Zenith Bank Plc (ZENITHBANK) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the Zenith Bank Full Year 2024 Conference Call. [Operator Instructions] Please note that this event is being recorded. Today, I am pleased to present Dr. Adaora Umeoji, OON, GMD, CEO of the Zenith Bank Group. Please go ahead, ma'am.

Good afternoon, investors, analysts, ladies and gentlemen. My name is Adaora Umeoji, the Group Managing Director and CEO of Zenith Bank plc. It is an honor to anchor this investor call. With me on this call today are our Executive Directors, Henry Oroh, Adobi Nwapa, Akin Ogunranti, Adamu Lawani, Louis Odom; Chief Financial Officer, Abiodun Durosinmi; Chief Risk Officer, Felix Egbon; Chief Compliance Officer, Lawrence Babalola; Company Secretary, Michael Otu; Head Investor Relations, Jacquelyne Yawa; Head of Treasury, Yeside Banjoko; and some of our colleagues from the Financial Control and Strategic Planning depart. I want to start by thanking everyone for making time to attend this investor call where we will be presenting our 2024 financial year results. In 2024, the global economy continued to experience uncertainties driven by China's economic slowdown, the Russia-Ukraine war, US-China trade dispute and instability in Middle East. Also security concerns in the Sahara region and the environmental issues and increased natural disaster and affected food security collectively shape the global economic trajectory. These challenges impacted supply chains, heightened inflationary pressure and constrained economic growth, particularly in advanced markets while amplifying the bodies in frontier and emerging economies. Several governments around the world in able to address these challenges implemented varied fiscal and monetary policies to stimulate economic growth and inflation. Central banks across the globe deployed monetary policy tools like interest rate adjustments and quantitative easing to stabilize financial markets and boost economic growth. The pass-through effect had its impact on the Nigerian economy. The removal of [ first ] subsidy and [indiscernible] depreciation on the naira to the U.S. dollar impacted businesses. Additionally, the incidence of flood in many states in Nigeria and prolonged in security challenges led to the increased food inflation, which further strained consumer purchasing power. Despite the numerous challenges, the Nigerian economy demonstrated resilience, which was partly driven by the government structural reforms and strategic policy actions aimed at stabilizing the economy and placing the country on a stronger development part. On the fiscal policy side, the government embarked on starting fundamental changes to address some macroeconomic challenges. These interventions, among others, include the proposed Nigerian tax bill 2024 issuance of domestic dollar bond and the rebasing of the country's inflation, which led to the decline of the official inflation figure by over 1,000 basis points from 34.80% in December 2024 to 24.48% in January 2025. The Central Bank of Nigeria also acted decisively by deploying various monetary policy measures aimed at stabilizing the naira, covering inflation and ensuring economic growth. These policies among others include the Nigerian FX good, [indiscernible] platform formation of foreign exchange rates, [indiscernible] recapitalization policy for Nigerian banks, increase in NPL to 27.5% in 2024 from 18.75% in 2023, increase in CRR of deposit money banks to 50%. The outcome of these initiatives are evident in the stabilized exchange rates, availability of FX for trade transactions, declining inflation and significant improvement in the general macroeconomic environment. For us at Zenith Bank, 2024 was an interesting year. We remain adaptive and innovative to the macroeconomic environment as we continue to offer exceptional service and maintain high standard of corporate governance in our operations. These values shaped our 2024 performance as evident in our exceptional results. The bank recorded a [indiscernible] growth of 86% in gross and year-on-year. This is attributed to 138% increase in interest income and 20% increase in noninterest income. The bank's profit before tax rose to NGN 1.33 trillion in 2024 from somewhere around NGN 95 billion in 2023, representing 67% growth. Our profit after tax grew by 53% to NGN 1.03 trillion in 2024. This makes Zenith Bank the most profitable bank in Nigeria. We are proud to say that none of our subsidiaries recorded a loss. It is worthy to mention that our U.K. and Sierra Leone subsidiaries grew their PBT by 71% and 262% year-on-year, respectively, in 2024. We remain the bank with the highest Tier 1 capital in Nigeria at NGN 3.19. In addition, Zenith Bank successfully raised [indiscernible] through a combined offer of rights issue and public offer, which achieved 160% subscription. Achieving this milestone demonstrates shareholders' confidence in Zenith Bank as the foremost financial institution and an indomitable brand. At Zenith Bank, we are committed to delivering superior returns to our shareholders. To demonstrate this, we declared and paid an interim dividend of NGN 1 per share in the course of 2024 financial year. We have proposed a final dividend of NGN 4. This will bring the total dividend for the year ended December 31, 2024, to NGN 5 per share. We have consistently maintained an improved dividend payment record, and we will continue to create enhanced value for our shareholders. Dividend payment policy is anchored on building a long-term resilient and sustainable institution that protects and creates world. Zenith Bank remains a distant leader in the financial technology space with numerous [indiscernible] in the induction and deployment of innovative products. In 2024, the bank concluded a major IT transformation, which included a change in its core banking application. This state-of-the-art technology is geared towards ensuring that our bank continues to provide best-in-class quality services and products that will create value for all stakeholders. With these achievements, we are set for global expansion into new markets by following our customers' business with a focus in markets with high growth opportunities. We have opened the Paris office and plan to expand to other developed economies as well as African countries starting from Cote d'Ivoire and Senegal. We recently signed an agreement with the African Continental trade area to finance the development of a digital portal called Smart AFA to help facilitate intra-African trade. As the first female and fifth Group Managing Director of Zenith Bank, it is pertinent to note that this is my first engagement with the investors community. We rest assured that our strategy and culture of excellence will continue to drive our business operations. We want to assure you of our commitment to ensuring strict adherence to good corporate governance and exceptional service delivery at all times. Our ESG lending policy retrace the bank's strong commitment to sustainability, prioritizing ethical business while engaging our environment sustainably. We will maintain our cost optimization drive and also take advantage of cross-border banking services to support our clients' international operations and investments. We believe in the power of inspirational and transformational leadership and our unicorn workforce is our key success factor. We remain committed to strengthening their capabilities, fostering a positive work culture and cultivating a happy work environment to maintain high staff retention as well as customers' retention. We are well positioned to attract cheap deposits, grow our loan book while maintaining a low nonperforming loan ratio. With all this, we are poised to deliver value to our customers and continue to provide superior returns to our shareholders in 2025 and beyond. It is a privilege to lead this great institution, having resumed to the ranks and appointed through a tradition of organic leadership development. We feel honored and committed to carry forward the enduring legacy of our Founder and Chairman, Dr. Jim Ovia, CFR, to build a successful, sustainable and strong corporate governance culture institution that will [indiscernible] to come. On this note, I welcome our CFO, Abiodun Durosinmi to present more comprehensive details of our 2024 financial year results. Once again, thank you very much for listening.

Thank you, [indiscernible], and good afternoon, everyone. In terms of the financial highlights, I will refer to Page 14 of the slide and of course, Page 16 for the group details. I'll starts with the gross earning GMV grew by 6% to hit our record of NGN 3.97 trillion. This is interesting because the contribution came from both interest and noninterest income lines. We have interest income contributed 70% to this and 30% from noninterest line. This for us signifies a very strong and sustainable ability from our core business operations. Specifically if I look at the interest income, it grew by 138% to reach [indiscernible] trillion in 2024. Some factors contributed to this, interest earning on our risk assets, of course, our risk asset grew and the interest earning there also increased. We also increased our investment in order securities, which also contributed significantly to the interest income. Interest rate hike in the period 2024, we saw [indiscernible] increase the NPL rate 6x like GMV confirm that also led to interest rate escalation in the market. And of course, again, the translation effect of the interest income on our FCY portfolio also contributed to that, especially with 62% depreciation of naira in the course of 2024. Similarly on interest expense, of course, we also grew by [ 142% ] to hit NGN 992 billion in 2024 from NGN 408 billion in the prior year. Similar factors also played out here. We grew our deposit liability by 45% due to our aggressive deposit mobilization drive. Again, the direct impact of the CBN's upward review and the MPR also led to a general rise in the interest rate environment. We saw cost of fund as we escalated by 60% from 3.0% to 4.8% in the course of the year, due to the increase in the MPR and escalated interest rate environment we operated within. Again, translation effect of interest expense on FCY borrowings and of course, FCY deposits also contributed to the increase we saw in interest expense, again, on account of naira depreciation. So the combined effect of the movement in the interest income and interest expense resulted in a very strong and positive net interest income for us. It increased by 135% from NGN 736 billion to NGN 1.7 trillion in the year 2024. So, effectively this resulted in a net interest margin increase of 13%. It went up from 7.3% to 9.5%. Another significant item on the income statement will be the impairment charges for the year. It increased by 61% as we charge booked NGN 659 billion in 2024 as against NGN 410 billion in 2023. It's good to note that this increase is not on account of any deterioration in our loan book. It's just in line with our tradition of making best impairment provisions for our loans as much as possible. We also saw the need to create sufficient buffer to protect our balance sheet and especially [indiscernible] denominated loan. Again, we took this prudent step taking the advantage of the valuation impact on profitability for the year. However, despite this increase in impairment charges, cost of risk moderated at [ 7.3 ] as we had before in the prior year. On the noninterest income line, we also grew by 20% to hit NGN 1.1 trillion. Major contributors, of course, net trading profit, which increased by 94% to hit NGN 1.1 trillion, again on account of effective management of effective management of treasury portfolio. And of course, we intend to continue in that step. There was also a 9% increase in our net fees and commission due to increase in adoption of digital channels. And of course, we continue to see tremendous increase in volumes of transactions on those platforms. Again, on this downside, we recorded a negative net return on other operating income. This has to do with the need for us to fully comply with regulators' directive on the need for banks to maintain a 0 net [indiscernible] loan and of course, maximum of 20% [indiscernible]. Again, to comply here, the bank has to restructure our balance sheet and the resultant effect of that was the currency loss that we experienced. We can see that on Page 148 of the financials on the notes [indiscernible]. Last on income statement, of course, is the operating expense, which also grew by 88% to hit [ NGN 842 billion ]. Here, a quarter of that has to do with regulatory costs, talking about the AMCON charges, which is a function of our total balance sheet size, and of course, the NDIC insurance premium, which is a function of total deposit liability. Another factor here is our ICT spending, which more than dollar-denominated. And of course, with naira devaluation, we see this translating to future naira on our income statement. Of course, again, [ Umeoji ] mentioned the hedging inflation we operated on which resulted in general price levels in 2024. So when we put all this together, our cost-to-income ratio increased slightly from -- by 8% from 36.1% to 38.9%. We intend to keep this below 50%. We provided a guidance of 40% as we have on Page 45 of the presentation. So all said, we returned a profit before tax growth of 67% to hit NGN 1.3 trillion in 2024. Effectively, our earnings per share was NGN 32.87 which is a growth from NGN 21.55 we have in 2023. We can see the details of that on Page 151 of our financial statements. So briefly on the balance sheet side. Highlights I refer you to Page 11 of the presentation. And of course, the details on Pages 22 to 23 of the presentations. Again, loan book grew by 56% to hit NGN 11 trillion. Contribution to that, again, naira devaluation, translation of the FCY component of the loan book. And of course, organic growth as we also book new facilities to driving sectors within the economy. The deposit also grew by 45% to hit [indiscernible], again, partly devaluation and, of course, address our aggressive deposit mobilization also yielded positive results. Total assets grew by 47% to hit NGN 30 trillion. Liquidity, we closed at NGN 8.3 trillion. Shareholders fund, of course, increased by 73% on account of new capital raise and, of course, additional teen earnings for the year. On prudential ratios, we continue to operate within the limits, its either we are below the maximum or we are above the minimum, and we'll continue to maintain that. So in summary, we are confident that we have a very liquid balance sheet. We are well capitalized, and we will continue to take advantage of profitable ending opportunities in the market. We have capacity to take big transactions now, and we will continue to pursue a good agenda. We consolidate on our digital transformation, and we'll continue to create and deliver value and continue to reward our shareholders. At this point, I hand over back to GMP CEO. Thank you.

Thank you very much, CFO for those clarification. So we are ready for questions now.

[Operator Instructions] The first question comes from Timothy Wambu of Absa.

I just ask one question as advised. I can see your PBT guidance is higher. And I would imagine this is because you expect to still have a very strong performance from your trading book. Just give us a sense of what drove that strong performance. I believe it has a lot to do with the swaps. Could you tell us the status of those swaps? Have they been resolved by the Central Bank of Nigeria or are they still in existence? Give us an idea of the size? And tied to that is just a question on the FX revaluation loss that you booked. Explain how that turnaround happened from a gain of [ NGN 233 billion ] to that loss of [indiscernible].

The next question comes from [indiscernible] of CardinalStone Securities Limited.

So I just have a couple of questions to ask. So looking at just a quick update on the plans to adopt the [indiscernible] structure. What is that looking like? And what is -- what I should be looking for this to be completed? Also, I would like to ask [indiscernible] from non interest income. This was majorly driven by we had gains on trading books. Could you shed more light on this as a breakdown wasn't provided. Also the NGN 63.3 billion in windfall taxes that we saw in the notes. Can you give us some sort of information on what portion relates to 2023, and what portion relates to 2024, as well as the expectation for this going forward in 2025 [indiscernible].

The next question comes from Felix [indiscernible]of Standard Chartered Bank Nigeria Limited.

Congrats on the numbers. I would just like to ask quickly just one question. So we saw from the financials that there was a new fresh borrowing of about NGN 800 billion from Central Bank of Nigeria. Could you shed more light on that line and what drove this? And do you expect this going forward?

Thank you very much for your questions so far. I will take some while the CFO will -- I will start with the question on the FX swap position. As at 2024, we had an exposure of $1.6 billion and presently have really come down significantly. The maturities have been reinvested into other interest using instruments to diversify our portfolio in that segment. Then for the question that has to do with the holdco, thank you as well for that insightful question because following the shareholders' approval for holdco, the bank set out to actually get a regulatory approval. However, the CBN came up with the recapitalization exercise along the line. So [ portraying ] the holdco will have delayed recapitalization exercise for us as a bank. So we decided to suspend the holdco structure to actually enable us to raise the capital for the bank, more so as our peers were already getting prepared to the market. So we wanted to be part of those to take the first mover advantage. After our capital raise, our focus is now on global market expansion and efficient deployment of the new capital. If the need arises, of course, the holdco structure will be revisited. But for now, we've suspended this so that we can focus on the global market expansion and making sure we grow our market share in the industry. Thank you very much. So [ I hand you ] to the CFO to take the rest of the questions.

Thank you, GMD. The question on the trading book, the income on that line is a mix of income from trading transactions, instruments and, of course, including the derivatives, trading income on various hedges taken out by the bank. Of course, it excludes trading bills and bonds. The good thing is as the investments in that portfolio continue to mature, we'll continue to roll over or even diversify into other higher yielding investments. We continue to look for the opportunity, and we continue to see in the market. So we'll continue to optimize returns from that portfolio. Our treasury is good at that. There was a question on windfall tax. The liability for windfall as far as 2023 and 2024 is concerned is fully taken into the books, is already disclosed in the financial statements for 2023 and 2024 combined, is [indiscernible], is NGN 63 billion, almost near 50-50, if we have to divide it between 2023 and 2024. There was a question on borrowing from CBN. It's a collateralized borrowing. CBN has dollar, which is in placement with CBN. Thank you, GMD.

The next question comes from Ifeanyi Osele of CardinalStone Securities Limited.

So I just have a few more. One is on your payout ratio for your dividend. So I've seen there have been a recent discussion in the trend for payout ratio. Could you provide a guidance as to what we should be expecting in the future? Would we expect the bank to maintain this current payout ratio of about 15%? Or do we -- should we be expecting something higher? Next, we have some -- I have something on NIM. So looking at how we are expecting a potential decline in interest rates in the later half of the year, what is the bank's plans to maintain a healthy net interest margin and also higher net interest income? And even also looking at your interest expense, this has kind of been elevated. And we've also seen your CASA ratio at 77% and interest expense going to, let's say, close to NGN 1 trillion. So what measures are the bank looking to, I would say, attract cheaper funding -- cheap forms in order to finance its operations, cheap deposits, basically? What is the plan of management? And also just a follow-up question to the question I asked earlier on the trading gains. You said it was broken down into a number of items. Can you give a sense -- if you could attach like percentages to those breakdowns, what percentage of the gains then was as a result of the exposure to FX, if you could just give an estimate as it relates to that? That's all from me for now.

[Operator Instructions] The next question comes from Isaac Osaro of WSTC Financial Services.

Can you hear me?

Yes, we can.

The last question I just spoke to that I tried to know, what percentage is derivative gain within [indiscernible] in your trading gains income. So that is my question.

The next question comes from Gideon Oshadumi of Chapel Hill Denham.

My question is about the -- about Zenpay. Are we likely to see more traction from the new subsidiary? Like I want to just shed -- can you shed more light on the status of Zenpay?

Adamu, why don't you go ahead with the [ rest ones ]? Would you go ahead? Okay. So I guess we can start -- I'll take some, and then the CFO will take some, then we have ED Akin to take the question on Zenpay, and then we'll have Lawani -- ED Lawani to take on the swap question. So I will start with the dividend payout question. Zenith Bank has remained investors' delight, and this made us one of the first banks to achieve Central Bank of Nigeria's mandates on recapitalization. We actually achieved 160% of [indiscernible]. It is pertinent to note that over the past 5 years, Zenith Bank has cumulatively paid the highest dividend in the Nigerian banking industry. The bank dividend policy is anchored on building a resilient and sustainable bank for the future. Our dividend payout was also influenced by the need to build a countercyclical profile given the operating environment. We will continue to enhance our dividend payout sustainably to be able to ensure that we sustain it and will improve based on economic environment. Our minimum dividend payout will be upward of 20%, subject to the economic and regulatory requirements. We should be rest assured that we will continue to give greater returns and value to our esteemed shareholders at all times. And CFO, can you take before Akin?

Thank you, GMD. There was a question on interest rate regime coming down. Well, it's not going to be one sided. If that happens, the important thing is we'll continue to maintain our margin. If that happens, interest income will come down quite all right, but of course, interest expense will also go down. And our ability to manage and retain our margin is what is important and that we can assure you we will do as we have always done. Interest expense -- there was another question on elevated interest expense. I think I explained that, that's partly due to [ narrative ] decision, translation effect of the interest expenses that were in FX. When translated, of course, they amounted to [indiscernible] amount. I also mentioned the hike in MPC rates in the cause of the -- was a contributing factor, and of course, the [indiscernible] in assets and liabilities giving rise to this interest expenses. So that should not be a problem for us going forward. There was a question on trading gain in terms of what's percentage breakdown. Well, it's safe to say that, of course, between 50% to 60% derivative-related trading instruments are apart from that. Thank you. I think that's it for me.

Okay. Lawani, can you go ahead with the FX...

Yes. Thank you, Group MD. I think the question on the FX swap. The Group MD did mention in the last response, at the beginning of 2024, we had about $1.6 billion. We will have several maturity with the Central Bank or CBN liquidator. But this liquidity have been reinvested in other interest using instruments, again, to improve our yields and diversify our portfolio. We'd like to assure shareholders that the maturity or the payback by CBN will not in any way impact on our yield and our returns on investment because we -- intelligently, we will continue to [indiscernible] our interest using instrument to invest this maturity. Thank you.

Thank you very much, Lawani. And Akin, kindly explain the Zenpay.

Thank you very much for your question and interest in the Zenpay. So we are at an advanced stage of concluding the build for the platform, and we expect that, that should be ready within the second quarter of this year. Once that is up and running, we expect that it would also be able to support our digital expansion in the marketplace. So yes, indeed, we expect a lot of interest in development and activities in that space. Thank you.

Next question comes from Ngozi Odum of CardinalStone.

Congratulations on your results once more. Practically, I just wanted to really clarify on your trading gains. I know we've discussed it. But on the notes under your trading gains, you have another sub-line item, gains on other trading book. And this amounted to about NGN 1 trillion. And then on that note, you stated about NGN 2.2 billion was on gains on derivative and about NGN 15.4 billion was related to foreign currency trading gains. So that is significantly less than NGN 1 trillion booked in gains on other trading book. Also, given your answer that at least 50% of your total trading gains was related to derivative, I would then believe that another, let's say -- the NGN 1 trillion is still related to -- apart from the notes that you gave about NGN 2.2 billion being gains on derivative, I would believe that there are still other gains in derivative resident in that NGN 1.1 trillion on that line item, just to clarify. And then going forward, what's the expectations for -- this kind of income is quite substantial. Are we to expect this kind of result given the relative currency sustainability that we're experiencing as of now? I think that's it for me.

The next question comes from Sodiq Safiriyu of SBG Securities.

Please, can you confirm that you can hear me?

Yes, we can.

Yes [indiscernible].

So number one, I wanted to confirm the proportional exposure of the bank's risk-weighted assets in 2024 sort of increased by about 76%. I would like to, well, more or less [indiscernible] the cost for that, likely implication and what we are looking at as the outlook in 2025. One of the concerns I sort of flag is the proportion of stage 2 loans to total gross loans. I know for now it's been -- I mean, it's been increasing about 30%, whereas at FY '24, sort of reduced to 30%. But it still remains high in my opinion. So I would like to know details concerning -- I mean, reasons why it has stood relatively high.

Okay. Thank you very much. For the question on the trading gains, like CFO said earlier on -- he will still take that. What I know, indicated that the other trading gains in our books is a mix of trading transactions and instruments, including derivative, trading income and various hedges taken out by the bank, excluding trading bills and bonds. So CFO is going to clarify on the trading gain aspects as well as well as operational risk, which the CRO will take, and as well as the proportion of stage 2 loans. That one -- CRO will take that as well. So go ahead, Abiodun.

Thank you, GMD. Just like you said, I mean, it's a box of trading activities. We've spoken about [indiscernible]. And we have product derivatives that cycled out and hedges. We've also spoken about reinvesting the proceeds of those investments, recycling or even diversifying into other high-yielding instruments as they mature. So for more specifics on this, of course, we are available -- you can also reach out outside this call. Thank you. CRO?

Thank you very much, same to you. On the operational risk increase, as you well know, the industry [ operating system ], that has approach measurements for operational risk. And as your turnover increases, your operational risk is measured as an average of your last 3 years turnover. So if you see where we have grown fairly, you understand why our operational risk has significantly increased. We are one of those that try to champion movement to more advanced approaches for CBN to feel safer with [indiscernible] current standardized approach because it offers them more confidence and safety within the banking industry. So it's something we'll continue to manage. We understand that we'll continue to grow as a bank. And as we grow as a bank, we must recognize that [indiscernible] loan also brings operational risk challenges to us that we'll continue to manage. So that we understand -- we'll continue to manage that. On the proportion of the stage 2 loan, it's worth it to know that we've always had assets in stage 2 loans that we are trying to deal with. Interestingly, most of those loans are being restructured, and we are seeing significant performance in them. But for prudency, we are less than there because we want to attain a comfortable period before we start thinking of moving them back. So for the few loans, we have not restructured with that. Putting them in stage 2, [ what factors and opportunity to be ] significant impairments, which you have seen in our payment charge in the year. So it's an area we'll continue to manage. It doesn't grow significantly because we have grown their loan size and they contribute also [indiscernible] assets. That kind of loan [indiscernible] until we get our way out of it before we start growing loans in that same space. So it's an area we are managing quite significantly, and we think we'll be out of it little by little [indiscernible] of the year when [indiscernible] most of it. Thank you.

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

So my question is basically on your dividend payout. I know you gave a bit of context to that. And you mentioned [indiscernible]. So is it safe to say that you have [indiscernible] CBN? And can we assume the 20% payout ratio that you give is the new dividend policy going forward? Because I understand that excluding 2023, right, [indiscernible]. So is it safe to now assume that 20% is now the new payout ratio? Or there are just some consideration around this 15% that you paid out this year? I'll just come back to the queue for my next question.

The next question comes from Timothy Wambu of Absa.

Mine is a follow-up from a question I'd asked earlier. So when you mentioned that the cross-currency swaps have declined significantly from $1.6 billion, are you able to give us a figure that is outstanding currently? And with this reduction, does this not impact on your ability to generate such significant trading gains? And I had also asked a question earlier, and this was on the foreign currency revolution loss that was reported. I understand the [indiscernible], the loss was due to compliance with the CBN NOP directive. Just explain what changes were transpired there for you to book such a significant loss compared to the significant gain you had in the prior year from NGN 223 billion gain to NGN 178 billion loss. What currency movement played out?

The next question comes from Sodiq Safiriyu of SBG Securities.

I just wanted to get a sense of the guidance for cost of risk. So what we saw last year was cost of risk guidance at 7% to 7.3%. For 2025, you have given cost of risk of 7%. So I just wanted to get a sense [ in early ] around what exactly is transpiring -- or given this cost of risk, can we just get a sense generally to that? And also, the significant loan loss reserve that was made last year, about 55% of it was to the oil and gas sector. Is it possible...

Sodiq, we seem to have lost you there. I'm sorry, but it seems like Sodiq is having technical issues.

Yes, I think we have technical issues. Maybe we should go ahead and respond to the questions we have already while he reconnects back. Okay. So there's a question on the swap position. Like we said earlier on that the exposure of $1.6 billion has significantly reduced to less than $1 billion, and the CFO will give more clarity on that. And for the guidance and cost of risk, the CRO will take that aspect. And then we'll have ECO -- our ECO is present to talk on same currency swap issue on the dividend -- and the dividend payout. Thank you very much. Henry, can we start with you, please?

All right. Thank you very much, GMD. And thank you for the question on dividend payout. Yes, for 2024, our dividend payout is at 20%. But over the last 5 years, Zenith Bank cumulatively has recorded the highest dividend payout in the market. And we continue to be -- we continue to take our returns to shareholders as a very, very significant interest. You are right, before the uncertainties in the market in the last 3, 4 years, remember COVID and all that, our payout ratio was somewhere around 48%. And now we are beginning to see some level of stability in the economic environment. Our dividend payout ratio, I can assure you we're going to push northward. I think 20% is just the bottom mark. In the coming years, we see our bank written -- our dividend payout to a very substantial ratio [indiscernible] to the level of 48% where we have been in the last previous years. Like GMD said, we see reward to our shareholders as a significant interest. And we are confident that our returns, which is very stable, our balance sheet, which is also very stable, will provide that high return that will enable us pay high dividend payout and also maintain a very high dividend payout ratio moving forward. Thank you.

Thank you. And can we start with the CFO, and then CRO, you can now conclude [indiscernible] clarity.

Yes. Thank you, GMD. There was a question on FX loss. I think like I said before, the point of fully complying with the regulator's directive on [ CERONET ] or composition loan, we restructured our balance sheet, like I said, and of course, we moved from long to short. If you look at Page 119 on the full FS that we have uploaded, you can see the short position. And with that position and subsequent naira devaluation, of course, we incur huge currency loss at that point. But again, the good thing is this is one-off. It will not reoccur, and that won't affect us in 2025. So it's done with 2024, and that's the position as we have now. Thank you. CRO?

Thank you very much. On the cost of risk projection and the guidance we gave of 7%, clearly, you would see that macroeconomic conditions are becoming more stable. Issues that gave rise to the uncertainties last year and following the reforms is stabilizing. So our commitment is that -- and what we see is that as these rates begin to get better [indiscernible], we don't see this incredibly impacting on the cost of risk within our environment. We do realize that there's still a bit of -- [indiscernible] uncertainties within the market. And we're more prudent in our -- into play in our projection. So 7% for us, we think, is sufficiently good enough for guidance at this stage until we see what happens before the middle of the year. So that's why guided 7% for our cost of risk.

Thank you very much. Judy, do we have more questions?

No, ma'am. At this stage, ladies and gentlemen, we have reached the end of the question-and-answer session. I will now hand back to the GMD for closing remarks.

Thank you very much, Judy. Thank you, ladies and gentlemen, for all your insightful questions and valuable perspectives. We appreciate your continued interest in Zenith Bank. We have shared our strong fundamentals, disciplined execution and strategic focus on resilience, innovation and sustainable growth. We remain agile and focused and forward-looking as we innovate to scale and create more value for all stakeholders as we look forward to building an institution that will outlive all of our generations to come. On behalf of the Board, management and staff of Zenith Bank, I want to thank you very much for your trust and partnership in Zenith Bank. And I want to assure you that we'll continue to build value for all stakeholders. Thank you very much.

Thank you, ma'am. Ladies and gentlemen, you are welcome to reach out to the bank's Investor Relations unit for further questions after the call. Once again, ladies and gentlemen, that concludes today's event. Thank you for joining us, and you may now disconnect your lines.