Zenith Bank Plc ($ZENITHBANK)

Good day, ladies and gentlemen, and welcome to the Zenith Bank FYE 2025 Investor Conference Call. [Operator Instructions] Please note that this event is being recorded. Today, I'm pleased to present Dr. Adaora Umeoji, Group Managing Director and CEO of Zenith Bank plc. You may proceed, ma'am.

Thank you very much, Judith. Thank you for calling my name very well. You did a good job. Good afternoon, investors, analysts, distinguished ladies and gentlemen. My name is Adaora Umeoji, the Group Managing Director and Chief Executive of Zenith Bank Plc. It is my pleasure to welcome you all to today's investors call. With me on this call today are our Executive Directors, Adobi Nwapa, Akin Ogunranti, Adamu Lawani, Louis Odom; our Chief Financial Officer, Abiodun Durosinmi; the Chief Risk Officer, Felix Egbon; Head of Investor Relations, Jacquelyne Yawa; and other senior management members of the bank. Let me start by thanking everyone for taking the time to join today's investor call, where we'll be presenting our 2025 financial year results. In 2025, the global economy faced elevated uncertainty driven by geopolitical tension and shifting trade policies. Escalating tariff measures in the global economic space reintroduced protectionist pressure into global trade flows. At the same time, ongoing conflicts in the Middle East and the Russia-Ukraine war contributed to the heightened market volatility. Despite this, global growth remained relatively resilient. And this resilience was supported by supply chain adjustments, strong private sector adaptability, easing energy prices and gradual monetary policy easing across both advanced and emerging economies. Against this global backdrop, Nigeria's macroeconomic landscape in 2025 reflected the impact of sustained reform efforts and improved policy execution. Ongoing fiscal and tax reforms improved the operating environment, while GDP and CPI rebasing provided a more accurate reflection of economic activities. The impact of the Dangote refinery also marked a structural shift, reducing FX pressures and supporting exchange rate stability. Also, monetary policy maintained a tight stance for most of the year, successfully covering inflation while declining significantly from 24.48% in January 2025 to 15.15% by year-end. External buffer also strengthened as foreign reserve rose to a 7-year high of $45.5 billion, supported by strong investor demand for Nigeria Eurobond issuance. The capital markets reflected this renewed confidence with the Nigerian equities market, delivering over 51% return, one of the strongest performances in Africa. In recognition of all these improvements in the domestic economy, international rating agencies revised Nigerian sovereign outlook from stable to positive. For us as Zenith Bank, 2025 was truly remarkable year. We delivered exceptional performance that underscores the strength of our business model, disciplined execution and a well-diversified earnings and an unwavering commitment to the highest standard of corporate governance. For the year ended December 31, 2025, we recorded gross earnings of NGN 4.19 trillion. Profit before tax stood at NGN 1.26 trillion, while our profit after tax rose to NGN 1.04 trillion, solidifying our position as the most profitable bank in Nigeria. We maintained our leadership in Tier 1 capital at NGN 4.14 trillion. The group recorded in its loan book, despite the write-off of over NGN 1.2 trillion, reinforcing the resilience of the balance sheet and growth capability, despite the write-off of NGN 1.2 trillion from our loan book. This was achieved due to the deliberate strategy of identifying and lending to thriving sectors of the economy. Our subsidiaries continue to contribute meaningfully to the group earnings, heightening the effectiveness of our expansion strategy. This performance, no doubt demonstrates our ability to sustain profitability in an ever-changing macroeconomic environment and the evolving landscape. In line with our commitment to shareholders' value, the Board has approved a 100% increase in dividend for the year 2025 financial year. To demonstrate this, we declared and paid an interim dividend of NGN 1.25 per share during the 2025 financial year, and we have proposed a final year dividend of NGN 8.75. This will bring the total dividend for the year ended December 31, 2025, to NGN 10 per share, thereby maintaining our consistent robust dividend payout ratio. And we remain committed to sustaining our track record of increasing dividend payouts. Looking ahead, we will continue to invest in technology and digital capabilities while driving prudent credit growth in high-quality sectors and maintaining strong asset quality. These initiatives are not only aimed at improving service delivery but also driving financial inclusion and operational efficiency. We are strengthening our international presence with a strategic focus on following our customers' businesses while consolidating across Africa, Europe and other high-growth markets. We recently expanded our U.K. presence with the opening of our Manchester branch. We have also received all regulatory approvals towards the acquisition of a profit-making bank in Kenya, which is known as Paramount Bank. And we also set to launch a subsidiary in Cote d'Ivoire tomorrow being the 29th of April 2026. This will position Zenith Bank as a major facilitator of intra-African trade and global business flows while unlocking emerging opportunities. Sustainability also remains integral to our strategy as we embedded ESG principles across all our operations to ensure responsible and inclusive growth. Zenith Bank is a customer-focused technologically driven institution committed to deliver exceptional service to all our customers. We are privileged to carry forward the legacy of our Founder and Chairman, Dr. Jim Ovia, CFR to build a resilient globally competitive institution anchored on sound corporate governance that our lead generation. We will continue to leverage our core strength to deliver sustainable growth and superior value to all stakeholders in 2026 and beyond. On behalf of the Board, management and staff, I thank you for your continued trust and confidence in the Zenith vision. We are confident and optimistic about the future, and Zenith Bank will continue to deliver superior returns to its shareholders. On this note, I welcome our CFO, Abiodun Durosinmi, to present more comprehensive details of our financial results of 2025. Thank you once again for listening.

Thank you, GMD, for that solid foundation, and good afternoon, listeners all over the world. Thank you for joining us this afternoon. I will take it from where GMD started, of course, on the top line, we had over NGN 220 billion growth in our revenue that closed at NGN 4.19 trillion, as mentioned by the GMD. This is slightly underscored by interest income that was about 88% of the gross income. This time last year, the interest income was like 17% of our gross income. So the trend underscores our strength in our core banking earnings. Interest income grew likely by 30% out of that NGN 4.1 trillion to close at NGN 3.6 trillion. The contributor to this likely -- if you remember in -- by the end of the year 2024, MPR stood at 27.5%. The interest rate regime was already elevated and that was under the condition that we operated up to September before it came down slightly to 27%. So we operated first 3 quarters on the highly elevated interest rate and that contributed to the growth we saw in NIM there. And of course, our balance sheet also expanded. Total deposit liability grew by NGN 2.4 trillion, and we can trace that deployed to increase in our treasury bill investments and treasury grew by NGN 1.98 trillion. And of course, other investment securities grew by about NGN [ 311 ] trillion. So that add up to NGN 2.3 trillion deployed into those NIM lines from the NGN 2.4 trillion incremental deposit that we generated. On the interest expense side, despite the elevated interest rate regime, we also -- the increase was moderated to about NGN 40 billion. It rose from NGN 992 billion to about NGN 1.02 trillion, that's about 4%. We also achieved a reduction in cost of funds, which closed at 4.2% from 4.9% on the average. So this also reflects improved funding mix and, of course, pricing discipline. So the gain on the interest income side and of course, the gain on the interest expense give us a very good net interest income and margins that closed at NGN 2.6 trillion for the year under consideration. So interest income was optimized. Interest expense was well managed. One other key line that I think I should speak to is the impairment charges. We all know what happened with the forbearance. On account of that, we made a specific provision of about NGN 0.5 trillion, NGN 500 billion just allocated to the assets that we wrote off on account of forbearance. That's why our impairment charges grew by about 13% from NGN 658 billion to NGN 741 billion in the year under consideration. This in any way, it's important to also stress that this does not reflect any deterioration in the quality of our assets. We know the quality of asset that is backing the asset that we wrote off and we are confident and even recovery has also started as we speak. Let me also quickly look at noninterest income. Noninterest income declined by 3% from NGN 1.1 trillion to NGN 404 billion during the year. This is due to quite a number of things. One, significant reduction in the trading income due to acquisition of the naira during the year 2025 accounted for a decline. But net fees and commission, of course, grew substantially by 41% on account of the stability we experienced throughout the year 2025 after the digital migration that was completed towards the end of the year 2024. So the benefit of that investment is already -- is what we are already experiencing. If you go to the Page 39 of the presentation slide, you will see further details there. There was a 105% growth in other income again, which closed at NGN [ 173 ] billion gain from a loss of NGN 206 billion in the prior year. This was largely driven by gains on our bank's net FX position, which is in line with local regulation. On operating expenses, there was an increase of about 23%. This is largely due to regulatory costs. AMCON and NDIC alone contributed about additional NGN 70 billion to this line. Other than that, the rest is within inflationary rates during the year. Depreciation, amortization, all moderate in the course of the year. All this put together at the end of the day, like the GMD announced, profit before tax declined slightly by about 5% to close at NGN 1.26 trillion. This is despite the extraordinary impairment provision that we made on account of the assets that we wrote off under the forbearance due to the expiration of the forbearance regime. Quickly, a few things on the balance sheet side. The gross loan grew by 1% from NGN 11.1 trillion to NGN 10.9 trillion. But if you look at this on account of the fact that we wrote off NGN 1.2 trillion in the course of the year, therefore, means that the NGN 7.6 billion we are looking at there would have been NGN 1.27 trillion, but for the write-off. So on the top 1% growth, but if you dig down, you realize that, that growth also to be in double-digit level. There has been significant improvement in the asset quality. The proportion of the assets in Stage 1 has reduced from -- has increased from 66% to 89%, emphasizing the improvement in the quality following the write-off. On customer deposit side, I said it, there was an 11% growth that we recorded, which is what we deploy into the earning assets that I made reference to earlier in my presentation. Our total assets has experienced a 5% growth to close at NGN 31 trillion. Liquidity, 71%, despite the regulatory limit of 30% will continue to be liquid. Shareholders' fund has also grown by 22% to close at NGN 4.9 trillion. The ratios -- return on assets from 32.5% to 23.2%. But from what we have put in place, we see this going up further. Cost of funds declined, like I said, due to the effective management of interest rates and interest expense. Cost of risk also declined slightly from 7.3% to 6.7% for the year. Liquidity, loan to deposit, all of them are being effectively managed. Same with capital adequacy ratio of 25.3% at the close of the year. That should be the end of my major highlights. We are confident that the current year is going to even be a better year for us. We are seeing the sign and the strategy is in place to make sure that we return a better results over and above the very good result that we have reported in the year 2025. So on that note, I go back to GMD. Thank you, everyone, for listening. GMD, thank you.

Thank you very much, Abiodun. So we are ready for questions.

[Operator Instructions] Our first question comes from Ifeanyi Osele of CardinalStone Securities Limited.

This is Ifeanyi here from CardinalStone Securities. Congratulations once again on your strong performance. So just going on with my first question was going to be around your loan book, going into 2026, are there specific sectors you are looking at trying to create credit risk assets? What sectors are you looking into in 2026? And how do you see demand for loans for credit funding in 2026, given the fact that rates are still where they are currently? And then also update -- any updates around the written off facilities, the NGN 1.2 trillion written off loans in full year 2025?

The next question comes from Nabila Mohammed of Chapel Hill Denham.

I have a couple of questions, but I'll try to keep them into 2. So my first question is that your loan growth guidance is for 20%. And just like a follow-up to the first person's question, how would you balance that given that your guidance for cost of risk, how would you balance asset quality going forward since the books are now somewhat clean with the rating of loans, given that you are guiding towards the 2.5% cost of risk in 2026, which is like going to be the lowest you would record in the past 2 to 3 years? That's my first question. Then my second question is with regards to your plans on the HoldCo transition. I don't know if there are things that have unfolded since the announcement of Zenpay Limited. I just want to get an update on that as well. And sorry, lastly, the 100% year-on-year growth in dividend per share, is that going to be the norm going forward? Or what should investors -- what should we expect in terms of dividend payout ratios and even dividend growth going into 2026? I'll leave my questions there, and I will come back on queue if I have for the others.

Okay. Thank you very much,. Do you want us to start responding or we should take more?

Thank you, ma'am. If you can respond now, that would be great.

Okay. thank you very much for your questions. I'll try to actually start with the question regarding the loan book. Regarding the growth in our loan book for 2026, we have guided approximately 20% growth in the loan book, which we believe is both achievable and prudent within the current macroeconomic context. Our growth strategy remains the same. We want to be very disciplined with a clear focus on risk adjustment returns and strong asset quality. Like I referenced during my opening remarks, our loan expansion will be driven by targeted disbursements to resistant and high-impact sectors, including like sectors like manufacturing, general commerce, trade, finance, non-oil exports and the broader -- extract broader sectors where we feel is very viable. In addition, ongoing government reforms are creating new opportunities, particularly in the gas and mining sector, which we are actually looking at attentively. Overall, our approach to deliver sustainable loan growth is very critical, but we are really looking at this to ensure that we continue to sustain that trajectory. And we are maintaining strong underwriting standards, making sure that we are supporting economic activities and preserving a stable cost of risk. With regards to the question on HoldCo, thank you very much for that, HoldCo. On the HoldCo structure and expansion strategy of the bank, our immediate priority remains the disciplined execution of our global expansion alongside scaling the contribution of our existing subsidiaries as well as continue to drive our bottom line to ensure that we are able to grow. And in terms of geographic expansion, the bank has really done enough there, and we are still looking forward to going to other countries where we can scale and where we can adapt within the culture. So the HoldCo is not on the front burner for us as an institution now. It's something we can always if time permits. And the question on the -- I think there's a third one on...

The recoveries.

On the recovery, right? I think the write-off is the recovery. The question on the bank write-off and going forward. The write-off was a deliberate and very structured cleanup strategy that commenced well ahead of the CBN's discontinuation of forbearance regime. In prior period, we proactively recognized impairments on these exposures. And following the expiration of the regime of forbearance, we took further decisive action to further resolve them. Despite those elevated levels of provisioning in the bank deliberately ensured that they deliver strong profitability, supported by at least rebalancing its asset portfolio, which resulted in a 5% increase in interest income, which is over NGN 900 billion, driven by improved asset yields, which we have recorded recently. We also witnessed a balance sheet expansion within our treasury bill portfolio, which increased by -- from -- it increased by NGN 1.9 trillion, which represents about 4% growth. And investment in security also grew to NGN 311 billion, which is like 6% growth. We also mobilized a lot of cheap deposits, which has actually helped us to moderate the interest expense and significantly help us in the growth in interest income as a bank. I will call on the CFO to throw more light on some of the areas I didn't cover. Thank you very much.

Thank you, GMD. The question on the hope of recovery on the rising of NGN 1.2 trillion. In my presentation, I also mentioned the fact that recovery process has even commenced and recovery, we are seeing proceeds. Like I said, there are very good underlying assets backing those facilities that are written off. And as we speak, inflows are coming in. So the hope of recovery is not a hope. We're already recovering. There was a question on the 100% increase in dividend, whether it's sustainable. Prior to 2023 and 2024, when there was a huge revaluation gain in the industry, our dividend payout ratio has been in the region of 40% thereabout before it came down to about 20% in 2023 and 2024 because dividend will not be paid on revaluation gains. So if you look at what we are paying NGN 10 now, it comes to about 40% payout. So things have normalized now, and we will sustain our dividend payout ratio in line with our policy. And of course, as long as our profits continue to grow, which is what we can guarantee you, quantum dividend in terms of absolute terms, will continue to grow, and we'll continue to maintain a very robust payout ratio to our investors. I think with that, we have covered all the questions.

Okay. Thank you very much. I think that's the questions. So we can take more.

The next question comes from Yemisi Sunmola of Vetiva.

Can you hear me?

Yes, we can.

Okay. So congratulations on your 2025 numbers. They were quite impressive. So just a question on this side. So I saw that the bank made about NGN 1 trillion in trading income in 2024, and this changed a loss in 2025, right? So what I would ask is what levels of trading income should we as investors treat as normalized for the year 2026. My other question on dividend. I think that has already been covered by the CFO. And just by the side, what do you think has been your experience leading Zenith Bank so far?

The next question comes from Timothy Wambu of Absa.

I trust you can hear me. Yes. And also congratulations on your good set of results and the increase in dividend. My first question is just more color on the derivative loss of NGN 414 billion. Just give us an idea of where your swap position is long or short. Maybe just expound on why there was such a significant derivative loss? My second question is congratulations on your foray in East Africa. Just some thoughts around your strategy when you finally launch in Kenya. And any thoughts about Ethiopia? And then just lastly, have you given any thought to an LSE listing that is the London Stock Exchange listing?

Thank you very much. Let me start with the -- thank you very much for your questions. And I want to start by attempting the one on the trading income on how we're able to make a profit of NGN 1 trillion after trading loss in 2025. While the trading gains of NGN 1.2 trillion recorded in 2024, were primarily driven by devaluation of the naira, which was supported by the foreign -- the bank's foreign currency trading income at that time. However, the improved macroeconomic stability experienced in 2025, these gains we are not repeated. Despite this, the bank sustained strong profitability through solid core earnings performances, which was mainly driven by a 35% increase in interest income, which is over NGN 900 billion, supported by our improved asset yield. And we also experienced moderate growth in interest expense of just NGN 40 billion, which is about 4%. As a result, our net interest grew significantly by 53%, which is over NGN 900 billion, reinforcing our strong organic growth earnings. And we saw at least a 41% increase in net fees and commission income driven by high transaction volumes. So this, I can see for the reason why the trading income of 2024 was in 2025. And then for the question on my experience. Yes, that's a very interesting question as the CEO of Zenith. Thank you very much for the question. Thank you very much. Let me start with my experience on leading Zenith Bank so far. I would say that leading one of Nigerian's foremost financial institution is a privilege, and it comes with profound sense of responsibility. Zenith Bank has always been defined as an institution with strong foundation, disciplined execution, culture and exceptional leadership and is a bank that's known for exceptional service delivery over the years. And Zenith Bank has actually witnessed 5 chief executives from within, which I'm actually the first female CEO. And if we have experienced 5 CEOs from within, it shows that we have strong culture and the bank is actually leveraging on all the gains and all the foundation laid and left by the predecessor. So for me, as a CEO in this strong institution, I would say that over the last 23 months, we have made significant progress and those progress we made in 23 months are not a small success. In 2024, as part of our digital transformation journey, we actually overhauled our IT infrastructure to the best-in-class platform, which enabled us to support our customers' business and deliver exceptional service. That was a major task for us because we didn't just upgrade, we ripped off our old IT architecture and brought a new one completely, which we are using now and we're using it to actually deliver more service to our customers. And we actually successfully completed our recapitalization exercise, which was a major exercise in Nigerian banking industry. And we completed our recapitalization exercise with 160% subscription rate, positioning us as one of the first bank in Nigeria to meet the CBN requirements as they go. We actually went to the market once, and we were able to raise all our money. That shows the strength of the brand of Zenith Bank and the customer endorsement and the kind of stuff we have, the resilient stuff that we have in the system. As at the end of 2024, we delivered a landmark performance surpassing NGN 1 trillion in profit for the first time since the inception of the bank. And we also grew our customer base from 34 million customers in half year 2024 to 36.7 million customers as at the end of December 2025. We have also maintained a position as Nigeria's most profitable bank with a profit before tax of NGN 1.26 trillion as of December 2025. And recently, we became the first bank in Nigeria to attain a market capitalization of NGN 5.5 trillion, setting a new benchmark in Nigerian banking industry. On the back of all these achievements, we have actually continued to make strong progress in our global expansion strategy. We opened our Paris branch, Manchester U.K. branch, and we have also received our regulatory approval towards the acquisition of a profit-making bank called Paramount Bank in Kenya, and we'll be launching our Cote d'Ivoire branch tomorrow being 29th of April, which is tomorrow actually. So these milestones are not a small milestone. It's a milestone that came with a lot of work and team spirit, and we have the best workforce in the industry because our workforce -- we call the unicorn workforce because they deliver on their mandate and they are very focused and we have the necessary capabilities to be able to drive this business. So these milestones are a testament of the resilience of our institution, the unwavering commitment of the Board and management and the dedication of our workforce. So looking ahead, we want to remain committed to driving sustainable growth in our bottom line as well as we want to ensure that we deliver enhanced value to all shareholders and stakeholders alongside. So we are really focused. It's been an interesting journey for me, and we are looking forward to more wins and Zenith is known as a trailblazing institution and will continue to be a trailblazer in the financial industry. Thank you very much. So let me call on any of my [indiscernible] to throw more light in some of the things that I didn't capture. Thank you very much.

All right. Thank you very much, GMD. Captured, I mean, essentially all the issues that were raised and especially your experience. I think one of the things that I can attest to is the style of leadership and the inclusiveness for every member of the team. You consistently call us the unicorn workforce and that -- it's the DNA of our Founder and Chairman that we have all in mind and that's the spirit that continues to drive us. So that's about that in terms of the experience. We're talking about the strategy yes, talking about the strategy around the subsidiary, Kenya, about the newly acquired asset. As my GMD earlier mentioned, currently, it's a profit-making entity. What we intend to do is to essentially infuse into that entity the culture of Zenith Bank, which has been our cutting edge and winning culture to be able to scale the business there to what we're used to. The team on ground are already doing a great job. What we will be doing is to further strengthen them around the governance structure, the culture, the drive for new businesses and opportunities within the environment. And the areas where there are opportunities to collaborate with every other stakeholder, we also do that. So as you know, this is not the first subsidiary we are having. We have done it excellently well in Ghana. We have done it well in the U.K. We've done it well in Salone and Cambia, and we believe that we'll be able to replicate in this new market exactly the excellent performance that we have -- we're known for across our various subsidiaries. So that's I think in terms of the other locations, I believe that at the appointed time, just as we have announced the places that we are going to, we'll be able to disclose to you other markets that we will be moving into. But the ones that have been disclosed by our GMD are the ones that are on the burner right now. Other conversations are ongoing. And as I said, at the appointed time, they will be communicated to you. At this point, I will yield the floor back to my GMD or the CFO, to speak to the swap issue. Thank you.

Thank you very much. Thank you. I think there's a question on the London Stock Exchange. Okay. Yes, the London Stock Exchange question, is a matter that's still under consideration and the bank will communicate this decision to the market when is determined and we'll be able to make that public. It's something we are still discussing and we've not really taken a position on it yet, but it's under consideration. Thank you very much. So I think there's a swap question. So [indiscernible], can you take that?

Thank you. Just a brief comment on that. As of December 2025, our swap was -- the position was about $1.113 billion, and that was with the Central Bank of Nigeria. But as of today, we have a total of $1.75 billion, as of now we have $500 million with the Central Bank and $575 million with other parties and promised investors and other stakeholders as of December last year, we're trying to look for areas of high yield and that is basically why the decision was taken to reduce the investment with the Central Bank and place some money in areas where we are going to get higher yields. So that's today.

And then CFO, can you throw more light into that swap issue, please?

Thank you, GMD, responded. I mean the truth is the NGN 1 billion we had at close of the year, it's fully matured and fully recovered. We only reinvested a portion. I mean what we will carry at the end of the year, just like the question is a function of the opportunities and the alternative investment that we see in the market. So I think we can leave it there, GMD. And if I can comment on the -- I mean, the investors was that the NGN 1.1 trillion trading gain in 2024, if it didn't happen again, what will happen? We happen in 2025, we didn't have it and we still deliver on our promise. So our gross earnings is driven by core earnings is the same. So if what happen trading gain or not, it shouldn't be -- it shouldn't arise at all. So we deliver on our promise. Thank you, GMD.

Thank you very much. So can we take more questions?

The next question comes from Olumide Sole of Renaissance Capital.

So my question, basically, first, the tax -- effective tax rate for 2025 came in pretty low. And I'm trying to wrap my head around trying to understand why it came in that low. And also -- okay. And also the -- I'm not sure if you have answered this before, but the -- was waiting for the capital adequacy compensation. If you can also shed more light on that.

Next question comes from Ifeanyi Osele CardinalStone Securities.

All right. Yes. So my follow-up question. So going into 2026, now what key top strategies is the bank looking to play in 2026 to sustain the NGN 1 trillion PAT? What's key things are going to be done in 2026? Yes, that was my question.

Okay. Thank you very much. So let me start with your question on strategy for 2026. I want to thank you very much for your question. With Zenith Bank has always been deliberate on its strategy, we've been a very strategic institution. And on our performance over the years, and we remain focused on actually sustaining this trajectory. Zenith Bank has always been deliberate and then strategic as reflected in our performance. If you look at our performance over the years, it's something that can only be achieved with a deliberate strategy. In 2026, we will focus on leveraging on our recently overhauled IT infrastructure to drive customers' business and grow revenue and to actually have a better customer experience. So service delivery is on our top runner for 2026 to ensure that we end our customers with the right service. And because we believe it's something that Zenith is known for is in our DNA, and we continue to drive customer service as our focus for 2026. And we also remain committed to improving efficiency cost. Efficiency is critical for 2026, particularly around driving low-cost funding sources to actually support our risk assets and ensuring that we continue to maintain healthy margins. And another strategy that is on the front burner for us for 2026 is to remain focused on executing our global expansion strategy by making sure that all the countries we are going to is well analyzed before we go there. We want to continue to follow our customers' businesses and going to the markets where we can scale and markets where we can adapt to the culture easily and the markets where foreign banks and Nigerian banks are making good profit. So we are going to be very strategic in global expansion. And that's what we've done so far. We don't have any of our subsidiaries that are making losses. All our foreign subsidiaries are very profitable, and we intend to make them profitable. And the ones we are going into are the ones that either already profitable or we are very confident that we are going to make profit in the first year of operation by following our customers' business. And in executing these strategies, we will continue to maintain our strict adherence to a strong corporate governance and credit culture because that's very critical when you're going to -- when you're embarking on global expansion, you need to ensure that you have very strong corporate governance and credit culture so that you will not erode the brand. So we have to sustain and continue to surpass where we are. And with regards to the question on tax, I'm going to pass that to CFO. And the question on SOL, I'll pass that to our Chief Risk Officer, Felix. So CFO, can you start?

All right. Thank you, GMD. Yes, you are right. The effective tax rate at the group level declined from 22% to 18%, a number of things. If you go to the Page 41 of the presentation that we have shared with you, you see performance by geography. If you look at the rest of Africa, effective tax rate for 2025 is 36%, coming from 72% in 2024. This is largely on account of effect of the domestic debt happening. And where in 2024, the ERCOT allowances were allowed for tax purposes, but it was subsequently declined in 2020 -- was subsequently declined. And because of that, it returned a heavy tax in 2024. Okay, was previously allowed in 2023. But in 2024, it was declined. That the effective tax rate for Rest of Africa was 72%, you can imagine, and that has come to 36%. So that is what caused the shift in the uplift. But if you come to Nigeria, it has improved from 17.5% to 12%. Why? Because in 2024, the payment allowance that was done was on Stage 2, and that is not allowable for tax. But the same level of impairments done in 2025 on Stage 3 assets is allowable. And for that reason, the accessible profit dropped significantly, and that is what is reflecting in the favorable effective tax rate that you have noticed. I think that answered that question. So I take you back to CRO on SOL question. Thank you.

Thank you, CFO. Thank you, GMD, and thank you, investors for this call. In response to the treatment of single limit capital adequacy computation, I wish to state that projection guidelines are very clear on how it should be treated. But I'll take you back to June when the forbearance lifted - the lift of that forbearance relief, it was important that we treated with potential guidelines clearly stated. But what we are clear about what we continue to tell investors is, one, we have sufficient capital to be able to deal with this treatment. Two, these transactions are basically transactions that are matched by margin deposits. And the transactions that cycle within the 180 to 270-day time line. So this is a strategic decision to see that we continue to support customers in this category and be able to then take sufficient capital to deal with it. So these are no concerns for us at all because today, we have a capital buffer of 9% over the required regulatory limit, and we'll continue to take advantage of the opportunities that it brings to us as long as we have sufficient coverage to be able to deal with it. So as well is no concern for Zenith Bank.

Thank you very much for the question. Do we have -- let's take more questions.

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

I have the following question. So from what I know, there are a few medium-sized banks in Nigeria, which are in breach of their capital adequacy ratio minimums. So I just wanted to ask your view, how do you think the Central Bank of Nigeria is going to deal with these banks? And related to that, also a follow-up, would Zenith Bank or other large banks in Nigeria consider acquiring such troubled bank in your view?

Sorry, can you repeat the last question? Can you repeat the last question, please?

Yes. So would Zenith Bank or other large bank in Nigeria in your view, consider acquiring such troubled bank in the end? What's your view on this?

Okay. Okay.

The next question comes from Samson [indiscernible] Investment Management.

Can you hear me?

We can, sir.

Brilliant. GMD and the entire Zenith team for delivering very strong core earnings. I have 2 questions around your guidance. One is to help unpack the 10% NIM guidance a little bit. Given that you reported 13.7% net interest margin for 2025 and you're guiding for 10%, that is a 370 basis point NIM compression. I want to get a sense of how you arrived on that number. What sort of NPR trajectory are you looking at? And given the return of underlying inflationary pressure, how should we really think about the evolution of your net interest margin for 2026? And then the second question is around your asset quality and your cost of risk guidance of 2.5%. Obviously, Zenith Bank has been in an aggressive impairment cycle over 2024 and 2025. But if I look at your numbers prior to that, you tend to average below 2% cost of risk. So how should we think about cost of risk evolution? And what is the evidence from the Q1 numbers so far around the trajectory for cost of risk?

Thank you very much for your questions. And in terms -- let me start with your question on whether we have plans of acquisition of a troubled bank. For now, there's actually no need for acquiring any bank and Zenith Bank has made its capitalization exercise. I guess the issue of acquisition has to be very strategic. It's not in our strategic plan so far, and there's really no need to go that route. But there is something that we need to do, then we have to discuss it and be sure it makes sense and it can add value to our bottom line for us to do that. So for now, there's no such plan in place. So I'll call the CRO, Chief Risk Officer, and [indiscernible] to take the rest of the questions. Thank you very much.

Thank you, GMD. Thank you for your questions. With respect to the asset quality, I will tell you that we are taking significant steps to ensure that all the accounts that are concerned for us have been treated in the books. This is an assurance we have given before, and we'll continue to maintain that. As to the guidance, we advise for cost of risk. It's just a matter of prudence. We do not expect to write off any significant accounts going forward. But you do understand that there's also -- there are still some macroeconomic fragility given the incident all over the world in the geopolitical space today, and we are just being prudent in advising the current cost of risk. As we go ahead, we believe that it probably will get better, but we are prudent in the current advice that the grant that we are giving at 2.5%. We do believe that it will go lower in time. Thank you.

Thank you. On the net interest margin guidance of 10%, you remember in 2024, MPC was pushing the MPR rates almost like 6x And for 2025, we begin to see a reversal of that. Q4 2025 to date, we have seen a reversal of that at least twice MPC the MPR rate. So we foresee easing of that rate. And for that reason, we have prudently guided that we do 10%. Remember, in 2025, we guided 9% and we returned to 13.7%. So prudently, let's promise this, but we put every effort in place to make sure that we over deliver again. Thank you. Thank you, GMD.

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.

Okay. Distinguished investors and analysts, thank you very much for your thoughtful questions and insightful engagement this afternoon. It reflects the confidence you continue to place in Zenith Bank, and we truly value it. Our priorities for the 2025 financial year and beyond remain very clear: to deliver exceptional customer service, to ensure that we have disciplined execution, cost efficiency, strong risk management and improved earnings quality with a strong focus on corporate governance. As we look ahead, we remain deliberate, agile and firmly committed to creating enduring value to all our stakeholders. On behalf of the Board, management and staff of Zenith Bank, I thank you all once again for your continued trust and partnership in Zenith Bank. Zenith Bank will always be in your best interest. 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. That concludes today's event. Thank you for joining us, and you may now disconnect your lines.