as a result of this policy. Our guidance on PAT and PBT have taken cognizance of the capital requirement. Yes, we have taken cognizance of the capital requirement in guiding our PAT and PBT. However, as we did last year, in the second half of the year, we revised our guidance. So we are giving this guidance based on what we know and what we anticipate. As we move into the capital regime and as we observe the macros, how they evolve, if there is a need for us to revise our guidance, we will revise and advise the market.

Next question?

The next question is from Stephen Chima of CardinalStone.

So my question really is on net interest margins for the bank. We saw net interest margin at 7.3% same as last year. I mean, considering the current interest rate environment, I mean, how do you see that being reflected on asset yields for the bank, kind of how would that translate to net interest margins for the year. Secondly, with the CBN's directive of FCY loan position, how does the bank see its earnings for in this year perhaps on sort of guidance on PBT and PAT in that regard. Also, I observed about circa 18% decline in net income and -- net income from fees and commission, and as fees and commission in more expenses almost cheaper, right? Could you speak a little bit about meter-drivers that drove that movement in fees and commission expenses?

Let me get the CFO to respond to the questions.

Thank you very much, Stephen. The first question is on net interest margin, NIM, 7.8% -- compared to last year's 7.8%. Yes, you're very right. The rate environment has improved. But you also have to recognize that if you look at the balance sheet of Nigerian banks, most of our liabilities are short tenured. So when the rate environment starts picking up, the liability reprice faster than the assets. So that is what we have seen. Towards the end of 2023, we saw the yield on the asset moving very, very fast. But that happened towards the end of 2023. In 2024, we have seen NIMs improving beyond that level. So we guided NIMs of 10% in 2024. So be rest assured that the rate environment is good, and we are going to use that to drive the needs in 2024. Then you asked about the directive on FCY position, how it impacts our PBT, PAT. The FCY position that the CBN is giving guidance, we have complied with it. When you have dollar assets or dollar liability, there are different ways you can deploy them as a bank to make revenue. You can deploy them on the banking book by creating loans, by investing in other investable instruments or you can deploy them on the trading book by entering into various transactions, either derivatives or forward and so on and so forth. So the restrictions does not limit us to how we can utilize the funds. We have the balance sheet. We have the liquidity, so we are able to explore other avenues to deploy them. We are factored in that in our PBT and PAT guidance. And as I said, as we observe the environment, we may, if need be, revise the guidance. This is based on what we know now and what we expect. Net income on fees and commission. You said expense cost grown significantly. You're right. A lot of the fees and commissions, they are driven by digital platforms. The digital platforms are driven by software, hardware solutions and support that are sourced for in foreign currency. So when you see significant devaluation, you experience a very sharp increase in their costs before the revenue will gain to ramp up. So we have seen the growth in the cost. In 2024, the revenue have started ramping up faster than the cost. So you expect to see the expense they're reducing in terms of how it is growing and the revenue of taking the expense.

Thank you, CFO. Can we have the next question?

Of course. The next question is from Olumide Sole of Vetiva Capital Management Limited.

Good afternoon, everyone. So I'll just have a very simple question. I just want, I would say my first one is basically looking at the severe guideline of net position at all. So I'm just one [ delight ] like this [ FX value ] on a bank sustained performance. So we see, right, for '23, '24, 2025 and years [indiscernible] with a bank [indiscernible] record kind of the pressing performance we have seen, when the bank is going mass [ classification ] we saw in 2023. So that was my first question. And my second question is I don't [indiscernible] is looking at [indiscernible] group this year -- its group [indiscernible]. So what services Zenith Bank and what services Zenith Bank is looking at to expand. Thank you.

Okay. Thank you, Olumide. Let me get the CFO to speak to the network composition in part on our earnings going forward.

Okay. Thank you very much. Yes, you're very right. Again, if you look at our financial statement, I will refer you to Page 164, you will see that our foreign currency revaluation gain there is NGN 228 billion for the full year 2023. Now our total profit is NGN 795 billion. If we take away that -- if you take away the NGN 228 billion, that leaves you with NGN 566 billion. Last year 2022 financial year, our profit was NGN 284 billion. So you have the profit almost doubling if you back out your valuation gain. So as we mean, we didn't do revaluation gain. We have a profit of NGN 566 billion, which is 99% growth from 2022. So even if we have made our projection, which was the basis of our projection, as we said. The guidance that we have given is based on organic growth. We are still able to show growth in our profit less revaluation. So you have to be rest assured on that.

Okay. I think that's the second question [indiscernible].

The next question is from Joshua Arowolo of [ Standard Bank Pensions ].

All right. Thank you very much. Good afternoon, and thank you for taking my question. And congratulation on the stunning results. And I have 3 questions. The first one is just to -- we confirm the bank's FX loan position now given that it was -- based on my understanding it was around $1 billion as a full year 2022. So if we can just get the absolute number now, that will be great. The second question is on the bank swap book. Just to understand the size of the swap book currently? And if you can just guide us on when the next set of big maturities on the -- this swap portfolio will happen just also help with our modeling that will be great as well. And then the last question is on sort of asset quality. I understand that most of the impairments that was made during the year about NGN 400 billion is largely precautionary. But is there any sort of legacy loan that was impaired [ doing credit ] as well just to we get a better understanding of those impairments.

Okay. Thank you very much. I'll get the CFO to answer the FX loan position, the swap book and the maturity profile. On the asset quality, let me say here that there's no deterioration in the policy of our assets. What we've done is just to be put at that conservative and making sure that we increase our impairment given the revaluation [indiscernible]. What you also see in the impairment line includes the additional provision we made for counter-cyclical buffer, so right now, with [ Naira ] strengthening, we are going to see that, yes, instead of [ assets ] in P&L, we go to the counter-cyclical buffer to even it out. So that's essentially what we've done. It's not a reflection of a deterioration in the quality of the loan book. The loan book remains very strong and healthy. And going forward, we'll continue to achieve that because in our tradition we are careful and diligent choosing and picking the kind of deals we do. So if you look at our trajectory over the years, we've maintained the least loan loss for [indiscernible] and the industry which therefore but 30 years or 40 years of existent. So CFO, you want to deal with the FX loan position?

Yes, very well. If you look on the -- our FX balance sheet that we have disclosed on Page 119 for the group and Page 121 for the bank, you would realize that at the bank level, you even have a short dollar on the balance sheet. It is only value bringing the other derivative instruments that you have a long dollar. And we have also down hedge accounting within the period. So if you look at the notes, we have other income, you're going to see how we have treated the hedge accounting from the trading book into the banking book. So we don't have an issue with a long dollar position. But if you want to know what is giving us the revaluation gain, you're looking at a long dollar position of -- in the range of $1.2 billion. That's that. The swap book is in the range of -- again, if you look at that same Page 119, we have mentioned the various swaps that we have that is amounting about $1.4 billion. And then they are a [ very less ] maturity. The maturities are structural at different levels. We have maturities almost every 3 months. That helps us to reprice and to determine whether we want to continue or not. MD has spoken of asset quality.

The next question is from Ronak Gadhia who is a private investor.

Thank you. Firstly, congratulations to the results and thanks for taking the time to take our questions. Maybe just a couple of follow-ups from Joshua just asked in terms of the net open position, could you just guide us what the net open position for the bank is currently following the introduction of the CBN regulation requiring banks to close down their loan positions? Likewise, on the swap portfolio, it was at about $1.4 billion. Given the changes that we are seeing at the CBN, has the bank continued to maintain that swap portfolio? Or is it seeking to close down that position through the rest of the year? And if it is looking to wind down the position, what potential impact could we see coming through on the net side is that instrument unwinds? And then finally, my last question is on your margins. You've already spoken quite a bit about it, but I saw a big -- at least by my calculation, there's a big uptick in your net interest margin in the fourth quarter. That, in my calculation, was being driven by...

We seem to have lost you there.

Can you hear me now?

Yes, we can hear you now. Thank you.

Sorry. Where did you lose me?

Uptick in the net interest margin, in the fourth quarter.

Sure. Maybe you could just talk through the big uptick in net interest margin in the fourth quarter. I saw it was being driven by a substantial increase in lending rates, even taking into consideration the uptick in interest rates, even the increase in lending rate during the quarter was quite strong and surprising. So if you could just talk -- just talk through in terms of what was driving that?

Okay. Thank you very much. On the net open position, we are squared in line with CBN regulation. We are not supposed to keep asset, we are not supposed to keep a positive net composition on the other way around where you can go shops. So as far as that revaluation is concerned, we are squared. The swap book at $1.4 billion, if you flash back to last year, you realized that the swap book was actually about $1.85 billion. So no doubt we are going concern, and we have very outstanding and most best-in-class talented treasury team. So it's all about where we have the margin work and we have the most value for shareholders. So that's essentially what we do again [indiscernible]. So we are not in any way [ physical ] on certain products. The treasury team continue to be creative, and we've seen it downsizing to $1.4 billion. And it depends on what has to find in the market. So the risk and reward concept will continue to drive us as we deploy our liquidity assets to achieve the required gains. So that is with the question of whether we wind down, it's all about what we see in the market and the dispositions. We have about certain developments we see in the market. Margin increase uptick, yes. From last year, we started seeing rates trending up. And of course, when the margin business. One, you see costs going up, it's only important that you now need to reprice to ensure that you don't compress your margin. So the acceleration in rate started from our [indiscernible] Q4. So we had to reprice and that repricing helped us to improve the uptick notice in the interest margin. So we'll continue to play the market and ensure that. No matter the direction that rate goes, whether it goes up or goes down that we don't have a compression of our margins.

Thank you very much, sir. Ladies and gentlemen, in the interest of time, I will hand back to Mr. Onyeagwu for some closing remarks.

Thank you very much. I'd like to invite our incoming CEO and Dr. Adaora Umeoji, who will give the highlights in terms of the outlook going forward. And let me also thank you, the analysts for the insights you keep providing for us when we have sessions like this. We have to reshape our understanding of the dynamics in the market and the implementation of our strategy. So I realize that this is going to be my last call. And Adaora will be taking [indiscernible] hear from her in terms of how she be driving the strategy going forward. And one that is important is to say that Adaora is going to be the fifth generation of leadership in the bank, not just the fifth generation, but the first lady CEO of the bank. She comes a lot of pedigree. She comes with a lot of creativity, and lots of energy. So we have no doubt that she'll be able to continue to elevate the core value discipline and the principles of business of Zenith. So Adaora, over to you.

Thank you very much. And thank you for that brilliant introduction. Today, I will be taking the strategy for driving our vision for 2024 financial year. In addition to the communicated strategies already, the Zenith vision remains to build the Zenith brand intra-retail International Financial institution recognized for innovation, so our customers in with and performance like fitting premium value for our stakeholders. Zenith Bank has remained focused on being a true blazer in the banking industry both in Nigeria, Africa and beyond, consistently topping the charts in terms of profitability in the Nigerian banking industry, there are some key strategies of this. I would like to share with you this afternoon as we close out an investors call. I would like to start with the Zenith [indiscernible] transition. We expect that within a month of our extraordinary general meeting, which is going to be held on April 26, 2024, who will conclude our transition to a holding company structure. On the holding company structure, we have a new fintech vertical and payment services platform called [indiscernible], which we already have in the Central Bank approval for how we intend to launch this before the end of 2024. Zenith Bank will leverage on the opportunities within the payment space in Nigeria across West Africa and beyond as we expand our retail and digital franchise. We have Project Tiger. This Project Tiger is not -- is from the [indiscernible] result of Tiger meaning strength and power. So we named a comprehensive IT infrastructure Project Tiger to be able to show these trends, I'm seamless with some powerful back-end systems. Project Tiger was initiated with a mission to upgrade and expand the bank's existing infrastructure to transform along the holiday systems and communicate the price demand to be able to service our customers better. This transition is expected to enhance our capacity across the various business segments from commercial, SME, retail and public and corporate aspect of our business. Models such as treasury and trade were deployed in 2023, while the remaining models of the Project Taiga such as core banking and loans, we go live in 2024. The new system capability, we enhance excellent customer delivery across all channels, customer touch points while driving efficiency and ensuring cost savings. We are going to look at expansion and establishment of a French subsidiary with footprints in over 7 countries. Zenith has always been focused on globalization as the key to exploiting opportunities in global markets and expanding our branch franchise. As part of the group's expansion plan, the bank is awaiting final approval from the French banking regulatory authorities to open a subsidiary in Paris. The French subsidiary, which would only [ is any ] banking entity. We help us we take 3 transactions for the group customers and their partners across Eurozone. We also cannot afford to ignore grain intra-regional business, commercial and trade opportunities on the African continent. We are looking forward to launching our strategic initiative in collaboration with the African Continental free zone known as [indiscernible] by the end of 2024. We are also looking forward to pursuing our aspiration to expand our franchise in other African countries where we do not have representation. These geographic opportunities will help us to [ chuck ] into growing customer demand for financial services in regions where we do not have a representation. We are not going to capital raise very soon. The Central Bank of Nigeria realized the regulatory circular. Released the regulatory circular on 28th of March 2024. We had distressed 5 new minimum capital requirements for commercial banks, merchant banks and noninterest banks in Nigeria. To this end, the bank will go into the capital market by way of price issue public of our private placement or a combination of these to raise at least an additional NGN 30 billion to meet the regulatory minimum capital requirement of NGN 500 billion set by the CBN for banks within international authorization license. We will receive other shareholders' approval for this at the upcoming AGM of the fund with our strong brand name, we are very optimistic of raising this fund because in the subsequent ones we've done before, we're able to raise and we carefully subscribed. Zenith Bank remains the most capitalized bank in Nigeria, a NGN 2.3 trillion shareholders fund as of December 2023. Now we're in the top 10 of African banks by shareholders. Our strategy is going to be to grow our loans and deposits. With the appreciation of Naira presently, there are a lot of promising opportunities for bank as they show the rebound of the economy, which we believe will increase the purchasing power of every Nigerian and fortify [ renewed ] desire for a banking product and service. This, together with our SME business and this will drive, we enhanced our market share and grow our deposits. We also see opportunity on the horizon by loan growth across key sectors such as telecoms, agribusiness, fast-moving consumer goods, manufacturing and other areas. These opportunities can be used to deploy the additional capital we plan to raise. We have a strategy of raising the SME, retail and digital footprint. Our SME growth agenda retail drive and conscious expansion of digital footprint across all KPIs like [indiscernible] banking, mobile banking, [indiscernible] terminal and card services. Our key aspects we plan on utilizing to boost our growth and sustainability going forward. We have an export business to be able to depend on our export drive. Zenith Bank controls some of the export market, and we intend to consolidate more on that. We have remained committed to the growth of non-oil exports in Nigeria, which can be seen through the [ Zenith Bank's ] Zero to Hero Export Scheme, which is a capacity building initiated for the non-oil sectors, where we have seminars held by the bank to grow our customer export business. Then finally, we have the customer service. Exceptional customer service remains the area of core competence, and we intend to improve on these trends by leveraging on our world-class technology while improving on the capabilities and well being of our staff. This will ensure that the bank continually skills in [indiscernible] sustainable brand and deliver premium value to our shareholders and stakeholders. Thank you very much. I would like the CFO talk on the guidance for financial year 2024.

Thank you very much MD, we have included the guidance for the financial year 2024 in the presentation. And during the course of the question and answers, we have also made reference to some of the key parameters in the guidance. And we have also mentioned that as events unfold as we see what happens in the year, if it becomes necessary, we may revise and advise investors on. Thank you very much.

Okay. Thank you very much, everyone. You've heard from my incoming CEO. I see that the recipe is the same. In the first the CEO will be changing from a man to a very pretty lady. And as a result, we're also going to be seeing a lot of fresh air being injected into the system. In keeping with our heritage and our DNA of discipline and very, very professional approach to business, we'll continue to extract victories out of divisions led to the system. The system is there. We have a robust platform. We have such an organized and disciplined system that is self regulates. So we are having somebody who has an institutional memory in terms of how to carry on. So the -- rest assure that we continue to post very outstanding performance. No matter the direction, the [ assay ] goes, Zenith to remain very profitable. We are not tired of leading and will continue to lead no matter the condition that the market presents. So thank you very much, and I wish you the very best as we continue to support Zenith. Thank you.